Persimmon

Housebuilder stocks have been among the worst performers on the FTSE 100 and FTSE 250 this year. Persimmon (LSE:PSN) is one of the UK’s largest housebuilders but it has been less impacted than other developers by the cladding crisis that has pushed share prices in this sector down in 2022.

While some stocks will see the majority of their 2022 profits wiped out by their pledges to recladding thousands of homes, Persimmon anticipates spending £75m on recladding homes that were built using flammable material. That might sound like a lot, but it’s less than 10% of its pre-tax profits last year. 

In a recent update, the firm disappointed investors as production delays meant that completions came in lower than expected during the first half of the year. Persimmon even reduced its volume guidance by 10% for the year. However, profits for the first half of the year still came in ahead of the same period in 2021, up 1%.

In July, the developer said it was around 75% forward sold for the full year. The average selling price of new homes forward sold to owner occupiers was £280,700, up 12%.

So the company is making more money from selling fewer units. And, personally, I have no problem with that. It’s also important to note that delayed completions will eventually contribute to revenue. These are not lost sales.

However, there are some concerns. Higher rates will likely push house prices down in the autumn, but the long-run prospects are positive. Persimmon is down 35% over 12 months and I’d buy more stock now before the share price moves upwards.

Synthomer

Synthomer (LSE:SYNT) shares tanked last week after the firm released an earnings update. Pre-tax profit fell to £114.7m from £272.4m in the same period a year earlier, but investors knew that this was coming eventually.

The company saw revenues soar during the pandemic as demand for latex gloves went off the chart. But this wasn’t going to last forever.

Despite the profits tanking, Synthomer’s management highlighted the positives, noting that all segments had grown apart from the elastomers arm and that revenues were up 8.6% to £1.33bn.

And I can see the positives too. There’s organic growth coming from three sectors, and the newly acquired adhesive technologies division added £18m in earnings.

The firm’s valuation also looks very cheap right now. Using last year’s earnings, the price-to-earnings (P/E) ratio is 2.5. But that’s not hugely reflective of its current performance. The forward P/E is around five, which is phenomenally cheap for a growing firm.

I already own Synthomer shares, but at current prices I’d buy more.

But the share price has been sliding since mid-2021. And today it fell 11% in morning trading. However, I still see plenty of value in this British-based chemicals business.

In fact, I’m already a shareholder in Synthomer, and I benefitted from the last big dividend payout, although I am down overall.

So let’s take a closer look at its performance and see whether I should buy more.

Profits halved but management confident

The headline data from the earnings report on Tuesday was that profits for the six months to 30 June more than halved year on year. Pre-tax profit fell to £114.7m from £272.4m in the same period a year earlier.

However, Synthomer’s management struck a confident note, highlighting that all segments had grown apart from the elastomers arm and that revenues were up 8.6% to £1.33bn. The firm noted that the elastomers arm performed exceptionally well in the prior year due to peak demand for nitrile butadiene rubber (NBR) related to the Covid pandemic.

Chief executive Michael Willome said: “These results demonstrate the solid performance of the business compared to pre pandemic levels with EBITDA significantly ahead of 2020 and 2019 and good levels of organic profit growth“.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) fell to £173.1m from £322.7m a year earlier. However, EDITDA remained ahead of the £100.2m generated in 2020 and the £99.7m seen in 2019.

Earnings per share came in at 19p versus 49p a year earlier.

Why I’m bullish on Synthomer

Profits from the elastomers segment dropped from £224m in the first six months of 2021, to just £41.8m in the last six months. But we all knew this was coming eventually. Elastomers include products like latex gloves that were much in demand during the pandemic.

But this is a growing business that appears to be using its pandemic profits to create a stable platform for future growth. Earnings in functional solutions and industrial specialities grew substantially, while acrylate monomers showed modest growth. The newly acquired adhesive technologies division added £18m in earnings.

I also think the stock represents good value. It currently has a price-to-earnings ratio of around 11. That’s certainly not expensive for a company that is growing in all but one of its business segments.

Synthomer has remained confident on its strategy for growth throughout the year. The company recently said that it has a “proven growth strategy” that will contribute to the business’s development in the coming years.

