US Edition It's impossible to time a market top or bottom. However, the best shares to buy in any falls are good quality global companies that have high, well-covered yields. Of course, you need the funds to do this – but if you have the liquidity you could benefit from the income for many years to come. There is absolutely no chance of interest rates being raised to above-inflation levels for the foreseeable future.
FTSE produces what it calls a Higher Yield Index (HYI). It is a market capitalisation weighted index of all shares in the FTSE 100 and FTSE 250 which have yields that are higher than the average.
Companies with the largest weighting in the index are, therefore, going to be global and are likely to be cash-generative. Questor gives a view on the six largest shares in the HYI.
Note: dividend yields are prospective and based on analysts' forecasts compiled by Bloomberg.
Vodafone
167.15p -1.9
Questor says BUY
Yielding 8.1pc and being the largest company in the HYI with a weighting of almost 10.1pc, Vodafone is an income investor's first port of call in these turbulent markets.
The business is global and highly cash-generative. Its 45pc-owned US joint venture Verizon Wireless is expected to pay a dividend to Vodafone of $4.5bn (£2.9bn) next year. This means it has already committed to paying a special dividend of 4p a share to shareholders in February.
The mobile group also says it will increase shareholder payouts by "at least 7pc per annum" for each of the financial years in the period ending March 2013.
Questor rates Vodafone shares
a buy.
HSBC
473.55p -14.05
Questor says HOLD
With a yield of 5.7pc, the banking giant certainly has a respectable payout.
The company has been described as solid but dull – but this is exactly the type of investment required at a time
of crisis. However, many unpredictable things are happening in the banking sector. As seen with the current battle to rescue Franco-Belgian group Dexia, solvency concerns have returned to haunt the markets.
Questor says hold.
BP
372p -14.85
Questor says HOLD
The oil major has had a difficult few years, with the Macondo oil spill, asset disposals and trouble with its Russian partners.
Many analysts reckon that the break-up value of the group is significantly higher than its current valuation. In July, JP Morgan Cazenove worked out a figure of about 800p a share – more than double the current share price. This implies the share is seriously undervalued.
However, question marks over the company's strategy remain and for this reason the shares are a hold for the 5pc yield.
Royal Dutch Shell 'B'
£19.41 -37½p
Questor says BUY
The Anglo-Dutch oil major spent many years in the wilderness – but now it's back.
The company was regarded as a lumbering, inefficient behemoth and it even had to humiliatingly restate its oil reserves in 2004. This led to investigations, fines and compensation payments
to shareholders.
However, unlike BP, the company now has a credible plan for growth – making it Questor's preferred oil major.
When Shell unveiled its new strategy in March last year, it said that the growth plans should increase cashflow by 50pc between 2009 and 2012 if oil was at $60 a barrel and by 80pc at $80 a barrel. Prices next year are likely to average a level
higher than $80.
In the last crisis the group said it would borrow to pay the dividend. This situation is likely to repeated in another crisis. With the shares yielding 5.8pc, they are a buy. UK investors should buy the "B" shares because dividends paid on class "A" shares have a Dutch source for tax purposes.
GlaxoSmithKline
£13.12 -17p
Questor says BUY
Like all the big pharma groups, GSK is struggling with the loss of patents on key drugs. But it is further through this process than rival AstraZeneca.
The company is trying to reduce its reliance on "white pills in Western markets" – the drugs most susceptible to falling prices and generics. It is also moving into more consumer products in emerging markets.
This is a good long-term strategy and, with a yield of 5.3pc, the shares are rated a buy.
BAT
£27.28½ -31½p
Questor says HOLD
Tobacco producers are defensive in a downturn – and BAT shares are yielding 4.7pc.
Recent first-half numbers were good. It reiterated that BAT was "confident" its operating margin would exceed 35pc this year.
But the valuation has held up well and the current year earnings multiple is 14 – which is not cheap. Questor reckons hold.