It’s been a difficult year for shareholders, both globally and in the UK. Share prices for a range of companies have been moribund. The end of the bear market that started 16 years ago has proved to be long and drawn out.
But these low prices mean that it has been the ideal time to pick up bargains. And anyone seeking high dividend yields will be spoilt for choice. So here are my three income picks of the moment.
HSBC Holdings
While rivals like Lloyds and Barclays are still struggling with fines and litigation and are only barely profitable, HSBC (LSE: HSBA) made a net profit of £10bn last year. That makes it not only the most profitable bank in Britain, but one of the most profitable companies in this country.
Yet the share price has been on the slide for the past three years. That makes the company one of the best buys in the FTSE 100. This is a bank with substantial businesses in emerging markets such as China, India and Latin America. So there’s potential for further growth.
Yet this is a bank selling at a dirt cheap price. Just look at the numbers. The forecast 2016 P/E ratio is just 8.63, with an income of 8.46%. And with plenty of dividend cover, this is a sustainable income which is more likely to increase than be cut. By any measure, that’s a stonking bargain.
Admiral Group
I’ve long been a fan of insurance companies, as I see a source of consistent earnings and dividends year in and year out. Admiral (LSE: ADM) is a case in point. This firm has been churning out profits every year, and it has a high dividend yield, which is well covered by profits.
As owner of the confused.com and Admiral brands, and a range of online insurance brands in Spain, France and the States, this is a company that’s set to steadily grow profits. That’s why the share price has been rising, yet the numbers are still reasonable.
A 2016 P/E ratio of 19.25 and a dividend yield of 4.96% would appeal to those looking for growing companies with high dividends.
GVC Holdings
Online betting company GVC (LSE: GVC) recently took over rival bwin.party. So this is a growth company, yet it’s also highly profitable one, and last year paid out an impressive 7.54% dividend.
We have yet to see the earnings of the newly merged company, and I suspect the income will be a bit lower. But this company has brands like Foxy Bingo and Sportingbet, and there’s the potential to be one of the leading online betting firms in the world.
That’s why if you want to buy into a business that’s rapidly growing, yet is paying out a healthy dividend, I can’t think of any better company.