Lots of people are worrying about "the market" being expensive these days, which in the US may be true to a certain extent. In the UK however, this may not be so true as we struggle with BREXIT & a generally downbeat economic outlook post the budget. This may not be such a bad thing though as there has been research in the past showing that equities in countries with low GDP growth tended to outperform those in countries that high GDP growth rates.

Any way lets look at the evidence of the valuations attached to UK Equities. According to Stockopedia the FTSE 100 index for example has a Median trailing PE of 17.8x with a forecast PE of 15.3x, which is not far off the long term average. This is and based on forecast earnings growth of just under 10%. Looking at the yield side of the valuation on the FTSE 100 Index this shows a trailing yield of 2.9% and 3.3% forecast, which must therefore be factoring in similar or slightly higher rates of growth to the earning growth forecasts. That headline yield of around 3% does compare favourably with what you can get on Gilts and on cash in the bank. Given the forecast growth it should also protect your income from the current 3% inflation too in the short run and in the long run too I would argue.

It is worth remembering not so long ago before Central Banks really got going with manipulating interest rates, there was something called the reverse yield gap. That was the gap between equity yields and government bonds where equities yielded less (yes less that's not a typo) but these days as the old chines curse says - we live in interesting times.

Now the other interesting fact when looking at the FTSE and looking at the highest yielders is that there are 25 or a quarter of the index yielding more than 5%. Thus it should be possible to put together a diversified portfolio of say 20 FTSE stocks with an average yield of 6% if you equally weighted them. You could take your pick form the list below although the growth on offer is lower than the headline figure suggested above and the cover is quite low in a number of cases, so dividend cuts could be possible in a number of these.

Despite this though some such as Centrica (CNA) and Glaxo SmithKline (GSK) have indicated that they are prepared to run with low levels of cover and maintain their payouts. Indeed GSK is currently toward the bottom of its 5 year range (see graph at the end) and therefore may be offering an attractive entry point. Whether these yields prove to be sustainable in the long run though remains to be seen, especially if GSK should finally decide to split the business up. Meanwhile in a similar fashion on SSE,  I suspect their proposed merger of their distribution business may well lead to a lower total distribution from the split business, if it does go ahead down the line. Like GSK  though they are also trading toward the bottom of their 5 year range too (see graph at the end). I'll leave you to decide if you think that's a good entry point or not.

Any way just goes to show you can get quite a lot of value in the market at the moment, although I wouldn't necessarily suggest rushing out and buying all the names below as they are a bit of a mixed bag in terms of their scores on the Compound Income Scores, but as part of a diversified income portfolio some of them could do a good job for you.

As ever you should always do your own research and pay your money and take your choice or not as the case may be. Good luck with your investing and don't forget you can get this kind of information and more to help you identify good value, growing, quality  yield stocks if you sign up for the Compound Income Scores. These are now available via Dropbox, Microsoft One Drive as well as Google drive / docs. Alternatively if you would prefer to receive them via e-mail in a spreadsheet of pdf form then please do get in touch & I'm sure we might be able to arrange that too.

...as I guess financial reporting is more efficient these days and lots of companies are getting their figures out before the holiday month of August. So many to go though and other things to do meant I didn't have time to write up any yesterday.

In passing I note that a few companies which feature in the Mechanical Compound Income Scores Portfolio have had updates recently. If that is of interest to you the names concerned have included Jupiter Fund Management (JUP), Renishaw (RSW), and ITV which all seemed fine. While Schroders (SDR) have reported today increased in flows of £8.8bn  a 21% increase in their dividend.

Otherwise in recent days we have had some big yielding blue chips like Glaxo SmithKline (GSK) and Royal Dutch Shell (RDSA & RDSB)  have had results updates and confirmed their plans to maintain their dividends and hence their current 6%+ yields. While expensive consumer stocks like Reckitt Benkiser (RB) and Diageo (DGE) have had mixed updates with Reckitt's raising guidance but cutting the dividend post their demerger of the pharmaceutical arm. While Diageo had a small miss on their earnings but raised their dividend by a better than forecast 9% reflecting their confidence in the outlook for 2016.

Finally in brief amongst many others too numerous to mention today we have had interim results from RPS Group (RPS) which I wrote up in the past and got into when it was sub 200p when the news flow on their oil & gas (O & G) operations was better than expected. However I traded this one out for a decent total return earlier this year when the O & G news unsurprisingly started to deteriorate.

In today's numbers the O & G division and effects of currency translation to a lesser extent have led to around a 7% fall in their earnings in H1, although they did increase the dividend by their "normal" 15%. Despite this they flag that the division, after some judicious cost cutting, has remained profitable with double digit margins. They also highlight the success of their diversification efforts via their "normal" add on acquisitions and suggest they have plans for more after completing a refinancing and extension to their debt facilities. Their net debt was actually slightly down by £0.5m over the period to £72.7m (gearing of around 20%) despite the spend on acquisitions in the period and reflects their strong cash flow, albeit bolstered by a big positive swing in working capital (debtors & creditors).

Looking at last years H1 / H2 split it looks to me, given the fall in the earnings today, that there could be a risk of perhaps 5% downgrades today, unless the acquisitions are expected to offset this in H2 perhaps? This could take earnings down to say 20p which together with the "normal" +15% dividend of about 9.75p would leave it at this mornings 215p (-2.3%) on a reasonable looking 10.75x with a 4.5% yield 2x covered. Thus it looks like it is worth holding / revisiting if you think they can continue to manage the decline in their O & G division and offset this with diversifying acquisitions as they have done recently.

On the chart if you were to do a school boy trend line from the February low that would come in around these levels. But if that fails to hold then the 180p to 200p range might be a good area of support for a purchase / repurchase where it would then be on around 10x with a 5% yield.