5 dividend stocks with 5%+ yields I’d buy now
[ad_1]
Image source: Getty Images
As the cost of living continues to climb, I’m buying dividend stocks to boost the income from my share portfolio. Here are five UK shares with dividend yields over 5% I’d buy today.
FTSE 100 high yielders
FTSE 100 tobacco stock Imperial Brands currently offers a 7.8% dividend yield.
Shares in this turnaround stock still look cheap to me, even after a one-year share price gain of more than 15%. Imperial’s dividend should be covered 1.8 times by earnings this year, giving a nice margin of safety.
Ethical considerations are a concern, as is the group’s low rate of growth. I don’t expect fireworks, but I do think that Imperial looks like a solid dividend stock for high yield hunters.
My second FTSE 100 pick is high street bank NatWest Group (formerly RBS). Rising interest rates mean the UK’s big banks may finally be on track to deliver steady profit growth and some generous dividends.
NatWest recently surprised investors with a 16.8p per share special dividend and a 17% increase to the interim dividend.
My sums suggest the bank will pay out between 20p and 28p per share in dividends this year. That gives NatWest a prospective yield of between 8% and 11%. Although the total payout in 2023 is likely to be lower, the dividend yield is expected to stay above 5%.
NatWest could see bad debts surge if the UK suffers a serious recession. But right now, I think the bank’s shares look like a good way to generate income.
Quality FTSE 250 dividends
One FTSE 250 dividend stock that’s caught my eye is housebuilder Redrow. This well-regarded business is expected to pay a dividend of 31.1p per share this year, giving a prospective yield of 5.5%.
This payout is expected to be covered three time by earnings. That tells me it should be safe, unless the housing market suffers a serious crash.
I’m also reassured to know that founder Steve Morgan still owns 16% of this business. I reckon he’ll keep a close eye on proceedings to avoid any risk of mismanagement.
Another mid-cap company that’s impressed me is Vesuvius. This business specialises in parts and equipment needed to handle molten metal. It’s a big player in the global steel industry, with a long history.
Vesuvius’s pre-tax profit rose by 78% to £117m during the first half of the year as the business bounced back from the pandemic. Management said that trading remains stable and it expects profit to be at the top end of forecasts this year.
A global slowdown could hit demand for steel. But I reckon Vesuvius’s 6% dividend yield will stay safe.
This 6% tiddler could grow
My final choice is payment handling specialist PayPoint. This business operates a network of retail terminals and card machines in more than 60,000 shops and small businesses.
Growth has been a challenge in recent years, but PayPoint has been gradually shifting its focus from cash handling to card services and digital payments. The business remains very profitable, with an operating margin of 35%.
Cash generation is strong, and I reckon the 6.5% dividend yield is safe. PayPoint is probably a higher-risk choice than my other picks, but I think it has interesting growth potential.
[ad_2]
Source link
Image source: Getty Images
As the cost of living continues to climb, I’m buying dividend stocks to boost the income from my share portfolio. Here are five UK shares with dividend yields over 5% I’d buy today.
FTSE 100 high yielders
FTSE 100 tobacco stock Imperial Brands currently offers a 7.8% dividend yield.
Shares in this turnaround stock still look cheap to me, even after a one-year share price gain of more than 15%. Imperial’s dividend should be covered 1.8 times by earnings this year, giving a nice margin of safety.
Ethical considerations are a concern, as is the group’s low rate of growth. I don’t expect fireworks, but I do think that Imperial looks like a solid dividend stock for high yield hunters.
My second FTSE 100 pick is high street bank NatWest Group (formerly RBS). Rising interest rates mean the UK’s big banks may finally be on track to deliver steady profit growth and some generous dividends.
NatWest recently surprised investors with a 16.8p per share special dividend and a 17% increase to the interim dividend.
My sums suggest the bank will pay out between 20p and 28p per share in dividends this year. That gives NatWest a prospective yield of between 8% and 11%. Although the total payout in 2023 is likely to be lower, the dividend yield is expected to stay above 5%.
NatWest could see bad debts surge if the UK suffers a serious recession. But right now, I think the bank’s shares look like a good way to generate income.
Quality FTSE 250 dividends
One FTSE 250 dividend stock that’s caught my eye is housebuilder Redrow. This well-regarded business is expected to pay a dividend of 31.1p per share this year, giving a prospective yield of 5.5%.
This payout is expected to be covered three time by earnings. That tells me it should be safe, unless the housing market suffers a serious crash.
I’m also reassured to know that founder Steve Morgan still owns 16% of this business. I reckon he’ll keep a close eye on proceedings to avoid any risk of mismanagement.
Another mid-cap company that’s impressed me is Vesuvius. This business specialises in parts and equipment needed to handle molten metal. It’s a big player in the global steel industry, with a long history.
Vesuvius’s pre-tax profit rose by 78% to £117m during the first half of the year as the business bounced back from the pandemic. Management said that trading remains stable and it expects profit to be at the top end of forecasts this year.
A global slowdown could hit demand for steel. But I reckon Vesuvius’s 6% dividend yield will stay safe.
This 6% tiddler could grow
My final choice is payment handling specialist PayPoint. This business operates a network of retail terminals and card machines in more than 60,000 shops and small businesses.
Growth has been a challenge in recent years, but PayPoint has been gradually shifting its focus from cash handling to card services and digital payments. The business remains very profitable, with an operating margin of 35%.
Cash generation is strong, and I reckon the 6.5% dividend yield is safe. PayPoint is probably a higher-risk choice than my other picks, but I think it has interesting growth potential.
About The Author
