Five top dividend income shares for 2011
Spotting a good dividend paying share is vital for investors looking for income or just plain old good returns.
Dividend shares: What shares could be strong for 2011?
Whether reinvested to buy more shares or used for income that beats savings rates, robust dividends are a powerful tool in the investors' box.
The classic statistic rolled out comes from Barclays Equity Gilt Study, which showed that £100 invested at the end of World War II would have been worth just £5,721 at the end of 2008 in nominal terms. Reinvest the gross dividends and the same £100 would have grown to £92,460.
But when it comes to identifying a good dividend paying share, it's not just as simple as spotting those that yield the highest amount.
The biggest yields can be deceptive, emerging thanks to a company's depressed share price and often unsustainable.
To help sift the wheat from the chaff, Nick Raynor, investment adviser at our share-dealing partner The Share Centre, has highlighted for This is Money five shares investors should consider for income and are anticipated to be top dividend payers for 2011.
He outlines what the company does and why he expects them to perform well next year.
Chesnara
Currently trading at 210p and offering a yield of 7.5% (medium risk).
Chesnara, mainly operates in the UK and engages in underwriting activities associated with death, disability and health.
The strength of the business was confirmed on Friday when the company announced it intends to acquire the Save and Prosper Group for £63.5m, the group is a UK based provider of unit-linked, non-linked and with-profits pension and life assurance products which is closed to new business.
Investors will be interested to know the regulatory surplus of cash stands at 330%, allowing the company to pursue its dividend policy. The yield currently stands at an impressive 7.5%, and we expect this to continue to increase.
Income seekers and investors looking for further takeover opportunities should consider Chesnara.
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