These British dividend stocks all offer dividend yields well above the market average. Should I buy them for my Stocks and Shares ISA today?
Direct Line Insurance Group
Dividend yield: 9.2%
Soaring petrol prices pose a danger to major car insurers like Direct Line Insurance Group (LSE: DLG). According to petrol retail researcher Experian Catalist, UK petrol prices just printed their largest daily gain for 17 years. In this landscape people might start leaving their cars parked up in increasing numbers.
I still find Direct Line highly appealing from an investment perspective, however. It offers a wide range of product lines like home, landlord, pet, and cycling insurance. History shows us that spending on general insurance products like these remain robust even during economic downturns.
I also like Direct Line because of its exceptional brand power. Established brands including Direct Line and Churchill command strong customer loyalty and by extension strong client retention rates. Robust retention pushed the number of in-force policies among Direct Line’s own Home brands 2.3% higher in 2021.
Imperial Brands
Dividend yield: 8%
Demand for Imperial Brands’ (LSE: IMB) shares has rocketed thanks to the company’s defensive qualities. The tobacco giant can expect demand for its goods to remain more stable than those of other cyclical shares. As a result, its profits and dividend levels could remain strong even as the broader economy dives.
I’m not prepared to buy Imperial Brands despite its big dividend yield, though. You see the business has halved in value over the past five years as legislators have stepped up the fight against the sale and use of tobacco. The direction of travel is very much against Big Tobacco businesses like this too.
A report commissioned this week by the UK health secretary, for example, suggested that the smoking age should be set at 18 and rise each year until cigarettes can’t be sold anymore. Meanwhile in the US, the Food and Drug Administration is pushing ahead to prohibit the sale of menthol cigarettes.
The pressure by legislators is rising across the globe and this makes the likes of Imperial Tobacco a risk too far for me.
Legal & General Group
Dividend yield: 8.4%
The amount people spend on financial products over at Legal & General Group (LSE: LGEN) could suffer badly as the cost of living crisis bites. But as a long-term investor, I think owning Legal & General shares could be a good idea. And that market-smashing dividend yield makes the FTSE 100 firm a great buy today.
Legal & General has plenty of things going for it. I expect sales of its pensions products and retirement services to steadily rise amid Britain’s rapidly ageing population.
With interest rates remaining below historical norms, it’s likely that demand for its investment services will remain robust too as people seek a decent return on their spare cash. Finally, I like Legal & General’s exceptional brand strength, which it has carefully cultivated for almost 200 years.
Legal & General has long been a lucrative FTSE 100 stock for dividend chasers. I expect it to remain so for a long time too.