And while demand for latex gloves and other elastomers is clearly normalising, the persistent nature of Covid is likely to keep demand above pre-pandemic levels for some time.

Would I buy Synthomer stock?

At the current price, yes, I would buy more Synthomer stock for my portfolio. I appreciate the business is going through a transitionary period with the adhesive technologies acquisition and a new CEO, but I see this as a cheap, growing business.

It still has an attractive dividend yield of around 6.5%, having cut the dividend payments from 8.7p to 4p. Until today, the dividend yield sat around 13%, although it clearly wasn’t sustainable.

It’s certainly worth noting that sizeable dividend yields are not always sustainable. Sometimes it reflects the fact that investors aren’t too keen on the industry, such as tobacco. Equally, the dividend may have been raised after an excellent year, but long run performance isn’t expected to be as good.

The firms I’m looking at today have big yields, and I accept that they might be reduced eventually. However, I’m also positive on the long-run credentials of these stocks.

So here are three stocks I’ve bought, or am looking to buy, to negate the impact of inflation on my portfolio and help it grow.

Synthomer

Synthomer (LSE:SYNT) currently offers a huge dividend yield of 12.5%. The mega-dividend is being paid on the back of a stellar year for the latex glove manufacturer.

Synthomer registered pre-tax profits of £283m in 2021. That’s more than double any year before the pandemic. However, the stock is now trading below pre-pandemic levels despite analysts suggesting demand for its products remaining strong.

Barclays recently downgraded the stock, noting volatility in the market, but its target price is around 30% higher than the current trading price.

The firm recently took on a new CEO, so there could be some short-term issues as the company transitions.

Diversified Energy Company

The Diversified Energy Company (LSE:DEC) is a lesser-known big-dividend payer. At today’s price, the yield is 11.1%. That’s pretty huge.

The firm has been paying sizeable quarterly dividends and recently went ex-div. There’s a 4.25c one declared for September as well.

DEC is one of the world’s biggest owner of natural gas wells, with over 60,000 in its portfolio. Amid higher commodity prices, the company successfully increased production, reaching 136,000 barrels of oil equivalent per day.

It operates mature wells, so capping them will come at a cost. I’d assume this puts its break-even point a lot higher than its peers, and therefore makes it more susceptible to a fall in oil prices.

However, it’s also set to become a leading provider of well retirement services to third-party operators in the Appalachian States.

Rio Tinto

I’m finally looking at adding Rio Tinto (LSE:RIO) to my portfolio after the share price fell in recent weeks.

The company had been going from strength to strength in recent months on the back of soaring commodity prices. But negative economic forecasts and Chinese lockdowns have negatively impacted the share price.

A reported plan by the Chinese government to centralise iron ore procurement has also seen the share price fall. However, I think we’re entering a period of scarcity in which commodity prices will remain higher in the long run.

There are several reasons for this. An increase in infrastructure spending in the developing world will push up demand for iron ore and other metals used to make steel. Meanwhile, the EV revolution will increase demand for certain rare earth metals.

At today’s price, Rio Tinto has a whopping 11.3% dividend yield.

Over the past week, global markets fell after US inflation data came in unexpectedly high. This was followed by poor economic forecasts from the UK and Germany.

But this stock market correction has also created buying opportunities.

These are three dividend stocks that I’ve bought or am looking to buy more of, and why!

Centamin

Centamin (LSE:CEY) shares are down 8% over the past week. The stock was also likely affected by renewed Covid-19 restrictions in China that will negatively impact demand for commodities.

Centamin is a gold miner that offers a whopping 8.9% dividend yield at today’s price.

The company performed poorly last year amid falling revenue and an impairment on assets in Burkina Faso.

However, 2022 is looking like a better year. Its gold production forecast is between 15,000 and 45,000 ounces higher than total production in 2021.

Profitability is also dependent on the price of gold. In the first quarter of 2022, Centamin achieved $1,883 per ounce, up from $1,778 in Q1 of 2021. Currently, the spot price is $1,825. 

However, it looks like costs are rising. Centamin said all-in sustaining costs were expected to rise to $1,275-$1,425 an ounce sold for the year ahead. That’s considerably above the all-in sustaining costs were $1,256 per ounce sold in Q4 of 2021.

