Are you a dividend investor? Are you searching for companies with reliable earnings that pay out a substantial amount of the money they make in dividends?
Then here are three firms – a consumer goods company, a defence firm and a restaurant business – that produce consistent yields and would be worthy of addition to your income portfolio.
Unilever
If past performance is any guide, then there will be fewer better investments in the stock market than fast moving consumer goods maker Unilever (LSE: ULVR). Over the past 30 years, through bull markets and bear markets, the share price of this company has increased more than tenfold.
That’s an enviable track record, but it begs the question: can this share keep on rising, or are we due a rocky period? Well, I think the reason Unilever is doing so well is because it’s the answer to a question many investors are currently asking, namely, how do we invest in the boom in emerging markets through a FTSE 100 company?
In fact, it has been answering this question so well that it’s set to make over £6bn in pre-tax profits in 2016, a substantial amount of which it has given away to shareholders as dividends. That’s how strong this global consumer resurgence is. And the thing is, this is a boom that’s only just getting underway.
That explains why Unilever has been busily moving its focus away from the developed world to countries such as India, China and Mexico. I expect this business to continue to progress into the future.
BAE Systems
Is the world becoming a safer place? Well, you might be surprised to hear me say this, I think in some ways it is. That’s why defence companies such as BAE Systems (LSE: BA) are having to adapt to a transformed world.
In developed countries, defence budgets have been slashed. Whether because a more peaceful, connected world really is fighting less or because of the need to divert spending elsewhere, the military around the globe is spending more cleverly. That means fewer soldiers, fewer fighter aircraft, and more technology.
Meanwhile the increasing wealth of emerging markets mean they are, in some cases, actually spending more money on defence.
As BAE Systems has traditionally earned most its money from the US and UK, it’s thus having to move quickly. So this is a company I wouldn’t expect to grow rapidly. But it’s still producing an impressive level of profitability, pays out a current dividend yield of 4.2%, and so may well be worth squirrelling away as a high-yield play.
The Restaurant Group
In contrast to these two giants, The Restaurant Group (LSE: RTN) is a small-cap catering business that owns brands such as Frankie & Benny’s, Chiquitos and Coast to Coast.
And checking the share price graph recently, I’ve noticed the valuation has halved in a few short months, opening up a buying opportunity.
Post-crash, the 2016 P/E ratio is now just 12.27, with a juicy 4.18% income. That looks cheap, and apart from a blip in 2014, this is a company that’s consistently profitable. So investors should consider tucking into this tasty dish.