Have £3k to invest? I’d buy these 5% and 6% dividend yields for my ISA before Christmas

Royston Wild zeroes in on two dividend stars he thinks income investors should consider buying for their Stocks and Shares ISA right now.

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Christmas can be an expensive time of the year, sure, but it’s always worth keeping some pounds left over in case of a brilliant investment opportunity this side of the Yuletide holiday.

On this theme, I’d like to introduce Record (LSE: REC) and explain why it could prove a wise buy ahead of the release of half-year results.

Possible buyers here need to get their skates on though, as that aforementioned update is slated for release this Friday (22 November), though judging from recent trading statements I think the currency manager could be well worth the effort.

Just last month, Record advised that assets under management equivalents grew to £48.6bn from £45.8bn a year earlier, underlining just how favourable market conditions are. Back then, the business commented that “economic, political and market uncertainty continues to prevail” and celebrated “the client engagement opportunities which this creates.”

There’s clearly a lot to be excited about in the run up to end-of-week trading release then. Oh, and one final thing to toast with Record, at current prices it sports a gigantic 6.4% forward dividend yield.

6% dividend yields

I also reckon Cairn Homes (LSE: CRN) is too good to pass up at the current time. 

Its forward price-to-earnings (or P/E) ratio of 16.9 times might not appear unmissable at first glance, though with earnings expected to soar 54% in 2019, the business sports a price-to-earnings growth (PEG) reading of 0.3. This comes in far below a reading of 1 which indicates unmissable value. On top of this, investors can also gobble up a 5.1% dividend yield right now.

And City analysts expect Cairn to keep doing good things in 2020. A further 27% profits advance is predicted, a forecast which lends itself to expectations of chunky annual dividend growth and, consequently, an even-better 5.9% yield.

Business is booming

It’s not a shock as to why the number crunchers are quite so positive either. I’ve touched upon the crushing supply shortage in the UK’s housing market time and again, and the very same imbalance can be seen in Ireland, one that is propelling demand for newbuild properties from the likes of Cairn.

In the six months to June, the company saw revenues and operating profits surge 48% and 51%, respectively, to €192.4m and €27.3m, and trading appears to have remained robust since. Cairn noted then that itrecorded [its] strongest sales period in the year to date in May and June” and that “this has continued through the Autumn 2019 selling season.”

So it’s No wonder Cairn is ramping up build rates to capitalise on this fertile trading environment (it was active on 15 sites as of June versus 12 six months earlier). Like its counterparts this side of the Irish Sea, I would happily but this share today and hold it for many Christmases to come.

RISK WARNING: should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice. The Motley Fool believes in building wealth through long-term investing and so we do not promote or encourage high-risk activities including day trading, CFDs, spread betting, cryptocurrencies, and forex. Where we promote an affiliate partner’s brokerage products, these are focused on the trading of readily releasable securities.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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