Synthomer

Synthomer (LSE:SYNT) is another dividend big hitter, offering an 11.2% yield.

The stock is down 15% over the past week, but its also worth noting that it went ex-dividend on 1st June. But at 265p, I think Synthomer looks like a great buy.

The polymers manufacturer saw its profits soar during the pandemic. But, analysts say that demand for its latex gloves, among other products, is likely to remain strong despite Covid-19 becoming less virulent.

In fact, in Q1, Synthomer said that all but one of its businesses were ahead of or in line with Q1 2021 performance.

Synthomer registered pre-tax profits of £283m in 2021, more than double any year before the pandemic. Anything near that would be a great result in 2022.

As a result of its stellar 2021, and its falling share price, the stock currently has a P/E ratio of just 3.46.

However, the group recently took on a new business unit, and a new CEO. So maybe there could be some teething problems here.

Hargreaves Lansdown

Hargreaves Lansdown is down 7.5% over the past week. But that’s just the tip of the iceberg. It’s down 52% over the year.

The business performed extraordinarily well during the pandemic, but growth has slowed since. After all, people are getting back to work and there’s a cost of living crisis. Many individuals just don’t have that much cash to invest anymore.

However, I think this is a business that will benefit in the long run. Generally, more and more individuals are seeking to investing their money themselves. And, in my opinion, Hargreaves Lansdown has the best platform for serious investors.

The group is also offering a 4.86% dividend yield at today’s prices.

I own shares in all these stocks, but recently bought more Synthomer.

However, Synthomer (LSE:SYNT) and Steppe Cement (LSE:STCM) are two dividend big-hitters that I’m backing for my portfolio. The two firms each have roughly 10% dividend yields. That’s substantially above the current level of inflation.

Synthomer

At today’s price, Synthomer has a dividend yield of 9.6% and a healthy coverage ratio of 2.5. That’s a huge yield and it comes on the back of a stellar 2021. The firm, which makes products like latex gloves, surged during the pandemic as demand for its goods skyrocketed. Synthomer registered pre-tax profits of £283m in 2021, more than double any year before the pandemic.

However, the share price has now returned to pre-pandemic levels. As a result, Synthomer has a particularly low price-to-earnings ratio of 4.

Despite the falling price, the prospects look good for this supplier of aqueous polymers. In late April, Synthomer said it had made “an encouraging start to the year“, with all but one of its businesses ahead of or in line with Q1 2021 performance.

Synthomer has not changed it full-year outlook and the board remains confident that recent acquisitions will bear fruit. It said it has a “proven growth strategy” that will contribute to the business’s development in the coming years.

However, the acquisition and the appointment of a new CEO also mark a period of change for the group. This could be a period of pain for Synthomer, especially if demand for gloves and other products falls as Covid subsides.

I’ve bought Synthomer shares and would buy more.

Steppe Cement

At today’s price, Steppe Cement has a 10.3% dividend yield and a dividend coverage ratio around 1.8. Once again, this is one of the highest dividend yields for a UK-listed stock. Steppe’s dividend payment comes on the back of a strong year for the Kazakh cement maker. Revenue for the year ended 31 December came in at KZT36.02bn (£60.09m), which was 16% higher than the KZT30.96bn recorded in 2020.

The strong performance has continued into 2022. Steppe posted revenue of KZT6.3bn in the three months ended March 31, representing a sizeable jump from the same period in 2021. 

The Kazakh property market is expected to cool in 2022 after coming close to overheating in 2021. But long-term trends look positive for the market and for Steppe. The Prime Minister’s office has forecast strong demand for housing due to the outdated nature of existing dwellings, as well as an increase in the birth rate in the past two decades.

The government also sees construction as an area to improve social wellbeing and provide jobs.

I’ve got Steppe Cement on my watchlist, but one issue is the spread between the buying and selling price. Currently I can buy for 35p, but sell for 33p. That’s a sizeable spread so I’m only watching for now.

A dirt-cheap bargain?

Royal Mail (LSE: RMG) shares have fallen by more than 30% over the last year. This slump has left the shares trading on six times forecast profits, with a prospective dividend yield of 6.8%.

