3 FTSE 100 and FTSE 250 shares I could buy to direct an income of £1,110!
Image source: Getty Images
I FTSE 100 again FTSE 250 share indexes are good places to go hunting for dividend stocks. It includes many established companies with mature business models, and generating excess cash flow that can be returned to shareholders.
Today, I'm looking for the best stocks with the highest dividend yield to buy for my portfolio. But this is not all I need. I also look for businesses that can provide a steady and growing payout over time.
With this in mind, here are three that I'm seriously considering adding to my Stocks and Shares ISA today. Each has a dividend yield that comfortably exceeds the FTSE index's average of 3.5%.
If the broker's predictions are correct, a total of £15,000 invested equally across the three companies would earn me £1,110 in income this year alone.
Dividends have never been confirmed, but I am confident that these stocks will meet current dividend forecasts. That's why I think they can be the top stocks to buy for long-term profit.
IM&G
Buying dividend stocks that are covered less than 2 times expected earnings can be risky. This is certainly the case with M&G, where expected payouts and dividends are at the 2024 level.
However, a strong balance sheet can help mitigate the impact of lower-than-expected earnings. And the financial services giant has plenty of cash on its books to support its dividend policy. Its Solvency II ratio was 203% as of December, up four points on the year.
I think strong cash generation and growing sales will increase profits in the long run. Demand should increase as demographic trends raise the demand for savings and investment products.
ITV
The broadcaster's ITV profit cover also falls under that 2x security watermark. But at 1.8 times, the company has a good cushion in case profits slow down. Disappointing advertising sales remain a threat as the UK economy slows.
In addition, the Love Island A manufacturer can also – like M&G – use its financial strength to help pay bigger dividends. Its net-debt-to-adjusted-EBITDA ratio has been falling, and was just 0.9 times as of June.
The success of ITV's fast-growing broadcast business bodes well for profits and gains in the coming years. Monthly active users jumped 17% in the first quarter, the latest figures showed. I also think that the expansion of the ITV Studios unit is a positive result for future shareholder returns.
Urban Logistics REIT share price
Urban Logistics REIT is, as the name suggests, a real estate investment trust. This is very beneficial for equity investors. In order to get some tax benefits, these companies pay at least 90% of the annual rental profit to the shareholders.
This does not guarantee a large and growing dividend. Declining occupancy rates and missed rentals can harm a REIT's ability to provide passive income.
Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content of this article is provided for informational purposes only. It is not intended to be, and does not constitute, any form of tax advice.
However, I am confident that Urban Logistics will increase its dividend quite a bit over the next decade. This will be supported by increased demand for warehouse and distribution space as e-commerce grows and changes supply chains.
With a loan-to-value (LTV) ratio of 29.3% in March, the business also has low gearing that supports near-term dividend forecasts.
Source link
