Many investors already have a selection of stocks in their portfolio. One way of reducing the volatility of your portfolio, is to own businesses in a variety of industries, that are exposed to different parts of the economy. However, it is more important that the individual companies you buy have good prospects and are bought at a reasonable price. With that in mind, here are 5 companies with diverse businesses that are trading at reasonable prices today.
1. Mighty River Power (ASX: MYT)
This NZ utility gives you a safe dividend and minimal exposure to commodity price rises. This is because most of the power Mighty River generates is from base load renewable sources (geothermal and hydro). It also gives you exposure to overseas revenue. No utility’s business model is completely safe in this era of rapid technological change in power systems. However, I believe this progressive New Zealand company is one of the better ones. Mighty River Power is buying back its own shares and the forecast dividend yield for the current financial year is over 5.5%, at the current share price and exchange rate.
2. Washington H Soul Pattinson (ASX: SOL)
WHSP gives you instant diversification on its own. The share price is up 4.65% since I wrote about it a month ago but I believe the share price is still reasonably attractive. WHSP pays a dividend of 3.2% and is exposed to both construction and commodities. It also has an important holding in TPG Telecom (ASX: TPM), which I consider to be the most attractive of the large Australian telecommunications companies.
3. NRW Holdings (ASX: NWH)
NRW Holdings is undoubtedly a cyclical play, but it pays a decent dividend and is among the better companies in the mining services sector. NRW Holdings is up 44% since I wrote about it in June. It also paid a 5% fully franked dividend since then. Despite the fact that the margin of safety has eroded, NRW Holdings is still a good option for people who want some exposure to mining.
4. Servcorp (ASX: SRV)
It’s rare to find a company as attractively priced as Servcorp in the current market. Again, this company is in a cyclical business as it leases serviced offices in buildings throughout the world. It currently boasts a P/E ratio of less than 20 and yields over 3.8% at least partially franked. Motley Fool contributor Peter Andersen covered the company in this article. Some of the investors that I admire most are on the register, and Servcorp also benefits from the involvement of the founding Moufarrige family. It appears to trade at a far more attractive price than main competitor Regus (LON: RGU).
5. My Net Fone (ASX: MNF)
In June, I made an incorrect call on this company, underestimating the synergies that would be extracted from the acquisitions in FY2013. I now consider it one of the better options in the telecommunications sector. The company is currently transitioning from a focus on residential customers, to a focus on small and medium sized businesses. Board and management are honest, competent, and on the lookout for sensible acquisitions. CEO Rene Sugo and Chairman Terry Cuthbertson showed a welcome willingness to engage with shareholders at the recent AGM. My Net Fone yields almost 2.5% fully franked, and the dividend is very likely to grow.
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Motley Fool contributor Claude Walker owns shares in Servcorp and My Net Fone, and has an interest in Mighty River Power through a managed fund. Follow @claudedwalker