Admittedly, profits are expected to fall this year as the boost from the pandemic fades. Rising fuel and labour costs are also a potential concern.

Even so, brokers’ consensus estimates suggest that Royal Mail will generate £349m of surplus cash in the 2022/23 financial year, rising to £412m in 2023/24.

My sums suggest that the near-7% dividend yield should be comfortably covered by Royal Mail’s cash generation, reducing the risk of a cut. An added attraction is Royal Mail’s large property portfolio. This business has plenty of asset backing, in addition to its trading profits.

I think Royal Mail looks like a classic value stock at current levels. I may add the shares to my portfolio in the coming weeks.

Energy market opportunity

My next pick is energy services firm Wood Group (LSE: WG). This business started out as a North Sea oil services provider, but offers a much broader range of energy operations today.

Unfortunately, the group’s diversification has coincided with a difficult period for energy markets. Debt has remained stubbornly high in recent years and profits have been disappointing.

Wood Group’s share price has dropped 15% over the last year and is 70% lower than five years ago. However, I think we’ve seen the bottom.

Wood is now selling its infrastructure business, which always looked like a mis-matched acquisition to me. At the same time, I expect the group’s core energy business to be enjoying improved demand, due to higher oil prices, plus continued growth in renewable projects.

Wood Group’s turnaround has taken a lot longer than expected. It’s not over yet. But this business is expected to return to profit in 2022 and could resume dividend payments in 2023.

Right now, I think Wood Group could be one of the best value opportunities in the energy sector.

An overlooked value stock

Chemicals group Synthomer (LSE: SYNT) has its heritage in the Malaysian rubber industry. Today, it produces a wide range of polymer-based products. These include latex gloves, foam for consumer goods, adhesives, and chemicals used by industrial customers.

The last three years have been a rollercoaster for shareholders. The shares rose from a low of 205p in March 2020 to 550p in 2021, as demand for latex gloves boomed during the pandemic.

Market conditions are now returning to normal and Synthomer shares have dropped back to around 300p.

One risk I can see is that slowing economic growth could have a knock-on effect on demand. With the boost from the pandemic gone, profits could disappoint.

However, I think that the share price already provides a fair margin of safety. Based on broker forecasts, Synthomer shares trade on less than eight times forecast earnings, with a dividend yield of 5.4%.

Synthomer could be the next stock I buy for my portfolio.

I have a varied portfolio of passive income shares, but today I’m looking at five ultra-high-dividend paying stocks that I’ve got on my watchlist.

Persimmon

Persimmon has the highest dividend yield on the FTSE 100. At today’s price, the yield would be around 11.2%. The strong dividend comes on the back of stellar year for housebuilders but there might be some short-term pain for the industry. Higher interest rates could dampen demand for new homes while Persimmon has had to put aside £75m for dangerous cladding removal. These factors have weighed on the share price. I’d like to see more data on UK property demand before I buy, although I’m bullish on long-term UK property demand.

Synthomer

Synthomer stock boomed during the pandemic as demand for latex gloves surged. But now the share price has returned to pre-pandemic levels. The group is now going through a period of change, after a recently completed acquisition in the US that created a new adhesives division. There’s also a new chief executive.

Synthomer’s latest trading update reported an “encouraging start to the year”. In a post-pandemic world, you’d imagine that demand for its product will remain strong. Analysts have reinforced this forecast. The firm is also a very attractive passive income option. Based on the company’s latest annual dividend and the current share price, Synthomer has dividend yield of 10.3%. I think this could be a good addition to my portfolio.

Steppe Cement

Steppe Cement isn’t well known, but the Kazakh cement manufacturer currently offers a 10.7% dividend yield. 2021 was a strong year for the company as the Kazakh property market came close to overheating. The market is expected to cool in 2022 but long-term demand should stay strong. One problem is the spread between the buying and selling price for this stock. It’s on my watchlist for now.

Direct Line

Direct Line is a dividend big-hitter. Last year, it made £343m in post-tax profits and raised its basic dividend slightly. At today’s price, the insurer is offering a 9.4% yield. The company recently announced a share buyback which, for me, represents a vote of confidence in future operations.

