Defensive Value Play: Swap BP for RBS

Today I sold my remaining BP shares and replaced them with RBS share at 610p, this follows on from my previous switch where I swapped some BP with Glaxo. The rational is the same as before, I am looking to reposition my portfolio as slightly more defensive in the current economic climate.

So, Why do I view RBS as more defensive than BP? I still like BP, but I think hat RBS offers more value. Traditionally shares with higher yields perform better in bear markets as the yield help to prop up the price since when the price drops the yield increases which makes the share more appealing to potential investors.

So, to compare the fundametals:

As you can see, RBS is cheaper both on yield and PE grounds, I think as well as being more defensive it is also more likely to outperform. Looking at the fundamentals, RBS is forcast to increase its dividend next year to 6.4% with a PE of 7.6.

Annoyingly, straight after selling my BP shares the RBS ones jumped up, but I’m going to try and not let the noise bother me, in what I hope will be good share trade.

To Sum up my BP holding (both this batch and the earlier one), my overall return over 6 months or so was just over 10% (including dividends). Although I think there’s more to go I feel that at this moment RBS offers better value, but we shall see.