Regular readers will know I’m more than a little fearful over the profits outlook for Lloyds Banking Group and its industry rivals due to the uncertainty created by Brexit negotiations for the near-term and beyond.
Whether or not you share my bearish opinion, I would encourage you to consider looking closely at these two dividend heroes before the FTSE 100 bank. They even carry bigger forward yields than the 5.6% Lloyds currently offers.
Safe as houses
Despite the stream of cracking trading releases still coming from across the housebuilding spectrum, the Telford Homes (LSE: TEF) share price has failed to gain the traction of its peers.
It’s not a surprise to see the AIM-quoted firm continue to struggle, even though low forward P/E ratio of 8.6 times gives it plenty for bargain hunters to get stuck into. Meanwhile its gigantic 6.1% dividend yield makes it one of the biggest-paying builders out there.
Telford has been the victim of slowing demand more recently, reflecting its strong bias towards the struggling London market. Problems here caused it to shave £10m off its full-year profits forecasts for the period to March 2019 in late February. And it’s possible things could remain difficult through the remainder of the current fiscal year, at least.
Having said that, I would argue long-term investors should consider capitalising on the 40%-plus slide in Telford’s share price over the past 12 months.
In response to its recent troubles, the business has vowed to redouble its efforts in the fast-growing build-to-rent market, a segment which is expected to represent 50% of the company’s development pipeline by the close of the calendar year.
In particular, Telford’s focus on the capital bodes particularly well as rental levels boom. Business campaigning group London First predicts by 2025, some 40% of all households in London will live in the private rented sector, versus 28% as of a few years ago.
Fancy some yields above 7%?
There’s plenty of upside for Telford’s profits to grow once confidence in the London property market improves. But if you’re not convinced, why not take a look at International Personal Finance (LSE: IPF) instead?
Unlike the housebuilding giant, IPF sources no profits from these shores and is, instead, geared primarily towards Central and Eastern European nations such as Poland, Hungary and Czechia. The prospect of runaway economic growth in these emerging nations isn’t the only reason to expect the financial giant’s bottom line to thrive, either, because of the success of its push into the fast-growing digital credit market (credit issued at its IPF Division unit soared 33% in the first quarter).
Currently, IPF sports bigger yields than Telford (and Lloyds for that matter), the business yielding an enormous 7.6% for the current fiscal period. It also trades on a dirt-cheap forward P/E ratio of 5.8 times. For those seeking big dividends on a budget, it’s a pretty terrific stock to buy, in my opinion.