Regulation changes and fintech entries could hurt Direct Line’s market share and profitability, but with its little red telephone logo, Direct Line a well-known and trusted brand. However, I’d like to see revenue move in the right direction before I buy.

Diversified Energy Company

Diversified Energy Company is a lesser-known gas and oil company focusing on mature wells. It’s the world’s biggest owner of natural gas wells, with over 60,000 in its portfolio. The FTSE 250 company recorded full-year production of 119,000 barrels of oil equivalent per day in 2021, up 19% on 2020. December production rate reached 139,000 barrels per day, up 35% over December 2020. With Brent Crude sitting above $100 a barrel, 2022 could be a good year for DEC if these rates are maintained.

However, it also has to cap its wells which could prove expensive and raises concerns about the long-term profitability of the business.

Currently, the Diversified Energy yield is 9.2%.

The FTSE 250’s weak performance is quite unusual. The mid-cap index has outperformed the FTSE 100 by 250% since 2002. Although past performance is not an indicator of future returns, I think there’s plenty of value in the FTSE 250 today. Here are five FTSE 250 shares that are on my buy list for May.

A contrarian buy?

My first pick is chemicals group Synthomer (LSE: SYNT). This business has been through a lot of change over the last couple of years.

In 2020 and 2021, demand for latex globes surged due to the pandemic. Latex sales are now returning to normal, but the group has recently completed a major acquisition in the US. This has created a new adhesives division within the group.

It’s a complicated picture and Synthomer’s share price has suffered as a result of the uncertain outlook .

With so many changes – and a new chief executive – I can certainly see some risk of further setbacks. However, I think I’m now starting to see some clarity.

Synthomer’s latest trading update reported an “encouraging start to the year”. Meanwhile, broker forecasts suggest that the group’s 2022 earnings and dividend will stabilise well above 2019 levels.

These City estimates price the stock on just seven times forecast earnings, with a dividend yield of 5.8%. That seems cheap to me for a business that’s been quite profitable in the past. Synthomer is on my list as a potential buy for my portfolio in May.

A whopping 9% yield

My next pick is well-known UK insurer Direct Line Insurance (LSE: DLG). This FTSE 250 business is best known for its home and motor policies, which are sold under brands including Direct Line, Churchill and Privilege.

Direct Line shares currently offer a forecast dividend yield of 9.5%. This very high yield is more than double the FTSE 100 average of around 4%. High yields can indicate some extra risk.

In this case, I think the problem is that Direct Line’s profits have been falling in recent years. The group’s 2021 results showed pre-tax profit of £446m. That compares to a figure of £581m in 2018.

My analysis suggests Direct Line’s dividend will be affordable. But this view does depend on the company’s profits starting to recover, following significant investment in new IT.

The company says these changes are already starting to deliver improved profitability. CEO Penny James also says that Direct Line is starting to see stronger market conditions in motor insurance this year, allowing the group to increase its pricing.

I already hold Direct Line shares and have no plans to sell. I think the evidence so far supports a recovery. In my view, these shares are probably too cheap.

A FTSE 250 bargain?

Shares in my next company have fallen by nearly 30% since hitting a record high in November. The company concerned is Pagegroup (LSE: PAGE), which is one of the FTSE 250’s largest recruitment groups.

My guess is that the market is pricing in the risk of a recession. This could lead to a slowdown in new hiring, hitting Pagegroup’s profits.

However, there’s not much evidence of this yet in the company’s performance. Pagegroup saw gross profits rise by 43% to £258m during the first quarter of this year. The company reported a “record performance in March”, which was the first month ever to generate a £100m gross profit.

I was also reassured to see growth spread quite evenly across the regions where the group operates. Gross profit rose by 41% in EMEA, 36% in Asia Pacific, 43% in the UK, and 57% in the Americas.

Pagegroup’s share slump has left the stock trading on 10 times forecast earnings, with a 4% dividend yield. On balance, I think this is probably too cheap. Pagegroup is on my list as a potential buy.

A founder-led business

One thing I often look for are companies where senior management have a significant ownership stake. I feel this makes it more likely that they will run the business with shareholders in mind.

One possible bargain share that fits this description is financial trading group CMC Markets (LSE: CMCX). CMC is led by CEO Lord Cruddas. He founded the business in 1989 and still owns 57%.

