Are you looking for reliable dividend stocks to help you ride out the Brexit storm? These five income heavyweights could be just what you’re looking for.
A long-term 6% yield?
Insurance giant Aviva (LSE: AV) has made good progress with its turnaround over the last three years. Yet despite the dividend being rebuilt to 20.8p from its 2013 low of 15p per share, most of the share price gains seen since that time have been reversed.
Aviva shares currently trade on a 2016 forecast P/E of 7.8. This year’s expected dividend yield of 6% should be covered twice by earnings per share. Analysts expect further earnings and dividend growth in 2017. In my view, Aviva remains a buy.
Is this market recovering?
Home and motor insurers like Direct Line Insurance Group (LSE: DLG) have been suffering from intense price competition over the last few years. But there are signs that market conditions are improving.
Direct Line’s gross written premiums for on-going operations rose by 4.2% during the first quarter. This compares to a 0.9% fall during the same period last year. City analysts have remained confident in the outlook for Direct Line, despite Brexit. The shares currently trade on 12 times 2016 forecast earnings.
Forecasts suggest Direct Line will pay ordinary, plus special, dividends of 24.8p per share this year, giving a whopping forecast yield of 7.3%. I believe Direct Line may be worth a closer look.
Profit from payment tech
Shares of corner shop bill payment firm PayPoint (LSE: PAY) has risen by 75% over the last five years. The dividend has risen by 60% over the same period, during which PayPoint has retained a net cash balance.
Pay point’s strong record of growth and cash generation suggests to me that this stock could offer decent value. While the 2016/17 forecast P/E of 15 isn’t an obvious bargain, the forecast yield of 5.3% is attractive and further growth is possible.
A big income from property?
Shares of retail property investment trust NewRiver Retail (LSE: NRR) have fallen by 10% so far this year. This has left the shares trading broadly in line with their net asset value. That’s not especially cheap for a REIT, but NewRiver have a couple of advantages. Gearing is much lower than the sector average, with a loan-to-value ratio of just 27%. A level of 35%-40% is more typical.
There’s also an above-average forecast dividend yield of 6.5%. NewRiver is planning to move from AIM to the LSE main market later this year. This should put the stock into the FTSE 250 and could trigger a round of institutional buying.
An oil recovery play
Oil services firm John Wood Group (LSE: WG) has been one of the strongest performers in its sector during the oil market downturn. The firm has proved the value of keeping debt levels low and focusing ruthlessly on cash generation.
Although Wood Group’s forecast yield of 3.7% isn’t as high as some of the others I’ve mentioned in this piece, the company expects to increase its well-covered payout by “a double-digit percentage for 2016”.
Profit margins are likely to remain lower than in the past, but companies like Wood Group remain indispensable to oil producers. On 14 times 2016 forecast earnings, I think the shares look a reasonable buy.