3 top dividend stocks I’d buy for February (and for 2019)

Royston Wild explains why he thinks these dividend stocks could surge in the coming sessions.

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Looking for top dividend stocks whose share prices could explode in the weeks and months ahead? Of course you are. Who isn’t? I reckon the three discussed below could be right up your alley.

Small price, big dividends

House-building is one of the hottest sectors to grab a slice of right now. Newsflow from across the segment remains, broadly speaking, pretty exceptional, with supportive lending conditions driving strong buyer demand. And I’m expecting yet another solid update from MJ Gleeson (LSE: GLE) when it unfurls half-year results on Thursday, 14 February.

The firm sprung to three-month highs in early January when it declared “we continue to see strong demand for our low-cost homes,” and another fizzy update in the coming sessions could see it add more gains.

Gleeson’s dirt-cheap valuation currently leaves plenty of scope for another share price spurt. It trades on a forward P/E ratio of 12.3 times, comfortably below the regarded value benchmark of 15 times, and below. It also sports a corresponding, inflation-bursting 4% dividend yield.

The home-builders are very much back in fashion, illustrated by the fact that they now comprise three of the FTSE 100’s biggest risers over the past four weeks (with Taylor Wimpey leading the index, up 20%). Now seems a great time to pile in.

6% dividend yields

Hays (LSE: HAS) is another great stock I feel could surge on the release of interim numbers later this month (Thursday, 21 February).

Investors failed to significantly react to its second-quarter update in the middle of January, but I feel they missed a trick here. Last month, the recruitment ace advised that net fees exploded by double-digit percentages for many of its foreign territories during October-December, and this helped fees on a group level rise by a chunky 9%.

Concerns over Brexit are still doing the rounds and are likely to continue for some time yet. Extra signs of trading resilience from Hays, despite troubles in its home territory, could well fuel a fresh share price advance, though.

Its prospective P/E multiple of 12.4 times, and its smashing 6.3% dividend yield, certainly make it an attractive destination right now.

A FTSE 100 favourite

Smurfit Kappa Group (LSE: SKG) is a company I believe is long overdue a share price bounce. I reckon this could finally occur when full-year results are released on Wednesday, 13 February.

I’ve been arguing that market sentiment towards the packaging sector, spurred by concerns over new capacity hitting the market, has been far too bearish. I believe that signs of more progress from the Footsie firm on the trading front should help allay these concerns and help it to recover some more ground. Last time out in October, Smurfit Kappa declared it “experienced continued demand growth across most markets” during January-September and tipped further gains as growing environmental concerns drive sales of its corrugated products.

A prospective earnings multiple of 8.8 times leaves oodles of room for a fresh re-rating, in my opinion, as does a bulging 3.9% dividend yield. I think next week’s release could prove the catalyst for a share price fightback in 2019.

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.

Royston Wild owns shares of Taylor Wimpey. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer 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 diverse range of insights makes us better investors.

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