CMC’s profits boomed during lockdown, but have cooled (as expected) since then. The market has punished the stock quite severely in my view, and CMC’s share price has fallen by over 40% since April 2021.

One risk here is that profits can be unpredictable, as many traders rely on volatile markets to find trading opportunities. Quieter markets generally mean lower profits.

However, CMC is also taking steps to diversify by expanding its stockbroking business. This should provide more stable earnings and create some new growth opportunities.

As I write, CMC shares are trading on 12 times forecast earnings, with a dividend yield of 4.3%. I think this FTSE 250 share could be a bargain and would be happy to add it to my portfolio.

A quality retailer

I want to wrap up with a look at FTSE 250 homewares retailer Dunelm (LSE: DNLM). This is another family-controlled business with a track record of strong profitability.

Dunelm’s sales boomed during the pandemic, as we all spent more time at home. However, over the last year, the group’s share price has fallen by 30%, even though sales have continued to rise.

This FTSE 250 retailer’s latest trading update showed sales up by 25% during the nine months to 26 March. During the first three months of 2022, sales were 69% higher than at the same time last year.

City analysts expect the company’s earnings to rise by 27% to 80p per share this year. That prices Dunelm stock on 12 times earnings, with a possible 5.8% dividend yield.

There’s a risk that the rising cost of living and the return of summer holidays could hit Dunelm’s sales later this year. But this is one of the most profitable big retailers in the UK. I think the sell-off has gone far enough. I’ve been buying Dunelm shares for my portfolio.

Invest in investment itself

The Jupiter Fund Management (LSE: JUP) share price has dropped 25% over the past 12 months, compared to a decline of just 4% for the FTSE 250. The company reported a net outflow of £3.8bn for 2021, so I think the fall is understandable.

But Jupiter still had £60.5bn in assets under management, and boosted its 2021 net management fees by 18%. The ordinary dividend was held at 17.1p per share, with the 2020 special payment of 3p not repeated. Forecasts suggest the same again for 2022, which would yield 8.4% on the current share price.

The danger is that investors will continue to withdraw funds during 2022, in response to the growing world economic crisis. In fact, I think it’s probably inevitable.

But we’re looking at a trailing P/E of only 6.5 now. And with the 2021 dividend having been covered 1.85 times by earnings, I rate Jupiter Fund Management a buy for my ISA.

Fat insurance dividends

The whole financial sector tends to suffer during economic squeezes. FTSE 250 insurer Direct Line (LSE: DLG) is no exception, with its shares down 14% over 12 months.

But that’s helped push up the forecast dividend yield, which now stands at 8.8%. I don’t know how long that level of payment will hold out, as it is barely covered by earnings. And those earnings have dipped over the past three years.

But Direct Line reported a strong capital position for the end of 2021. And in addition to lifting its final dividend, the company embarked on a further £100m share buyback programme.

The 2021 adjusted solvency capital ratio came in at a healthy 160%, even after dividends and share buyback.

Direct Line’s success appears to be down to its investment in improving its technology platforms, which it reckons boost its competitiveness. CEO Penny James told us that “we believe there is plenty more to come in 2022.“

Biggest FTSE 250 faller

Of my three FTSE 250 picks today, Synthomer (LSE: SYNT) shares have fallen the furthest. The price is down 40% over the past 12 months. The five-year picture is similar, despite the company having posted strong earnings growth over that period.

Synthomer is clearly suffering from a pandemic effect withdrawal. The company makes nitrile gloves and related health and hygiene products (among a wider portfolio). So it was hot stuff while Covid-19 was at its worst, with investor demand cooling off now.

But the company said: “Exceptional levels of profitability in 2021 have enabled the group to make major inorganic and organic investments to significantly strengthen our platform for future growth.“

I suspect the Synthomer share price will continue to underperform as growth investors seek their excitement elsewhere. But I can see sustainable dividend yields of around 5-6%, based on the current share price. I might get me some of that.

Royston Wild: Redrow

A steady flow of positive data continues to stream in from Britain’s housing sector. Last week, for example, news emerged that average home prices in the UK rose at their fastest pace for 17 years in March.

