Each month, we ask our freelance writers to share their high concepts for dividend shares with you — right here’s what they mentioned for July!
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Diageo
What it does: Diageo is the brewer and distiller behind a bunch of premium drinks worldwide, from Guinness to Johnnie Walker.
By Christopher Ruane. With a 3.2% dividend yield, Diageo (LSE: DGE) may not seem like a scorching dividend share at first look.
However from the angle of the way it can fund future dividend development, I just like the share quite a bit. This can be a firm that has grown its payout per share yearly for properly over three many years. These should not tokenistic will increase, both: the dividend has elevated by 5% in each of the previous couple of years.
Excessive demand, premium positioning and distinctive merchandise give the corporate robust pricing energy. The enterprise mannequin generates sizeable free money flows: £1.8bn final yr alone. I due to this fact count on Diageo can elevate its dividend for years to come back.
Weakening gross sales in Latin America concern me. They might foreshadow a broader slowdown in premium drinks demand as world financial weak spot bites. As a long-term investor, although, I believe the outlook for Diageo is promising.
Christopher Ruane doesn’t personal shares in Diageo.
HSBC
What it does: HSBC is a global financial institution with a presence in over 60 nations.
By Charlie Keough. I already personal HSBC (LSE: HSBA) shares however at their present value, I’m extremely tempted to purchase some extra in July.
The star of the present is its 7.1% dividend yield. Final yr its payout grew by 97% to 61 cents per share. In its Q1 outcomes, it introduced a particular 21 cents per share dividend after promoting its Canadian enterprise. Accounting for that, the inventory yields a whopping 11.8%.
HSBC shares additionally look low-cost. They commerce on 7.5 occasions earnings, comfortably under the FTSE 100 common. Its price-to-book ratio is 0.9.
The most important menace to the agency is its give attention to Asia. A slowdown in Chinese language financial development might overwhelm on the inventory within the months to come back.
However transferring previous that, I’m bullish on HSBC. Its shares are low-cost, and its yield is excessive. That’s the type of inventory I like to purchase. If I’ve the money, I’ll be including to my place this month.
Charlie Keough owns shares in HSBC.
Authorized & Common Group
What it does: Authorized & Common Group sells a variety of life insurance coverage, retirement and funding merchandise.
Authorized & Common Group (LSE:LGEN) shares have lengthy been in style with traders looking for a rare passive earnings. Following current heavy value weak spot, it appears much more interesting from a dividend perspective.
The FTSE 100 firm now carries an unlimited 9.5% dividend yield for 2024. And for 2025 and 2026, these figures enhance to 10.1% and 10.7% respectively.
Traders have been spooked by Authorized & Common’s intention to chill future dividend development. It introduced plans in mid-June to boost annual payouts by 2% between 2025 and 2027, down from 5% beforehand.
I believe the market is overreacting right here. Not solely are dividends nonetheless anticipated to develop. However the monetary companies large plans to “return extra to shareholders” general by launching a sequence of share buybacks. This begins with a £200m repurchase this yr.
There’s at all times an opportunity that Authorized & Common could wrestle to hit these targets if the economic system struggles and earnings undergo. However a cash-rich steadiness sheet suggests the agency might nonetheless make good on its revised capital allocation coverage, even when earnings disappoint.
Royston Wild owns shares in Authorized & Common Group.
Phoenix Group Holdings.
What it does: Phoenix calls itself the UK’s largest long-term financial savings and retirement enterprise, with 12m clients and £280bn of property beneath administration.
By Harvey Jones. Possibly I’m naive, however I simply can’t get previous the truth that FTSE 100 insurance coverage conglomerate Phoenix Group Holdings (LSE: PHNX) yields 10.2% at the moment.
I do know double-digit yields are extremely precarious, and I do know there are a number of different causes to spend money on the inventory, which is down 4.05% over one yr and 24.95% over 5. However I nonetheless thinks it’s an excellent purchase
The market may be coming spherical to my perspective, with the shares springing into life in current days.
What’s taken them so lengthy? I’ve simply run some figures, and Phoenix has a strong observe report of accelerating its dividend per share for the final decade. In 2014, it paid 36.75p per share. By 2023, that had risen to 52.65p.
In March, the board pledged to supply a “progressive and sustainable dividend coverage” going ahead.
Analysts count on the yield to hit 10.5% in 2024 and 10.8% in 2025. The enterprise is paying down debt, too.
No dividend is assured. Some traders will see this as a worth entice. The share value could proceed to flounder. However I’m an optimist.
Harvey Jones owns shares in Phoenix Group Holdings.
