3 great dividend stocks for your ISA

Royston Wild looks at three payout powerhouses for savvy ISA shoppers.

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A strong housing market makes me convinced Bellway (LSE: BWY) should keep delivering market-beating dividends long into the future.

The property developer is expected to see earnings moderate in the near-term as the rampant growth in home prices draws to a close. Indeed, bottom-line expansion of 6% and 4% is pencilled-in for the periods to July 2017 and 2018, a sharp decline from the 39% rise Bellway enjoyed last year.

Latest data from Halifax showed house values rose just 5.1% in February, the slowest rate since July 2013.

However, Bellway should remain a reliable earnings generator as government plans to kick-start homes construction continue to yield very little and generous mortgage rates persist.

Against this backcloth, Bellway is anticipated to pay a 110.8p per share dividend in 2017, yielding a stonking 4.1%. And the yield rises to 4.4% in 2018 thanks to an expected 119.1p payout.

Insurance star

With revenues powering higher and the balance sheet becoming ever-stronger, the dividend outlook is getting steadily brighter at RSA Insurance (LSE: RSA).

The financial giant hiked the dividend by an eye-popping 52% in 2016, to 16p per share, as group profits went through the roof. Indeed, the company saw operating profit soar 25% last year to £655m, reflecting the hard work RSA Insurance has made in stripping out costs and slimming down to concentrate on key geographies in Europe and North America.

And the insurer’s restructuring plan is not done yet, RSA Insurance upgrading its cost reduction target again just last month — the business now aims to cut expenses by £400m per annum by 2018, up from its prior target of £350m.

This naturally bodes well for dividends in the near term and beyond, and the City expects rewards of 21.5p per share in 2017 and 29p in 2018.  These projections mean the yield jumps from 3.6% this year to 4.9% in 2018.

I reckon RSA Insurance’s heroic turnaround strategy now makes it an excellent long-term dividend pick.

Keep on trucking

The fruits of huge restructuring over at Stobart (LSE: STOB) should also deliver stunning dividend flows, in my opinion.

The company has big plans to turbocharge revenues from its Energy, Rail and Aviation divisions. At its flying arm Stobart is steadily stepping up expansion at Luton Airport and last month bought the outstanding 33% stake in aircraft leasing firm Propius Holdings from Aer Lingus..

Elsewhere, a steady stream of recent contract wins has helped Stobart’s railway pipeline to continue to bulge. And at its energy operations, Stobart plans to deliver more than 2m tonnes of biomass fuel by the close of next year.

The City currently has dividends of 12p per share chalked in for the years to February 2017 and 2018, giving Stobart a monster 6.2% yield. And I reckon dividends should continue to outperform the broader market as sales stream in across the business.

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 considered so you should consider taking independent financial advice.

Royston Wild has no position in any shares mentioned. 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.

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