- ^FTSE
- HFG.L
The FTSE 100 has slipped about 4.5% from its 52-week high of 10,989 points set in February. For passive income investors, these lower prices could offer some attractive opportunities to lock in higher long-term returns.
Aside from the potential for better gains, a falling share price also ramps up the yield on <a s important to do a full assessment before assuming a lower price could boost income. A market dip can offer bargains – but that's true for every stock.
A higher yield, with a catch
Suppose a company pays an annual dividend of 20p. At £4 a share, a new buyer gets a 5% yield. At £3.60, the same dividend represents about 5.6%. Nothing about the <a t fixed. If profits or cash flow weaken, a company might reduce its payout. A falling share price can therefore be a warning, not a gift.
That’s why buying in staggered stages appeals to me. Known as pound-cost averaging, this strategy simply means making smaller but more regular purchases – rather than trying to guess the market bottom. Essentially, it locks in some income now and saves some money if prices fall further.
Of course, this approach doesn’t guarantee anything – a portfolio could still lose value if a stock keeps falling. And if it recovers quicker than expected, you might end up paying more.
At the end of the day, assuming the stock eventually recovers, it removes the stress of trying to catch the best price.
The Hilton Food question
Hilton Food Group (LSE: HFG) is one example of a high-yielding share to consider if prices fall. It supplies meat, seafood and other food products through partnerships with major <a s certainly attractive for income, but I never make decisions based on yield alone.
The company’s recent half-year results should give investors some confidence. Management raised its full-year adjusted pre-tax profit guidance from continuing operations to £66m-£71m. The planned sale of its loss-making Dalco business and favourable currency movements helped that forecast. The interim dividend stayed at 10.1p a share.
But there’s another side to the story. First-half adjusted earnings per share (EPS) from continuing operations fell 9.2%, while the seafood business remained under pressure. If profits pressure debt obligations, the dividend could be at risk.
