Main dividend-paying stocks for June 2021


We asked our freelance writers to share the highest dividend-paying stocks they would buy in June. Here is what they chose:

GA Chester: Bunzl

Distribution and outsourcing specialist Bunzl (LSE: BNZL) doesn’t have the highest yield of the FTSE 100. But it does have a 28-year track record of increasing dividends at a 10% compound annual growth rate. Growth was supported by a successful targeted acquisition strategy.

I have always liked the company’s significant exposure to non-cyclical and less cyclical customer markets. And the company has been very resilient during the pandemic. The stock price has underperformed the Footsie so far in 2021, and I think a starting return of 2.4% makes it a good time to buy for long-term income.

GA Chester has no position in Bunzl.

Roland Chef: Direct line insurance group

Insurer FTSE 250 Direct line insurance group (LSE: DLG) is my main dividend paying stock, thanks to an 8% dividend yield which I think is sustainable.

This well-known auto and home insurer has invested in new technologies over the past two years to improve their underwriting. Direct Line also developed its commercial insurance division, whose sales increased 16.1% in the first quarter.

One of the risks is that new regulations prohibiting price increases for repeat customers could affect Direct Line’s profits over the next few years. However, the new rules were expected, and my experience is that large companies generally manage regulatory changes more easily than their smaller competitors.

I see Direct Line as a buy at current levels.

Roland Head owns shares of Direct Line Insurance Group.

Ben Hargreaves: National Network

I think buying shares in national grid (LSE: NG) could be a solid investment for a dividend-focused portfolio. The company has a strong presence in the UK, but also has a strong presence in the US, where it serves around 10 million customers. This adds geographic diversification to its strengths, in a stable environment in which it operates as a utility company.

National Grid is offering a 5.2% dividend and its share price has risen 11% year-to-date. A note of caution is that the stock price has only risen by 14% in the past three years. However, when the dividends are counted, I think following a long term buy and hold strategy with National Grid should make it a solid income.

Ben Hargreaves has no position in National Grid.

Edward Sheldon: Unilever

My main dividend for June is the consumer goods giant Unilever (LSE: ULVR). It currently offers a potential dividend yield of around 3.4%.

I like Unilever for several reasons. The first is that the company is a reliable dividend payer with an excellent history of dividend growth. Over the past 70 years, Unilever has increased its payments by around 8% per year.

Another reason I like the title is that it has the potential for long term growth. With over 50% of its revenue coming from emerging markets around the world, there is plenty of room for growth.

The investment case involves risks. One risk is that its brands lose their appeal. Overall, though, I think the long-term risk / reward proposition here is appealing.

Edward Sheldon owns shares in Unilever.

Kevin Godbold: ESS

FTSE 100 energy company ESS (SSE) has experienced operational difficulties in recent years, but the business is growing. The directors oriented operations towards renewable energies, such as wind turbines. And the financial figures are on an improving trend. For example, I like the recent record for strong and rising cash flow. The company rebased the dividend lower for the fiscal year to March 2020, but it has since risen, with city analysts predicting further gradual increases to come.

With a share price close to 1540p, the expected return is around 5.5%. I would be keen to buy a portion of the shares and lock the growing income of this improving company into my diversified portfolio.

Kevin Godbold does not own any SSE shares.

Christopher Ruane: Imperial Marks

As income stocks disappear, Imperial marks (LSE: IMB) is hardly a secret. But I still think this is a high dividend stock for my portfolio.

Its yield exceeds 8%. This makes the tobacco giant one of the most productive FTSE 100 stocks.

He recently increased his dividend. I took this as a sign of confidence that Imperial’s new strategy of focusing on cigarettes in its five key markets has got off to a good start.

However, it cut its dividend last year and uncertain future demand for cigarettes is a risk.

Christopher Ruane owns shares in Imperial Brands.

Rupert Hargreaves: direct line

Insurance group Direct line (LSE: DLG) is one of my favorite income investments. The company is one of the largest insurers in the country, which gives it a strong competitive advantage. Specifically, it has lower costs and loss rates than most of its peers.

As a result, Direct Line is quite profitable and management is committed to returning as much profit as possible to investors.

At the time of writing, the stock offers a dividend yield of 7.3%. In addition, the group also returns liquidity to investors by buying back shares.

These cash returns could come under pressure if the company were to face higher losses than expected. An increase in costs can also lead to reduced profit margins.