The ultra-low valuations of London’s quoted housebuilders seem at odds with the industry’s resilience, however. The past provides no guarantee that homes demand will remain strong as interest rates rise. Yet I think this risk is more than baked into the share prices of most housebuilding shares.

I believe that FTSE 250-quoted Redrow (LSE:RDW) is one of these brilliant bargain dividend stocks. Today the business — which in February upgraded its medium-term profit guidance — trades on a forward P/E ratio of just 5.6 times. It also carries a large 6% yield at recent prices.

Royston Wild does not own shares in Redrow.

Stephen Wright: BP 8% Cumulative 1st Preference

I’m taking a slightly different theme with my top British dividend stock for April. The BP 8% Cumulative 1st Preference (LSE:BP.A) shares are catching my eye. Preferred shares work slightly differently to common stocks, but Warren Buffett is a big fan. And I think that this one might be a winner.

The shares pay a fixed dividend of 8p/share. Importantly, the company has to pay dividends to its preferred shareholders in full before it can pay dividends to its common stock holders. For an income-seeking investor, I think that the added protection of preferred dividends might be welcome.

Stephen Wright does not own shares in BP Cumulative 1st Preference 8%.

Roland Head: Synthomer

FTSE 250 chemicals group Synthomer (LSE: SYNT) has caught my eye recently. I believe it could be an attractive dividend investment at current levels.

Synthomer benefited from a boom in demand for latex gloves during the pandemic, but it’s now returning to a more sustainable and diverse mix of product sales.

Although I can see some risk relating to management changes and the integration of a recent acquisition, I believe the fundamentals look strong.

Synthomer offers a forecast dividend yield of 5.5% for 2022. I believe it should deliver steady growth over the medium term.

Roland Head does not own shares in Synthomer.

Paul Summers: Taylor Wimpey

My top dividend stock for April is Taylor Wimpey (LSE: TW). Right now, the housebuilder is down to return 7.5% in cash in FY22. That makes it one of the highest-yielding stocks in the FTSE 100.

Sure, the potential for a wobble in the currently booming UK housing market can’t be ignored. With a valuation of just seven times forecast earnings, however, I’d say the market has already priced this in. The income stream is also likely to be covered nearly twice by expected profit. Staying diversified is vital but I’d be happy to buy today.

Paul Summers has no position in Taylor Wimpey.

Andrew Mackie: BP

My standout dividend stock for April is BP (LSE: BP). Although its yield of 4.3% is certainly not the most generous, this figure masks the true extent of the returns earmarked for shareholders.

Buybacks of $4.15bn have already been announced from surplus cash flow in 2021. In addition, the company has committed to return 60% of annual cash flow through buybacks. It estimates that if oil averages $80, that will equate to $7bn. Although the forced sale of Rosneft will likely impact that figure.

It also has the capacity to grow the dividend by 4% a year, at an average oil price of $60. Today, oil is over $100 and I expect it to remain elevated for some time to come.

Andrew Mackie owns shares in BP.

Harshil Patel: Imperial Brands 

My top dividend stock for April is Imperial Brands (LSE:IMB). This well-established consumer brand offers a juicy dividend yield of over 8%. That beats the average FTSE 100 yield of 3.5%.  

It also has an impressive track record when it comes to dividends, having consistently paid income to shareholders for over 25 years.   

Imperial is in the early stages of a multi-year transformation plan. There are always risks involved when it comes to business transformations. That said, it can afford some room for error as this dividend stock trades on a price-to-earnings ratio of just 6x. That looks super cheap to me.  

Harshil Patel does not own shares in Imperial Tobacco.  

Alan Oscroft: Direct Line Insurance Group

Direct Line Insurance Group (LSE:DLG) is my April pick amongst income shares. The insurance sector might be risky as we face soaring inflation and a possible recession. But I find Direct Line’s forecast 8.2% yield tempting.

My concern is that the dividend is likely to be only just covered by earnings. But there does seem to be cash around to pay it. In March, the insurer announced a share buyback worth up to £100m, in order to reduce its share capital.

That has an additional benefit in that it should help boost earnings per share and support future dividends.

Alan Oscroft has no position in Direct Line Insurance Group.