DividendMax Model Portfolio 2012

Here we choose BAE systems for it's superior yield and share buyback programme. It is currently yielding 8.43% on the 3 dividend optimizer. It has a forward P.E of around 7 and is forecast to increase it's dividend by around 5.5%. It has an excellent track record of increasing it's dividend. We would be underweight in this sector due to U.S. Defence cuts, but would still retain a holding rather than a zero weighting.

We choose Close Brothers because of their astute handling of the credit crisis. We are tempted to say 'No banks', but we feel that Close will benefit from any increased activity in the sector, whilst being underpinned by a seriously good dividend.

This was a very close call between Britvic, Greene King and Diageo. In the end, we felt that the pub sector would continue to be under pressure and that Britvic were better value than Diageo.

Balfour Beatty is having a really good time of it of late, winning contracts regularly and is expected to increase profits dramatically in 2012.

There is a great deal of choice in this sector, but in the end, we went for 3i because it allows the investor to spread his or her investments across the globe and across sectors. Add to that the massive increase in the dividend promised for this year and 3i looks good value at these levels. At a 37% discount to NAV, the price just looks wrong.

It is difficult to choose between the big three, but in spite of it's lower dividend cover, we have just gone with the optimizer. At 7.09, Sainsbury is yielding more than a full percentage point more than rivals Tesco and William Morrison

After the success of Hargreaves Lansdown last year, we are going for a recovery play in Man Group.

It pays to have something from this sector due to the global coverage and exposure to the BRIC economies where Reckitts products are in a growth phase. The P/E says fair value, but the yield is unusually high for this sector. So Reckitt still gets the nod over Unilever.

Take your pick. The sector is crammed with high dividend payer's. We are tempted to select more than one stock from this sector. This year we are choosing RSA above Aviva in a reversal of last years choice.. The sector has been hit hard by the level of natural disasters this year. Agreed, that this is bad in the short term, but insurance companies have a habit of putting up their premiums. Then, next year when things are not so bad, funny how the premiums do not come down.

ITV remains our choice for this year as we believe the recovery has further to play out.

Excellent growth being shown and consistently pays high special dividends.

Over 10% on the optimizer and with a solid track record of dividend increases.

AMEC has a fantastic track record of increasing dividends

A higher dividend than BP and no baggage from the deep water horizon spillage

Glaxo is a dividend paying giant with a long time track record of increasing the payout year in, year out and almost always accompanied by share buybacks. With it's new strategy of focussing on growth markets and reducing exposure to the high litigation Pharmaceutical sector, this is a must for any portfolio.

With an incredibly high yield of over 12% on the optimizer, this represents a good recovery play. With £200 million in cash and takeover prospects to boot.

Hays is a recovery play with a high dividend payout.

ARM is expensive, but it's prospects merit this and it's yield is still more than you can get in the building society.

Strong dividend increase last year. This stock is just plain undervalued.

Recovery play