Thursday, 5 July 2012

A UK Blue-Chip Starter Portfolio

Share Price (Pence)
Yield (%)
Royal Dutch ShellOil & Gas2,2257.65.0
BHP Billiton (LSE: BLT.L  )Basic Materials1,8067.64.3
British American TobaccoConsumer Goods3,24214.64.5
Tesco (LSE: TSCO.L  )Consumer Services3108.85.0
GlaxoSmithKlineHealth Care1,44711.45.3
Vodafone (LSE: VOD.L  )Telecommunications17910.97.4
National GridUtilities67612.46.1
ARM HoldingsTechnology50632.20.9

Excluding tech share ARM, the companies have an average P/E of 10.7 and an average yield of 5.0%. The numbers were 9.8 and 5.2%, respectively, when I last carried out this exercise in October 2011.
So, the group is rated a bit more highly today than it was nine months ago. However, I think it still veers towards the value end of the spectrum, because my rule of thumb for this group of nine is that an average P/E below 10 is firmly in "good value" territory, while a P/E above 14 starts to move toward expensive.

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