Dividend stocks currently form the core of my portfolio. However, big dividends are often unsustainable. And this is why it’s important to assess whether any firm can continue to pay its shareholders. If the dividend is cut, not only will I get lower returns, I’ll likely see the share price fall too.
So, here are five big-paying dividend shares I’m considering buying before June.
Imperial Brands
Imperial Brands is controversial. Not everyone wants to invest in tobacco. However, the Bristol-based firm currently has a dividend yield of 7.8%, which is very attractive. The share price had been growing until last week when the company announced a fall in profits.
Long-term growth will depend on its ability to build its non-tobacco business as smoking becomes increasingly taboo. But with a price-to-earnings ratio of 7.2, it’s certainly not too expensive.
Synthomer
Synthomer is a personal favourite of mine that I’ve recently bought, and I may buy more. The latex manufacturer is currently offering a 9.5% dividend yield on the back of a stellar year.
The company is forecasting another good year, although demand for latex gloves is likely to fall as we move away from the core pandemic years.
I’m aware, though, that Synthomer has recently taken on a new CEO and has acquired a new business sector. Such changes can be tricky in the short term.
Centamin
Centamin is trading at less than half of its pandemic peak. The gold miner recently announced a hit to profits as revenue fell and it recorded an impairment on assets in Burkina Faso.
However, 2022 is forecast to be better. Production should rise and cash costs are broadly in line with 2021 levels. Greater production and higher gold prices should make 2022 much more profitable.
The firm is also paying an attractive 8% dividend yield. Three of its board members also bought shares on Monday, usually a good sign.
However, a global economic slowdown would likely hurt demand for commodities. As we know, it’s been quite a volatile year.
Lloyds
Ok, so Lloyds isn’t necessarily a big-yield stock like those above. But it’s a blue-chip stock offering an attractive 4.5% dividend yield. It’s also trading in penny territory and I believe the stock has plenty of growth potential. It has a price-to-earnings (P/E) ratio of 5.9, that’s some way below the sector average.
It may also benefit from higher rates as margins increase. Some 71% of Lloyds’ loans are mortgages, so it’s very exposed to property. There might be short-term pain if demand for mortgages decreases on the back of higher interest rates.
Diversified Energy Company
Diversified Energy Company offers a 10% dividend yield at today’s price. DEC is actually the world’s biggest owner of natural gas wells, with over 60,000 in its portfolio. The company is benefiting from higher oil prices this year and saw Q1 production reach 136,000 barrels of oil equivalent per day.
DEC operates mature wells and is therefore responsible for plugging them — which can be an expensive procedure. However, it said that internal plugging capacity was growing and that the firm was set to become a leading provider of well retirement services to third-party operators and to the Appalachian States.
A fall in oil prices could hurt DEC more than other operators with higher margins.