Despite these risks, I would buy more stocks in June.

Rupert Hargreaves owns shares in Direct Line.

Paul Summers: First Miton Group

Small cap asset manager Premier Miton (LSE: PMI) probably goes under the radar of most income hunters. However, a 48% increase in the interim dividend after a 17% increase in profits could be a game-changer.

Analysts expect the PMI to return 5.2% in FY 21 based on the share price as I type. This is much more than the paltry 0.46% I would get from better ISA species.

Of course, the company’s line of work makes returns hard to predict. However, I think a P / E of just 12 takes that into account. A healthy balance sheet is also reassuring.

Paul Summers has no position in the Premier Miton group

Alan Oscroft: City of London Investment Trust

City of London Investment Trust (LSE: CTY) has been called a “dividend hero” by the Association of Investment Companies, after increasing its dividend for 54 consecutive years. We are currently aiming for a return of around 4.8%, which I find very attractive. Where does the trust put its money? He is targeting income from UK stocks, with a breakdown of the top 100 FTSE stocks in his portfolio.

So this is my main dividend for June. Oh, and probably for July, August, next year, and five years too… I see the City of London as a serious long term income investment.

Alan Oscroft owns shares in City of London Investment Trust.

Nadia Yaqub: The Renewable Infrastructures Group

I think The Renewable Infrastructures Group (LSE: TRIG) gives me a great way to get exposure to the green energy industry. It is a diversified portfolio of renewable energy assets located in the UK and Europe.

TRIG consists of 77 investments in solar, onshore and offshore wind power as well as battery storage. These assets generate income from the sale of electricity and green benefits supported by the government.

With economies focusing on net zero carbon emissions, this should act as a tailwind for TRIG stocks. The investment trust is not cheap. It is traded at a premium of 13% over the net asset value (NAV). But given its dividend yield of over 5%, I think this stock is attractive to income investors in me.

Nadia Yaqub does not own any shares in The Renewables Infrastructure Group.

Royston Wild: ITV

A slew of positive news from the advertising industry leads me to believe that ITV (LSE: ITV) is a great income security to buy today.

ITV itself has seen a steady increase in advertising revenue in recent months. The emergence of Covid-19 variants could of course see this turnaround expire quickly if infection rates rose again. But for now, there is much to be excited about as ad revenue soars and ITV’s production units get back to work.

Okay, ITV’s 3.7% dividend yield for 2021 can be chunky rather than mind-blowing. But the city’s expectations of a sustained earnings recovery – and with them predictions that dividends will continue to rise – are pushing the yield to a very handsome 4.3% for next year.

Royston Wild does not own any shares in ITV.

Harshil Patel: Khaki

Khaki (LSE: PSN) is my best choice of income stocks. It offers an expected dividend yield of 7%! This UK based home builder aims to build good quality homes at a range of prices.

Demand for newly built homes remains healthy and average selling prices are higher than in 2020. In his latest trade update, he said his average private selling rate this year was “way ahead” of 2020. .

Persimmon has high quality land holdings, a strong balance sheet, and growing demand for its homes. That said, dividends may fall if trading deteriorates. However, so far this year, trading has been strong. Therefore, I expect to receive the expected 7% of dividend income.

Harshil Patel does not own any shares in Persimmon.

Manika Premsingh: Imperial Marks

It has a high 9.4% dividend yield, but the tobacco is big Imperial marks (LSE: IMB) faces two criticisms.

First, tobacco stocks are out of fashion as the world becomes healthier.

Second, it is often seen as a “stock market sin” in an age of ethical investing.

Here are my counter arguments. First, tobacco companies are making the transition to healthier alternatives. In addition, demand for tobacco is strong at this time, as evidenced by recent healthy earnings from Imperial Brands.

Second, to think of tobacco as a “sin” is questionable for me. Civil society and policy makers have done their part to educate consumers about its drawbacks and protect passers-by from the harmful effects of second-hand smoke. Beyond that, smoking is a conscious adult choice.

This is my main dividend in June.

Manika Premsingh has no position in Imperial Brands.

The highest dividing stocks of June 2021 appeared first on The Motley Fool UK.

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The Motley Fool UK recommended Bunzl. The opinions expressed on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a wide range of ideas makes we are better investors.

Motley Fool United Kingdom 2021


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