The update opened with a headline announcing “strong progress against core strategic initiatives“. So what was the bad news hiding behind it?

Share price plunge

The Sabre share price had been picking up a bit in 2022, following on from a previous year of weakness. But then this happened, as the share price chart shows.

It’s all down to plummeting profits in the half, as the motor insurer reported inflationary pressure on its cost of claims.

The “extraordinary inflationary pressures” spoken of have led Sabre to change its strategy. It’s putting up prices in an effort to support profitability, at the expense of pursuing new customers to grow the business.

The bottom line is not pretty, with H1 profit after tax plunging to £3.5m. That’s after an £18m profit in the same period the previous year, and a profit of £30m for the whole of 2021.

Contagion

The surprise news has already sent ripples through the motor insurance sector. At the time of writing, the Direct Line Insurance Group share price has dipped by 10%. And Admiral Group shares are down a heftier 14%.

Sabre said it continues “to expect to pay a dividend for 2022, albeit at a reduced level, before returning to more normal levels in 2023.“

I’m not quite sure what normal levels mean, or whether this will instil any real confidence in investors. Sabre’s dividend did yield 4.6% last year. But the annual payments had been falling for a couple of years as earnings had been declining.

Rapid rebound?

So what next? Chief executive Geoff Carter said: “We believe that taking prudent and assertive action now, in conjunction with our normal pricing discipline, means that we are protecting the underlying profitability of the business, and will allow a rapid rebound to our expected levels of performance.”

So is Sabre Insurance an attractive recovery buy now, in the hope that these expected levels of performance will return?

Well, Sabre shares had been on a price-to-earnings (P/E) ratio of about 15. And in the current market, I can’t help seeing that as a bit high. Direct Line, by comparison, is on a multiple of approximately 10, while Admiral is down closer to seven.

Watching the sector

What the P/E might turn out like when full-year earnings are out is the big unknown. And it’s going to be very hard for investors to work out any kind of objective valuation until then.

Meanwhile, I’m sure all eyes will be peeled for first-half results from Sabre’s motor insurance rivals. Direct Line has first-half results due on 2 August. And Admiral is set to deliver its H1 figures the following week, on 10 August.

So what’s my take on the Sabre Insurance share price slump? Right now, it’s just too hard to form an opinion on whether it’s overdone and whether I’m looking at a recovery candidate. I’m just going to keep watching.

Here are three companies I would buy today, all of which offer dividend yields of 6%, or more. 

UK dividend shares

The first company on my list is the Gore Street Energy Storage Fund (LSE: GSF). With a dividend yield of just over 6%, at the time of writing, I think this company looks incredibly attractive as an income investment. It is also an excellent way for me to build exposure to the green energy industry. 

Gore Street buys and builds energy storage facilities. The goal of these facilities is to stabilise the electricity supply through the peaks and troughs of renewable energy generation. The market for this energy storage capacity is only likely to increase as the country invests more and more in renewable energy. 

Still, this is not a risk-free investment. The company has been using a lot of debt to fund its expansion. This could have an impact on profit margins if interest rates suddenly increase. 

Insurance challenger

Mid-cap insurance group Sabre Insurance (LSE: SBRE) offers a dividend yield of around 6.3%, at the time of writing. The company helps consumers find car insurance and has been doing so for several decades. It owns a portfolio of well-known brands, although these only make up a relatively small share of the overall car insurance market. 

The company’s smaller size is not a significant drawback. It can actually be beneficial, especially in a market where insurance rates are falling. In these weak markets, Sabre can pick and choose its customers to maximise profitability. 

Despite this advantage, the company’s most considerable challenge is competition and the potential for additional regulations, which could hit profit margins. 

Global giant

Vodafone (LSE: VOD) is one of the most respected dividend stocks in the FTSE 100. That is why I would buy the telecommunications giant for my portfolio today as an income play. At the time of writing, the stock supports a dividend yield of 7%, which is more than double the market average. 

