The buy-to-let market isnât exactly in a state of collapse, but itâs certainly eroding at an alarming rate as rising tax, maintenance and regulatory costs take their toll. Indeed, latest UK Finance data showed the number of mortgage approvals for buy-to-let purchased dropped 1.5% year-on-year in October to just 6,600.
On account of the paltry returns that British landlords can now expect to make, Iâd much rather go looking for rich investment returns through buying some of Londonâs big-yielding dividend shares. And one such business Iâm thinking of loading up on today is Springfield Properties (LSE: SPR).
A better place
Unlike in the buy-to-let market, mortgage approvals for residential home purchases remain quite robust, reflecting a combination of favourable lending conditions and the assistance of the governmentâs Help To Buy purchase scheme. To illustrate this, the same UK Finance report showed the number of mortgage approvals for first-time buyers rose 2.8% in October to 32,260.
The trading landscape remains quite robust for the housebuilders like Springfield Properties, and thanks to its bulky 4.2% dividend yield for the current financial year (to May 2020) — one that beats the UK mid-cap average of 3.3% into submission — I reckon this one specifically is a top buy today.
But donât just take my word for it. In latest financials released this week, the Scottish business said that the âgood growth across the businessâ that it had witnessed at the start of the fiscal period had continued throughout the first half, adding that it had witnessed âan increase in completions and revenue in both private and affordable housing.â
This is no wonder given the size of the homes shortage north of the border, one that underpins City projections of a solid 9% earnings increase in the present period. An added bonus: right now Springfield is a bargain, trading on a forward P/E ratio of 8.5 times.
Too cheap to miss?
N Brown Group (LSE: BWNG) is another share which, owing to its colossal near-term yields, continues to attract no shortage of attention from dividend chasers. In fact, with a forward reading of 5.5% this share beats Springfield in the yield stakes. A forward earnings multiple of 6.2 times makes it pretty cheap on a bottom-line basis too.
That said, itâs not a share in which Iâd consider investing my hard-earned capital for even a second. It doesnât matter that this particular clothing retailer specialises in the growing plus-size segment, a combination of subdued consumer confidence and intense competition continues to plague trade at the small-cap.
And a report from Deloitte underlined the huge pressures facing the countryâs clothes retailers, one in which it estimated that average discounts could hit 50% by Christmas Eve, such is the struggle to part customers from their cash. In this environment itâs only natural to fear for N Brown and its profits outlook, and by extension, its dividend outlook.