I’ve been weighing up new income stocks to buy in an effort to boost the average yield of my portfolio. After screening for cash coverage, payout ratios and dividend history, I created a decent shortlist of options:
| Stock | Sector | Yield | Cash coverage | Payout record (years) |
|---|---|---|---|---|
| Investec (LSE:INVP) | Finance | 6.20% | 2.47 | 24 |
| Aberdeen Group (LSE: ABDN) | Finance | 5.80% | 2.30 | 20 |
| Imperial Brands | Tobacco | 5.80% | 2.40 | 29 |
| BritishAmerican Tobacco | Tobacco | 5.3% | 1.68 | 46 |
| Reckitt Benckiser | Consumer goods | 4.30% | 1.87 | 46 |
| Severn Trent | Utility | 4.20% | 2.6 | 37 |
I already own shares in Reckitt and British American Tobacco. Since I don’t want another tobacco stock and already hold shares in National Grid, I decided another utility is unnecessary. So I decided to narrow it down to a choice between Investec and Aberdeen Group.
Let’s see how they compare.
Aberdeen Group
Aberdeen hasn’t had the best run of late. The share price has fallen almost 50% since early 2018, prompting management to take measures to enact a recovery. What followed was a catastrophic rebranding attempt and subsequent reversal.
Despite all that, the eventual outcome turned positive — the price recovered 26.6% over the past year. Now, with a meaty 5.8% yield, the dividend appeal’s clear. If this recovery has legs, I suspect the group will soon resume dividend growth, which was paused during the pandemic.
If so, the combined capital gains and dividend returns could be substantial. But that turnaround isn’t guaranteed, which is where the risk lies. If the operating improvements don’t translate into higher margins and capital generation, it could struggle to keep paying dividends.
Investec
Investec is a British/South African investment bank that was recently upgraded to the FTSE 100 from the FTSE 250. What I find attractive is that the business is still growing, not just paying out old profits. Latest results show revenue up 4.2%, earnings up 5.2%, and a 5.48% dividend increase.
The bank’s latest results show strong capital and liquidity buffers, with CET1 ratios of 13% and 13.6% (equivalent to Lloyds). Combined with the strong results, that gives me confidence dividends are reliable and will keep growing.
However, unlike Aberdeen, share price growth has been muted — they’re up only 11.6% since July 2025. Plus, it’s more exposed to risks around credit losses, weaker lending demand and lower borrowing activity. If the UK or South African economy experiences a downturn, Investec’s earnings would take a hit.
On the plus side, separate global operations add diversification.
My verdict
On balance, I’d say Aberdeen looks like the riskier option, with an uncertain recovery ahead. However, if things go well, the growth potential is notable. For investors keen on growth and income (and happy to stomach some volatility), it’s worth considering.
Investec, on the other hand, exhibits more stability and stronger dividend sustainability. As such, it’s the option that I feel is better suited to my long-term income goals. It’s already been on my watchlist for some time, so I plan to build a small position in the stock over the coming months.
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Mark Hartley owns shares in British American Tobacco, National Grid, Lloyds, and Reckitt Benckiser.