I am optimistic about the company’s potential because its infrastructure network across Europe means it is one of the largest data-driven network providers. This is a strong competitive advantage in a world that is increasingly driven by data and data processing. 

Cash flows from the organisation’s telecommunications business should more than cover its dividend as we advance, although I am worried about the company’s debt.

Vodafone’s debt levels have increased rapidly over the past 10 years, and management needs to focus on reducing borrowing, or it could jeopardise the group’s financial position. 

Even after considering this risk, I think the company has attractive income credentials. 

A hangover from Covid-19 lockdowns, a soft pricing environment, and weak car sales owing to supply chain issues have all caused trading to disappoint. It’s possible that some or all of these problems will continue to hamper the dividend stock into 2022 too.

However, as a long-term investor, I’m extremely tempted to buy Sabre shares at current prices. This is primarily because the insurer carries a mighty 6.7% dividend yield for 2022. It’s also because there’s a chance Sabre may have touched rock bottom. And that means premiums may start rising again from next year. It recently commented that “further tentative signs that market prices may be starting to correct.”

I’m also encouraged by Sabre’s potentially-lucrative entry into the motorcycle segment this month. It’s signed a deal to become exclusive underwriter for MCE Insurance, one of the biggest bike insurance distributors in the business.

Going green

The not-so-snappily-titled Triple Point Energy Efficiency Infrastructure Company (LSE: TEEC) is another dividend stock I’m considering buying. And it’s not just because its yield sits at a decent 5.3% for the fiscal year to March 2022. Renewable energy stocks like this could prove to be shrewd assets to own as demand for low-carbon electricity shoots through the roof.

TEEC invests in a broad range of ‘green’ energy projects to help the government hit its net zero target by 2050. Its most recent bit of business in September saw it snap up a portfolio of hydroelectric power projects in Scotland.

Its best-known investment to date is in combined heat and power (or CHP+) assets on the Isle of Wight which supply heat, electricity and carbon dioxide to APS Salads, the UK’s largest producer of tomatoes.

Now TEEC isn’t one of the biggest renewable energy stocks out there. But it has a packed acquisition pipeline that could help it generate big shareholder returns in the future. I’m thinking about buying it even though, like any acquisition-focussed entity, it faces the constant danger of overpaying for an asset.

A brilliant dip buy

The PayPoint (LSE: PAYP) share price has fallen significantly in recent weeks. And as a bargain lover this has set my antenna quivering. The retail technology giant now trades on a P/E ratio of 12 times for the fiscal year to March 2022. Furthermore, its dividend yield has jumped to a mighty 5.8%.

PayPoint makes terminals which allow retailers to execute transactions, receive parcels and take bill payments from customers, and benefit from EPOS functionality. Its technology is cutting edge and demand for its PayPoint One terminals continues to steadily climb. It installed an extra 324 machines during the three months to June.

A high-profile failure of its systems could prove devastating for PayPoint’s profits. But although a past lack of such problems isn’t necessarily a reliable indicator for the future, I’m reassured by the company’s record on this front.

FTSE 250 dividend stocks

The first company I’d buy for my portfolio of dividend stocks is the insurance business Sabre Insurance (LSE: SBRE).

With a historical dividend yield of around 8.2%, this company offers one of the highest dividend yields in the FTSE 250. However, analysts expect the payout to fall this year due to the pandemic.

On a forward basis, the company could yield 5.6%. That’s still pretty good in my eyes. While the organisation remains cautious about the rest of the year, Sabre is starting to see an improvement across business lines, according to its recent trading update. I think this could support future dividend growth. 

The biggest challenge the business faces is remaining competitive in the fiercely competitive UK car insurance market. If Sabre can’t stay ahead of its competition, the company could struggle to grow. This would hurt profit and dividend growth. 

Even after taking this into account, I would buy the company for my FTSE 250 dividend stocks portfolio. 

Growing profits

I would also buy Jupiter Fund Management (LSE: JUP). According to the company’s latest trading update, for the three months ended 31 March, assets under management (AUM) were £58.8bn, up £0.1bn from the end of 2020.

