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While most people's minds are drifting away from the pleasures of a sunny summer in August, the stock market remains open for business. Here are three FTSE 100 stocks, each yielding at least 8%, that I would consider buying for my portfolio next month if I had the cash to invest.
IM&G
I am already a shareholder in the property manager IM&G (LSE: MNG). But as the stock price continues to move quickly – down 4% since the start of the year – its yield remains attractive to me. It currently sits at 9.2%.
Share price performance has been weak – indeed, M&G shares are today less than 5% of the company's listed price in 2019. But that has been more than just the creation of shares during that time. The company aims to raise or maintain its payout per share each year and has so far done so.
In the past few years, the business has published its interim results in August or September, so we should have an update soon about how the company is doing. A persistent risk is a weak economic environment that leads clients to withdraw funds, which hurts profits.
So why would I consider adding to my M&G Holdings?
With its strong product, large customer base, and proven cash generation potential, I see the income share as the type of investment I'm happy to hold in my portfolio for years to try and generate income.
Phoenix
Another financial services share, which I do not hold, is Phoenix (LSE: PHNX).
Like the M&G, it has increased its annual budget share in recent years. Its yield is very high, 9.7%. That means it is one of the highest yielding stocks in the FTSE 100.
Like M&G again, Phoenix sometimes seems unpopular with investors. Despite those strong profits, its share price has fallen 19% over the past five years.
In part I think that reflects the complexity of its business. Price liabilities on long-term financial products such as annuities can be difficult to adjust. If the recession lowers property values, for example, Phoenix's mortgage book may be worth less than it currently thinks.
But the business has a large customer base and I expect it to benefit from long-term insurance demand. Like M&G, it has proven the ability to generate cash on a large scale and like M&G, it has consistently shown a willingness to use that spare cash to help fund large dividends.
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Legal & General
Since my portfolio is already diversified in business areas, I would be happy to add three stocks from the financial services sector to it next month. Next to the M&G and Phoenix, the third would be the one I bought in recent months: Legal & General.
The attractions are the same: strong long-term customer demand, a strong brand, and a large customer base. Legal & General has also been a strong dividend-paying company, with its last cut in 2008 amid the financial crisis.
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Profits have fallen sharply in the past year and another big market decline could mean another dividend cut. As a long-term investor, I like the 8.7% yield of the FTSE 100 share.
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