3 Finance Stocks With Stunning Yields: Lloyds Banking Group PLC, Amlin plc And Tullett Prebon Plc

These 3 financials could boost your income: Lloyds Banking Group PLC (LON: LLOY), Amlin plc (LON: AML) and Tullett Prebon Plc (LON: TLPR).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

A generous share 

In 2016, Lloyds (LSE: LLOY) (NYSE: LYG) is expected to yield a hugely appealing 5.2% at its current share price. This should attract a significant number of investors to the stock and help to push the bank’s share price higher between now and then, as investors continue to seek out relatively high yields.

Furthermore, there is much more to come from Lloyds when it comes to dividends. That’s because the bank is aiming to achieve a payout ratio of around 65% over the medium term, which means that it should prove to be a generous share for shareholder payouts. And, with interest rates due to stay low for a number of years, this could be of huge benefit to investors in the bank.

Meanwhile, Lloyds continues to offer excellent value for money. For example, it trades on a price to earnings (P/E) ratio of just 10 and this shows that there is capital gain potential as well as a great income return on offer.

Considerable appeal

While Amlin’s (LSE: AML) headline yield of 5.6% is hugely appealing, the insurance company also offers a significant scope for an upward re-rating. For example, it trades on a price to book (P/B) ratio of just 1.4, and this indicates that its shares are undervalued at the present time. Furthermore, a P/E ratio of just 12.3 provides further evidence that Amlin has capital gain potential over the medium term.

Of course, Amlin’s bottom line is due to stall over the next couple of years, and this could cause concern for income investors. However, with a payout ratio of just 69%, Amlin should be able to increase dividends per share by at least as much as inflation (assuming it rises from its current level of zero), thereby maintaining its considerable appeal as an income stock in 2015 and beyond.

Generous dividend payments

Clearly, the stability of a company and its bottom line is of major importance to income seeking investors. However, in the case of Tullett Prebon (LSE: TLPR) the challenges that it is facing appear to be fully priced in to its current valuation. For example, it trades on a P/E ratio of 11.4 and, although its profitability has declined in each of the last four years, it is forecast to rise in each of the next two years.

As such, its yield of 4.5% has huge appeal — especially since it is covered 1.9 times by profit. So, even if the company’s performance does disappoint, it has a wide margin of safety and sufficient headroom to continue making generous dividend payments.


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of Amlin and Lloyds Banking Group. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

The flag of the United States of America flying in front of the Capitol building
Investing Articles

This S&P 500 blue chip looks far too cheap to me at $183!

Our writer picks out one high-quality S&P 500 stock that is currently the cheapest among the 'Magnificent 7' group of…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Down 23% today! This one’s stinking out my Stocks and Shares ISA

Our writer's wondering what to do with a problem named Ashtead Technology (LON:AT.) in his Stocks and Shares ISA portfolio.

Read more »

Two male friends are out in Tynemouth, North East UK. They are walking on a sidewalk and pushing their baby sons in strollers. They are wearing warm clothing.
Investing Articles

Down over 20%, should I dump this FTSE 100 dividend stock?

Our writer has been loving the passive income this dividend stock has been throwing off. But does the big share…

Read more »

Businesswoman calculating finances in an office
Investing Articles

I’ve just bought this FTSE share…

Our writer explains the thought process that led to him buying this FTSE share. One that’s likely to do well…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Just over £5 now, easyJet’s share price looks cheap to me anywhere under £13.84

easyJet’s share price has dropped recently, which could mean the business is worth less than before. Conversely, it could mean…

Read more »

Trader on video call from his home office
Investing Articles

36% under ‘fair value’ and forecast annual earnings growth of 6%, should investors consider this FTSE 250 stock?  

This FTSE 250 firm is a leader in a growing sector and has secured several new sites to drive its…

Read more »

Portrait of a boy with the map of the world painted on his face.
Investing Articles

3 UK shares that have recently become takeover targets

Mark Hartley examines why these three UK shares have become takeover targets and could be bought out by rivals in…

Read more »

Young Caucasian woman holding up four fingers
Investing Articles

These 4 FTSE 100 stocks are currently yielding more than 8%!

Our writer believes there are plenty of passive income opportunities among FTSE 100 (INDEXFTSE:UKX) stocks. These are the top four…

Read more »