As the company earns a management fee on the assets under its administration, rising AUM indicates higher profits. That’s just what City analysts are expecting for 2021. They’ve pencilled in earnings growth of 7.8% for the year. 

Based on these forecasts, the stock trades at a forward price-to-earnings (P/E) multiple of 10.7. I think that books cheap, especially when combined with the company’s 6.4% dividend yield.

The main risks and challenges facing the business today are competition, which could force the company to lower management fees. More regulation may also lead to increased costs, which could depress profit margins and profitability.

Despite these risks, I would still buy. 

Rebound expected 

Most financial companies reported significant losses last year as they prepared for defaults due to the coronavirus crisis. Close Brothers (LSE: CBG) was no exception. Group net income slumped around 50% last year. 

However, analysts are expecting a strong recovery over the next two years. Net income could return to pre-pandemic levels by 2022, according to City projections.

Based on the fact that many other lenders have recently been revising their losses lower due to fewer than expected write-offs, I think the company stands a good chance of outperforming these projections. Although, I should say this is just my view, and it is far from guaranteed. Another coronavirus wave could send losses skyrocketing, and this would set Close Brothers’ recovery back by as much as a year. 

Still, with a dividend yield of 3.6% at the time of writing, I would add the company to my portfolio of FTSE 250 dividend stocks. 

In fact, I’d buy this insurance giant before full-year results come are released on Tuesday, March 16. Sabre Insurance earlier declared that “an attractive full-year dividend” could be coming down the pipe.

I feel that this FTSE 250 share’s operating model should lay the foundations for bulky dividends long after 2021 too. Its brands like Insure2Drive and Drive Smart are niche operations that offer insurance to drivers who struggle to get cover elsewhere. This translates into higher premiums that in turn create excellent profit margins and help produce lots of cash.

Car sales are slipping

Of course no UK stock is without its risks. And Sabre Insurance faces a couple of not-insignificant problems in the near term and beyond. New car sales in Britain are falling, putting pressure on the average premium sizes that insurers enjoy. The Society of Motor Manufacturers and Traders (SMMT) has said that new vehicle demand slumped 35% last month, the worst February result since 1959. The body cut its 2021 sales forecasts by 60,000 units too, to 1.83m.

Shuttered car showrooms and Covid-19 lockdowns have obviously fed through to those shocking SMMT numbers. Though it’s possible that new vehicle sales could continue to struggle as the year progresses. A lumpy economic recovery could cause individuals and companies to hold off spending on new sets of wheels. Ongoing uncertainty over vehicle emissions legislation in the UK might keep damaging new car volumes too.

A long-term worry for UK insurance shares like Sabre is the steady fall in the number of new drivers. Test pass rates in Britain fell to four-year lows in 2019/20, latest data shows. It reflects the growing cost of driving lessons and changes to testing. But it’s also been caused by the rising cost of motoring and growing environmental awareness.

A top UK dividend share

That said, I still think Sabre Insurance is an attractive pick at current prices.

City analysts expect annual earnings at the company to fall 3% in 2021 before rebounding 6% in 2022. As a consequence, Sabre trades on a forward price-to-earnings (P/E) ratio of 16 times. It’s a figure I think makes the UK share much more attractive than fellow car insurance giant Admiral. The latter trades on an earnings multiple that sits in the mid-20s for 2021.

As I suggested earlier, the prospect of big dividends is why I think Sabre Insurance looks like a great ISA buy. The company’s balance sheet is rock-solid and solvency coverage of 186% in September flew above its target range of 140% to 160%. Consequently, City brokers are tipping big dividends for both 2021 and 2022, which create chunky yields of 6% and 6.3% respectively.

I reckon that buying these shares today could help you beat the market for many years to come.

You may wonder why I’m ignoring coronavirus vaccine stocks like Synairgen, which has risen by 500% in two weeks. The reason for this is simply that I think it’s too late.

Synairgen and its rivals are now priced for huge success, but at least some of them will disappoint investors. When that happens, their share prices could crash.

