5 Of The Safest Dividends Around: Norcros plc, Barratt Developments Plc, Close Brothers Group plc, Sepura Plc And Bank of Georgia Holdings PLC

These companies support some of the safest dividends around: Norcros plc (LON: NXR), Barratt Developments Plc (LON: BDEV), Close Brothers Group plc (LON: CBG), Sepura Plc (LON: SEPU) and Bank of Georgia Holdings PLC (LON: BGEO)

| 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.

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.

Buying shares that offer a regular dividend payout can be an excellent way to supplement your annual income.

However, not all dividends are created equal, and some payouts are more secure than others.

And it pays to do your research before buying a company for its dividends. Most of the time, when a dividend payout is cut, it is cut without much warning.

Unfortunately, it’s not possible to accurately predict every dividend cut before it happens, but you can reduce the risk of being caught by surprise.

With that in mind, here are five top dividends stocks with payouts that are well covered by income, minimizing the risk of a sudden dividend cut.

Slow and steady

Norcros (LSE: NXR) at present levels, the company’s shares support a dividend yield of 3.4%, and the payout is covered 3.3 times by earnings per share.

Norcros currently trades at a forward P/E of only 8.9 and a 2016 P/E of 8.5. The company’s dividend yield is set to hit 3.6% next year payout cover is expected to remain at 3.3 times.

Homebuilding boom

As the UK’s housing market goes from strength to strength, homebuilders are raking in the cash. Most of this cash is being distributed to shareholders.

Barratt Developments (LSE: BDEV) is a prime example. The company’s shares currently support a dividend yield of 3.9%, and the yield is set to jump to 4.8% next year.

At present, Barratt is trading at a forward P/E of 13.5 and 2016 P/E of 11.5.

The payout is covered twice by earnings per share. Barratt’s earnings per share are set to expand by 18% next year. As a result, payout cover will remain at 2x.

Banking profits

Merchant banking group Close Brothers’ (LSE: CBG) services are in demand. The group’s earnings are set to expand at around 10% per annum for the next two years. Earnings have already doubled since 2010.

At present, Close Brothers is trading at a forward P/E of 13.7 and analysts believe that the company’s shares will support a dividend yield of 3.4% this year. The payout is covered 2.2 times by earnings per share.

Based on current forecasts for growth Close Brothers is trading at a 2016 P/E of 12.3. Next year the company’s dividend yield is set to hit 3.7%, and dividend cover is forecast to remain at 2.2x.

Rapid growth

Communications specialist Sepura (LSE: SEPU) has reported rapid earnings growth over the past five years. Although, unfortunately, this has not translated into dividend growth.

Sepura’s earnings per share have risen four-fold since 2011. Further growth is expected in the years ahead.

City analysts believe that Sepura’s earnings per share will grow by 12% this year and then a further 18% during 2016. This kind of growth doesn’t come cheap. Sepura is currently trading at a forward P/E of 21.7.

What’s more, Sepura’s dividend yield of 1.4% leaves much to be desired. However, as the dividend payout is covered 3.6 times by earnings per share, it looks to be one of the safest around.

Interesting opportunity

In my opinion, Bank of Georgia (LSE: BGEO) is one of the market’s most fascinating companies.

A holding company for Georgia’s largest bank by assets, as well as healthcare assets and a property portfolio, Bank of Georgia, is no ordinary bank.

Management is targeting a growth rate of 20% per annum. If this can be achieved, the bank is set to become a top growth stock.

Analysts are forecasting earnings per share growth of 23% for 2016. And based on current projections Bank of Georgia is trading at a 2016 P/E of 7.5.

Further, at present the bank’s dividend yield stands at 3.9% and the payout is covered 2.8 times by earnings per share. Analysts’ figures predict that the bank will support a yield of 4.8% during 2016.

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.

Rupert Hargreaves owns shares of Norcros. 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

Photo of a man going through financial problems
Investing Articles

I’d stop staring at the Nvidia share price and buy this FTSE 100 stock instead

This writer reckons there is a smarter way to invest in Nvidia today without taking on stock-specific risk. Here is…

Read more »

Young lady working from home office during coronavirus pandemic.
Top Stocks

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Young Asian man drinking coffee at home and looking at his phone
Dividend Shares

These 3 FTSE 250 stocks offer me the highest dividend yields, but should I buy?

Jon Smith considers FTSE 250 shares with a very high yield, but questions whether the income is going to be…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Is FTSE 100 takeover target DS Smith a great buy?

A mega-merger between FTSE 100 giants DS Smith and Mondi has the City abuzz. But is there any value in…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

The WPP share price dips as profits fall. Here’s why it could be a top dividend buy

I'm starting to think the WPP share price undervalues the stock, especially if the long-term dividend outlook comes good.

Read more »

Black father and two young daughters dancing at home
Investing Articles

A £3K investment buys me 632 shares in 2 stocks for a second income!

This Fool explains how a second income is possible through dividend-paying stocks and details two picks that could help her.

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

Here’s what these results tell me about the Lloyds share price

A policy of progressive shareholder returns, including big dividend yields, makes the Lloyds share price look super cheap to me.

Read more »

Couple working from home while daughter watches video on smartphone with headphones on
Investing Articles

Passive income from 9.2% yield stock could cut pressure as costs spike

Passive income is one way to reduce the pressure on families, especially as a new study finds a third of…

Read more »