Never has the hunt for yield and good quality income flow been so great, a situation exacerbated by constant volatility and uncertainty and ultra low interest rates and government bond yields. For the slightly more adventurous conservative investor substantial and relatively safe yields can be found in the stock market, though they do come at a price as quality can be expensive in the current environment.

The first two companies Primary Health Properties (PHP) and HICL Infrastructure (formerly HSBC Infrastructure) are considered by some analysts to be like quasi-government bond securities as their revenues are largely guaranteed by the state. Though these two companies are very safe bets by equity standards, they do nonetheless carry operational risk, which is not the case for Gilts. Also, there is always regulatory risk, but the UK government tends to be careful about tinkering too heavily with existing contracts for fear of damaging future investment in the public sector. However, these risks are more than compensated for by their inflation-busting yields.

Just what the doctor ordered

Primary Health Properties (LON:PHP) is a healthcare real estate investment trust – a property company, which lets out modern purpose built medical centres mainly to doctors and dentists across the UK. There's certainly no speculative development for PHP or glamorous trophy buildings to adorn the annual report, but therein lies its 'nice' qualities. Nothing is built until it is pre-let and the lets can be for over a decade with rents linked to inflation. Most of its properties are worth less than £10 million making them relatively straight forward to build and manage in contrast to say a skyscraper. Another positive factor is that it's properties tend to be 99% let. For a property investors it doesn't come much better than that.

PHP really showed its mettle during the financial crisis where revenues remained stable and their were no cash flow crises. This stands in sharp contrast to say British Land, which struggled during the height of the financial crisis. In 2009 PHP did conduct a cautionary rights issue to beef up its equity buffer in case it breached its loan covenants with banks as all commercial property values were under pressure. But as it turned out, this was very profitable for shareholders who took up their rights. All in all this is probably one of the…

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