Coronavirus stock #1: Foxtons

Estate agents have been hit hard by the pandemic. London-focused Foxtons (LSE: FOXT) is no exception. Foxtons’ share price has fallen by 60% from its February high, but I think the shares are now looking too cheap.

The latest report from the company tells me that Foxtons is very unlikely to run out of cash, even if we see a long housing market slump. Net cash was £40.5m at the end of June and the company’s operations generated underlying positive cash flow of £4.6m during the half year.

Of course, business isn’t good at the moment. Revenue fell by 20% during the half year and the group reported an accounting loss of £4.3m for the period. But housing activity is returning and Foxtons also has a stable lettings business. Over time, I’m confident the shares will recover. I think Foxtons’ share price could double over the next few years.

Coronavirus stock #2: AG Barr

Soft drinks are generally seen as a defensive product. Demand doesn’t change much, even during a recession. However, sales can suffer when every pub, café, and restaurant in the country is closed, as we saw during lockdown.

What’s interesting about Irn-Bru maker AG Barr (LSE: BAG) is that according to the firm, only 10% of sales are made to the hospitality trade. More than 80% of sales are impulse buys or are made through supermarkets. As a result of this sales profile, the company still achieved 88% of last year’s sales during the April-June lockdown period.

Revenue for the six months to 25 July is expected to be down by just 8%. Profits for the full year are expected to be lower, but I don’t see this as a concern. AG Barr has been a reliable performer for many years. I’m sure it will recover. With the stock trading at an eight-year low, I’d buy today.

Coronavirus stock #3: An overlooked insurance play?

My final choice is motor insurance company Sabre Insurance (LSE: SBRE). Sabre floated on the FTSE 250 in 2017 and specialises in insuring drivers who attract high premiums. It’s a very profitable business that I believe is likely to be a good dividend stock.

Numbers released today show that profitability has remained strong during the first half of this year. Although sales were down, disciplined pricing helped to support the group’s profit margins.

Cash generation remains strong and Sabre has now restored its dividend. Shareholders will receive a total payout of 9.5p per share for the first half of the year. Analysts expect a total payout of 19p this year, giving the stock a forecast yield of 6.8%. I rate Sabre as a dividend stock to buy today.

As I recently explained, those seeking FTSE 250 bargains might be interested in snapping up B&M European Value Retail. It’s not the only cut-price corker I’m looking closely at buying today though. Another beauty from Britain’s second-tier share index I’m considering snapping up is Sabre Insurance Group (LSE: SBRE).

Life and non-life insurers are classic safe-haven plays in times of economic, political and social upheaval. This makes motor insurance specialist Sabre a brilliant buy as the coronavirus crisis continues.

And at current prices it looks particularly tasty. A low forward price-to-earnings (P/E) ratio of 15.2 times is decent, but might not look too special. But from a dividend perspective, Sabre makes some serious waves. Its yield for 2020 sits at a fatty 6.7%.

Don’t panic!

That’s not to say that Sabre hasn’t rung a few alarm bells on the dividend front. Last week it said it was deferring its decision to pay a supplementary reward for 2019 following the coronavirus outbreak.

This is no reason for possible buyers to panic though. The insurance play said that “Covid-19 is not currently expected to generate any significant adverse capital strain.” It’s decided to take a cautionary approach until the full impact of the crisis on its operations (and the wider economy) becomes apparent.

Sabre still felt confident enough to raise 2019’s final dividend by almost 20% year-on-year to 8.1p per share. Rising car insurance premiums give the business something to cheer for 2020 and 2021 despite pandemic-related tension. And the insurer’s strong balance sheet and mighty cash generation provide something else to celebrate. Its solvency ratio of 180% after dividends as of December soared past its target of 140% to 160%.

Another hero for your Stocks & Shares ISA

Sabre isn’t the only terrific defensive share to buy in these tough times. Having some exposure to gold is also a great idea for ISA investors and Centamin (LSE: CEY) is one great way to play this theme.

