We’re entering October in a state of economic chaos. Interest rates are climbing, and the pound has slumped. And share prices are suffering too. But there’s nothing I like better than cheap income shares, to help me lock down a healthy long-term dividend stream.
Flooring
James Halstead (LSE: JHD) makes flooring, for commercial and consumer markets. And over the past few years, earnings have been holding up pretty well and dividends have been climbing steadily.
But the share price has been suffering, falling 20% in the past 12 months. Over five years, though, we’re looking at only a 5% fall, so I suspect there’s been a needed correction along the line there.
Full-year results are due on 3 October, and August’s trading update suggests they should be good. The company described turnover as robust, saying it should be 9%-10% ahead of the previous year.
At the interim stage, James Halstead raised its dividend by 5.9%. The full-year forecast dividend yield stands at 3.8%, which is modest. But it’s been strongly progressive. I’ll be doing my research in October for sure.
Investment management
The investment management business has been under pressure. But Rathbone Brothers (LSE: RAT) hasn’t been suffering too badly, with its share price down 12% over the past 12 months.
We have a Q3 update coming on 19 October, which could be crucial in the current environment. The company has previously described the first half as turbulent, but still achieved net positive inflows.
The forecast dividend would yield around 4.5%, rising to 5% by 2024. That’s obviously very uncertain right now. But Rathbone has a record of regular annual dividend increases stretching back more than a decade. And that’s what I really want to see from a long-term income investment.
Whether we’ll get another annual raise remains to be seen. But the company lifted its interim dividend by 3.7%.
FTSE 100 bank
NatWest Group (LSE: NWG) is the third income stock I’ll be watching out for, with Q3 results due on 28 October.
It might be too early to tell what effect the latest economic turmoil might be having on the bank. But we could get some hint.
Banking shares are generally in the dumps, but NatWest has fallen only a few percent over the past 12 months. The sector weakness puts the shares on a forecast price-to-earnings (P/E) ratio of only around seven, which looks cheap to me.
There’s a forecast dividend yield of close to 5% now, so any news on where that’s likely to go will be welcome. I’m not sure if NatWest is the bank I’d buy, but on the whole it looks like a decent income investment to me.
Buy?
I’d do a lot more research before I’d buy any of these three. But following company news on a monthly basis is an effective way to build a list of candidates over the course of the year.