Forget the FTSE 100! Here are 3 dividend stocks to consider for maximum income
Image source: Getty Images
I FTSE 100It’s a great place for investors to hunt for dividend stocks. However, those stuck with the UK Flagship index may be missing out on great opportunities elsewhere.
Here are three good passive stocks that I think stock pickers should consider today.
As you can see, their dividend yield for next year breaks Footsie’s 3.5% forward rate to smithereens. I am sure that these companies can pay big and growing dividends for years to come.
ITV
ITV has had a difficult few years due to evaporating advertising sales. But with marketing budgets expanding, now may be the time to consider buying the streaming giant.
In the long run, there are other reasons why I like ITV’s share. The company’s bet is big on the fast-growing streaming sector, and it’s paying off handsomely. Third-quarter earnings showed streaming hours on its ITX platform rose another 14%.
Remember though, that high competition from the likes of Netflix it jeopardizes future growth.
I also like the huge investment ITV has made to build the world’s best production arm. Organic revenue at ITV Studios is expected to grow, on average, for the sector by 5% until 2026.
In 2025, the forecast dividend is covered twice by expected dividends. This stands out from the widely-regarded security benchmark.
Tired of it
As a major auto distributor, Inchcape’s profitability is at risk during the recession. Selling big-ticket items is often the first thing to do when people feel low.
Yet despite these threats, dividends over the next few years look secure, in my book. By 2025, the forecast share is covered 2.4 times by expected earnings, providing a wide margin of error.
With operations in 40 countries, the company enjoys geographic distribution that helps reduce profitability risk and dividend volatility.
Speaking of distribution, I like Inchcape’s decision to sell its UK retail operations earlier this year and become a pure play distributor.
A double take here – described by the company as “higher margins, more financial light, higher returns, more profitable, compared to sales-only businesses” – well agreed, in my opinion. Improved cash flow can certainly give dividend growth a big boost.
Take care of REITs
Care REIT – until last month known as Impact Healthcare REIT – also enjoys a healthy dividend cover, 2.1 times.
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.
This adds more strength to an already strong dividend stock. As a maintenance and housing service, it operates in the defense sector where rent collection is less affected by broader economic conditions.
It doesn’t end there. All of its contracts are 100% inflation linked, protecting profits from rising costs. And Care REIT has its tenants locked into very long leases (the maximum unexpired lease term is over 20 years).
Real estate investment trusts (REITs) like these must pay out at least 90% of the profits from their rental activities in the form of dividends. Although income is offset by high interest rates, I think it’s worth serious consideration for diversification investors.
Source link