With dividends toppling like dominoes, this African metal producer seems like a particularly-intelligent buy. As the boffins over at Jefferies commented: “Against the backdrop of widespread dividend suspensions/reductions in other industries… Centamin should be considered a safer divi play.” The broker highlights that the FTSE 250 digger has no debt on its books and close to $400m in cash and liquid assets.

At recent prices Centamin carries a chunky 4.4% dividend yield for 2020. This isn’t the only reason why it packs a punch for value-hungry stock pickers though. It also trades on a forward P/E multiple of 12.9 times. Given the bright outlook for gold prices this year and potentially beyond, this provides a solid foundation for some meaty share price gains. I’d happily buy the gold play for my ISA and hold it for years.

The stock supports a dividend yield of 5.9% at the time of writing, and the payout is covered 1.8 times by earnings per share.

These impressive dividend credentials suggest to me that Marston’s could be a great addition to a portfolio for 2020. Not only is the stock an income champion, but it also looks relatively undervalued at current levels. Shares in Marston’s are dealing at a forward earnings multiple of 9.6 compared to the market average of around 14.

Debt balance

It appears that one of the reasons why Marston’s is trading at such a deep discount to the rest of the market is the size of its debt pile. Group borrowing was £1.4bn at the end of its latest financial year, compared to a market capitalisation of £840m.

The good news is that management is speeding up plans to reduce debt with £70m of asset disposals planned in the company’s 2019/20 financial year, as well as a reduction in capital spending to help free up cash flow.

As borrowing falls, I think there’s a good chance the market could re-rate the stock higher in 2020, and investors will be paid to wait for the recovery.

Rising demand

I also think that homebuilder Redrow (LSE: RDW) could be an excellent income investment for 2020. With the UK facing a chronic undersupply of new homes, builders like Redrow can’t put up new properties fast enough.

The company’s earnings per share have more than doubled over the past four years, and considering the lack of supply in the housing market across the country, it doesn’t look as if Redrow’s growth is going to slow any time soon.

Government policies designed to stimulate homebuilding activity, such as cutting planning red tape, should help builders like Redrow increase output. With an operating profit margin of nearly 20%, shareholders should be well rewarded if Redrow goes through a growth spurt.

At the time of writing, the stock supports a dividend yield of 4.2%, and the payout is covered nearly three times by earnings per share. The company also has £124m of cash on the balance sheet, enough to fund the distribution for at least a year according to my research.

Niche market

Sabre Insurance (LSE: SBRE) might not be a household name, but I think this company has some of the most attractive income credentials in the FTSE 250.

Sabre owns a handful of car insurance brands, including Go Girl, Insure2Drive and Drive Smart. All of these brands fill a particular niche in the market and are highly rated by customers.

Insurance can be a risky business, but where Sabre differentiates itself is its conservative underwriting approach. The company will only offer coverage to the most trustworthy customers. While this approach has had an impact on growth, it has helped Sabre remain highly profitable. Net profit has grown at a compound annual rate of 11% for the past six years.

City analysts believe the company will distribute 100% of earnings per share in dividends for its current financial year, which gives a dividend yield of 6.6% on the current share price. Analysts are forecasting a slight decline in the payout next year, but a dividend yield of 6% is still projected.

Over the past five decades, the group has completed a string of deals in the sector snapping up some of the most significant players in the market.

Buffett likes to buy well-run, profitable insurance companies that have a track record of sensible underwriting. Firms like Lancashire Holdings (LSE: LRE).

Well-diversified

Lancashire is really three different businesses: Lancashire, Cathedral and Kinesis. As my Foolish colleague Kirsteen Mackay recently explained, Lancashire and Cathedral provide specialist insurance against catastrophic events such as hurricanes. They also offer unique insurance policies for the property, marine aviation and energy sectors.

On top of this, the Kinesis segment manages reinsurance for the business. It offers a management service for third parties who want to invest in the insurance industry but don’t know where to start.

Lancashire’s profitability track record is outstanding. The group’s 10-year average combined ratio (a measure of insurer profitability) is around 70%, compared to the industry average of nearly 100% (the lower the ratio, the better).

