Concentrating on stocks that offer a substantial dividend yield could provide a useful focus for investors considering entering the market in the current uncertain environment, NCB has said.

The key for investors is to successfully identify stocks that not only offer a yield comparable to the bond yield but where there is a high degree of comfort that the dividend is safe, the stockbroker says.

AIB and Bank of Ireland, which offered a gross dividend yield of 3.9 per cent last year, and Irish Life & Permanent, which yielded 5 per cent in 2002, are the Irish stocks that it believes best meet these criteria.

"Not only do we think these dividends are safe but we also continue to expect ongoing growth," NCB says.

It has also added fruit group Fyffes to its list of safe, high-yielding stocks, noting that the dividend is underpinned by strong cash characteristics in both the profit and loss account and the balance sheet. Last year, Fyffes yielded 4.2 per cent, comparable to the current yield on the 10-year Government bond.

Other brokers have also pointed to the strong dividend performance of Irish companies of late.

While the yield on the Irish market is lower than elsewhere in Europe, dividend cover is better at a healthy three times and there have been few dividend disappointments in the recent reporting season, Davy says.

The stockbroker notes that, of the 24 companies that paid a dividend in 2001 and have reported to date for last year, 21 have increased their dividend, two have maintained their payout while just one has cut.