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Highlights
-After ensuring their own financial security, parents usually pass on their assets to children.
-The inherited assets may include a stock, a house, or even a business.
-The best stock options to pass as inheritance are high-dividend stocks of large cap companies.
Wealth is generally passed on from one generation to another and children usually inherit the assets of their parents, be it a stock, a house, or even a business. After ensuring that their own financial needs would be met, even in case of any potential long-term contingencies, parents usually give away their financial assets to their kids or grandkids. But there are some specific considerations about passing on stocks to children, which makes it important to analyse if the stocks should be gifted while the parents are alive or just be passed on as inheritance after their death. This is to avoid the kids from carrying over the cost basis in the stocks of the parents, if the value of the stocks depreciates. Children also may face issues related to inheritance tax.
A great gifting strategy for parents is to give high-dividend stocks to their children as the dividend payments may provide greater financial support to children in the long run. Moreover, dividend paying companies are generally less risky and provide a stable income stream. Dividend paying companies with large market caps are favourable stock options to pass on as inheritance.
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Let’s take a look at some of the stocks you can give away to your kids as inheritance.
BP plc (LON:BP)
London-headquartered BP plc is a UK-based oil and gas company and holds a position among the world's seven oil and gas supermajors. It is listed on the main market of the London Stock Exchange since 1954 and is a constituent of the FTSE 100 index. Its current market capitalisation stands at £70,204.40 million. It has given a return of 58.40% in 1 year. Its average dividend per share stands at GBP 0.16 and its 5-year average dividend yield is 6.9%. The previous close price of BP plc’s shares was GBX 350.65 as on 5 October 2021.
British American Tobacco PLC (LON:BATS)
British American Tobacco PLC is a UK-based world leading cigarette manufacturing company. It is listed on the main market of the London Stock Exchange since 1962 and is a constituent of the FTSE 100 index. Its current market capitalisation stands at £58,513.64 million with earnings per share of 2.80. Its average dividend per share stands at GBP 2.18 and its 5-year average dividend yield is 5.7%. The previous close price of British American Tobacco PLC’s shares was GBX 2,550.00 as on 5 October 2021.
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Vodafone Group plc (LON:VOD)
Vodafone Group plc is a UK-based telecommunications companies which has its operations mainly in Asia, Africa, Europe, and Oceania. It is listed on the main market of the London Stock Exchange since 1988 and is a constituent of the FTSE 100 index. Its current market capitalisation stands at £31,558.85 million. It has given a return of 5.00% in 1 year. Its average dividend per share stands at GBP 0.06 and its 5-year average dividend yield is 6.5%. The previous close price of Vodafone Group plc’s shares was GBX 114.66 as on 5 October 2021.
Imperial Brands PLC (LON:IMB)
Imperial Brands PLC is a UK-based tobacco company. It is listed on the main market of the London Stock Exchange since 1996 and is a constituent of the FTSE 100 index. Its current market capitalisation stands at £14,702.45 million. It has given a return of 8.09% in 1 year with earnings per share of 1.58. Its average dividend per share stands at GBP 1.41 and its 5-year average dividend yield is 8.4%. The previous close price of Imperial Brands PLC’s shares was GBX 1,553.50 as on 5 October 2021.
EVRAZ plc (LON:EVR)
Evraz plc is a UK-based company with focus on steel making and mining. It is listed on the main market of the London Stock Exchange since 2005 and is a constituent of the FTSE 100 index. Its current market capitalisation stands at £8,437.06 million. It has given a return of 62.88% in 1 year and with earnings per share of 0.58. Its average dividend per share stands at GBP 0.91 and its 5-year average dividend yield is 10.4%. The previous close price of Evraz plc’s shares was GBX 578.40 as on 5 October 2021.
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