Finding reliable dividend stocks in today’s tough markets isn’t easy. But there are still some reliable income shares out there. For this piece, I’ve chosen a diversified mix of five FTSE 100 stocks. Put together, they offer an average forecast yield of 5.5%. I think they could be the best UK shares to buy now for income investors.
A healthy performance
Sales at pharmaceutical giant GlaxoSmithKline rose by 19% to £9.1bn during the first quarter of this year. Adjusted earnings rose by 25% during the same period.
The company did warn that much of this increase was down to stock building and isn’t likely to be sustained during the rest of the year. But even excluding these gains, I think the figures showed good signs of growth across the firm’s main ranges.
I’ve covered Glaxo in more depth recently, but in short I think the firm’s improving portfolio and 5% dividend yield offer value for investors. I remain a long-term buyer.
Commodities: best share to buy now
I think that most diversified portfolios should have exposure to commodities such as oil, iron ore and copper. Like it or not, these raw materials are still needed to make the world go round.
However, I have strict rules about commodity stocks. I only invest in profitable, well-established businesses that pay regular dividends. One stock I like very much in this sector is BHP. This Anglo-Australian group covers all the main commodity classes, thanks to its mix of oil and mining assets.
BHP has a strong focus on dividends and this year’s 5.1% payout looks safe to me.
Consumer dividends
Some shopping habits don’t change much, even in a recession. The food and cleaning products sold by consumer goods group Unilever are a good example. Brands such as Domestos, Hellmann’s, Dove and Persil aren’t likely to go out of fashion, in my view.
Unilever’s star is rising at the moment and the shares don’t look cheap to me. But the stock’s 3.1% dividend is enough to be worthwhile and hasn’t been cut for more than 50 years. I think this is one of the best shares you can buy today.
8% yield: better than a bank?
Savings and asset management group Legal & General has become one of the biggest players in the bulk annuity pension market in recent years. In 2019 alone, L&G bought up £11.4bn of pension schemes from companies.
Despite this strong growth, Legal & General’s cash generation has remained very strong. Last year’s dividend was covered comfortably by surplus cash and there’s no sign yet this year of any change to this situation.
This year’s forecast yield of 8.4% should be covered 1.6 times by earnings. I rate Legal & general as an income buy.
Utilities: best share to buy now
My final pick is utility group National Grid. In the UK, this business makes its money from operating the gas and electricity transmission networks. Handily, this means it’s not directly exposed to commodity prices or consumers.
The group’s US utility business adds some diversity, although it’s suffered extra costs in this year’s pandemic. The main risk to the dividend is that tougher regulatory settlements will put pressure on profits.
Despite this, I think the stock’s 5.5% yield is worth buying for income investors today.