On top of this, management has adopted a policy of paying out as much capital as possible to shareholders. Shares in the insurance group currently support a regular dividend yield of less than 2%, but the company regularly distributes special dividends, which has jacked up the yield to more than 10% in the past.

Analysts are forecasting a total yield of 5.4% for 2019.

Sector leader

Another insurance business that stands out as a sector leader is Sabre Insurance (LSE: SBRE). Sabre stands out because the company has managed to carve out a niche for itself in the highly competitive car insurance sector.

The group’s three direct brands are Go Girl, Insure2Drive and Drive Smart, all tailored specifically to cater to individual needs. While they may be slightly more expensive than other policies, customers seem happy.

Revenue has grown at a compound annual rate of around 10% over the past five years, and City analysts are expecting the company to report a net profit of £50.2m for 2019.

Based on these figures, the stock is currently trading at a forward P/E of 15.3. This is slightly above what I would consider an appropriate valuation for a company that’s for not expected to report any earnings growth for the next two years. However, like Lancashire, Sabre likes to reward its investors with cash payouts.

This year, city analysts are forecasting a full-year dividend of 20.2p, which gives a dividend yield of 6.8% on the current share price. Sabre’s niche brands, as well as the company’s customer loyalty and cash generation, are the key reasons why I believe Buffett would be interested in adding this stock to his portfolio.

The FTSE 250 stocks I’m going to look at today are good examples of this, in my opinion. All three face some kind of risk. But each one also has a solid track record, strong finances and a forecast dividend yield of more than 7%. Is now the right time to buy?

Reputation risk

The share price of oil services group Petrofac (LSE: PFC) has fallen by more than 50% since the Serious Fraud Office opened a bribery investigation into the firm in 2017. So far, only one former employee has been prosecuted, but the investigation remains ongoing.

As far as I can see, the first risk facing investors is that the company will eventually be prosecuted and hit with a big fine by the SFO. The second risk is that damage to its reputation could make it harder to win new work.

A trading update today seems to hint at this problem. Chief executive Ayman Asfari says that although trading is in line with guidance, the firm is facing “challenges in Saudi Arabia and Iraq”. These are the two countries involved in the SFO investigation.

The rate of new orders seems to be falling, with new orders of $1.7bn so far this year, compared to $1.8bn during the same period last year.

However, Petrofac shares now trade on about six times forecast earnings, with a 7.1% yield. If was to bet on this situation, I’d guess that the firm will weather this storm and return to growth. If I’m right, the shares could be good value at around 400p.

Safe as houses?

Big housebuilders continue to report record profits and pay generous dividends. FTSE 250 firm Redrow (LSE: RDW) is no exception. Pre-tax profit rose by 21% to £380m last year and has continued to rise this year. In April, shareholders were rewarded with a 30p per share cash return on top of the regular dividend.

RDW shares look affordable to me, trading at 1.2 times net asset value and on around six times forecast earnings. The total dividend payout (including one-off payments) for the current year is expected to provide a yield of more than 9%. The forecast dividend yield for 2019/20 is 7.4%.

What’s the risk? Well, many believe the UK housing market may be slowing. And the planned end of Help to Buy in 2023 could put pressure on profits.

My view: I’d be happy to buy Redrow today and then buy more shares at a lower price during the next market downturn.

Are you insured?

Motor insurer Sabre Insurance (LSE: SBRE) specialises in providing cover for high-risk drivers. These pay much bigger premiums.

This company’s smaller size and specialist focus has helped make it highly profitable. In 2018, only 70% of its premium income was needed for operating costs and claims. The figure for most mainstream rivals was over 90%.

However, growth was non-existent in 2018 and profits are expected to be flat again this year. Rising repair costs are also a problem.

Despite all of these risks, I’d suggest that this company’s specialist niche and high profit margins could make it a good buy at current levels. Trading on 13 times 2019 forecast earnings and offering a 7.7% yield, the shares look temptingly priced to me.