As we start the second half of 2019, I’d like to discuss the outlook for three dividend shares that may be appropriate for long-term portfolios. I believe that companies which consistently pay (and especially increase) dividends offer robust avenues to build passive incomes.
In the UK, we have many choices in various sectors from which to pick dividend shares that may appeal to a wide range of investors. So here are three stocks that I like and you may want to study further.
Increased demand for flexible office space
Workspace Group (LSE: WKP) is a FTSE 250 property company that offers flexible office and co-working arrangements to London-based companies. Its customers are mostly start-ups, small enterprises and freelancers.
The group owns and manages about 3.9m sq ft of business space across 64 London properties and has a pipeline of refurbishments and redevelopments over the next several years. It has been able to capitalise on the dynamic growth of the flexible workspace sector and last month, WKP announced results for the full year to 31 March that looked good. Its trading profit after interest rose 19% to £72.4m year-on-year (YoY) and net rental income rose 16% to £111m.
Management increased its dividend by 20% to 32.87p per share due to a “strong financial performance and positive outlook”. The company’s ex-dividend date is 4 July and the current dividend rate stands at 3.3%.
Bullish gold environment
The second FTSE 250 company I like is Centamin (LSE: CEY), the gold mining firm focused on the Arabian-Nubian Shield.
Recently, the US Federal Reserve (FED) Chairman Jerome Powell has opened the door for an interest rate cut, possibly in July and his comments have helped the price of gold reach a six-year high.
Now that gold has gone through the $1,350 resistance level, many gold-linked equities, such as Centamin, could benefit from a sustained bull run in the spot price of the precious metal.
This mid-cap stock with a market capitalisation of £1.32bn has a robust balance sheet with no debt. On 24 April, management released strong Q1 2019 results and gave an upbeat forecast as the Sukari mine in Egypt has already produced above forecast. The mine produces approximately half a million ounces of gold annually.
With a current dividend yield of 3.8%, CEY has a good history of returning a large share of free cash flow to investors semi-annually. The shares should go ex-dividend as of 29 August.
Growth in enterprise software
Micro Focus International (LSE: MCRO), is an enterprise software company that develops, sells, and supports software products and solutions for about 50,000 companies worldwide.
Analysts regard its software business model as dependable, high-margin, and cash-generating. Revenues are also resilient thanks to the sticky client base. The group is the seventh-largest software company in the world by revenue and with a market-cap of about £7.1bn, it is also the UK’s largest quoted software company.
2018 was not a good year for its shareholders and the stock price suffered. In March 2018, it saw a 52-week low of 97.6p. However, things have steadily improved for the FTSE 100 blue-chip over the past year as management is working hard to put the troubled integration of HP Enterprise behind it. And the current share price of about 2,100p now reflects increased investor confidence.
I except this business to keep rewarding shareholders in the coming years. Its healthy stream of dividends with a yield of 5.1% is an added bonus.
