3 no-brainer dividend stocks I’d buy right now

These dividend stocks are all benefiting from strong tailwinds, which could lead to large capital and income returns for investors.

| 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.

Various denominations of notes in a pile

Image source: Getty Images.

Research shows that over the long term, dividends can account for as much as 50% of an investor’s profits. This implies that dividend stocks should form a core component of every investor’s portfolio. 

Unfortunately, this year, many former dividend champions have slashed their distributions to investors. However, a handful of firms have stood by their payouts. I reckon these companies could be fantastic portfolio additions. 

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Today, I’m going to take a look at three of these no-brainer dividend stocks. 

Buy-to-let income

Grainger (LSE: GRI) is one of the largest publicly traded residential landlords in the UK. It owns nearly 10,000 homes across the country, which provide a steady income stream for the business. 

Recent trading updates from the group show rent collection has remained strong this year, unlike other property-focused firms. The business has collected 95% of rents so far in 2020. What’s more, rents have increased by 3% on average across the portfolio. 

All of the above implies that one can depend on Grainger to produce a steady income through dividends. The stock currently offers a dividend yield of 2%. The distribution has grown at an average rate of 18% for the past five years, which suggests investors could see strong payout growth in the years ahead. Indeed, the company has a pipeline of around 1,500 new homes, which should help underpin earnings and dividend growth as they’re rented to customers. 

Blue-chip dividend stocks

I think Hargreaves Lansdown (LSE: HL) also qualifies as a no-brainer dividend stock. The reason why I like this company as an income play is simple, the group has substantial profit margins. 

The organisation’s operating profit margin has averaged 62% since 2015. This has provided the firm with vast amounts of cash to reinvest and return to investors. According to my figures, since 2015, Hargreaves has returned approximately £1bn to investors with dividends. 

With profits set to jump this year, analysts are expecting the group to hike its dividend by around 11%. This may give the stock a 3% dividend yield. 

Considering the firm’s track record of returning cash to investors, I think one could benefit from buying the stock as an income investment. Over the past five years, Hargreaves’ net income has grown at an annual rate of 15%, generating strong capital growth as well. 

Another blue-chip income play I believe one could benefit from buying is CRH (LSE: CRH).  

As dividend stocks go, this business does not jump out at investors. The building business is hardly the most recognisable business on the market. However, as one of the largest building products providers in the world, CRH has large profit margins and substantial economies of scale. 

These qualities have helped the firm become an income champion. The stock currently supports a dividend yield of nearly 3%. What’s more, the payout is covered 2.3 times by earnings per share, so there’s plenty of room for payout growth in the years ahead. The distribution has grown at a compound annual rate of 6% for the past decade. 

Governments around the world are already planning large building programmes to help their respective economies recover from Covid-19 lockdowns. CRH could become a primary beneficiary of this spending. That’s why I think it could be worth buying this undercover income stock today. 

There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it!

Don’t miss our special stock presentation.

It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.

They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.

That’s why they’re referring to it as the FTSE’s ‘double agent’.

Because they believe it’s working both with the market… And against it.

To find out why we think you should add it to your portfolio today…

Click here to get access to our presentation, and learn how to get the name of this 'double agent'!

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.

More on Investing Articles

A beach at sunset where there is an inscription on the sand "Breathe Deeeply".
Investing Articles

Stock market crash: here’s why falling prices is good news

Over in the US, a stock market crash is battering high-priced stocks. But I see falling shares as an opportunity…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

These 5 FTSE 100 shares crashed in 2022. I’d buy 1 today

Although the FTSE 100 index is flat in 2022, some Footsie shares have crashed hard this year. But I see…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

How investors can boost their passive income when the FTSE is falling

Stock markets are plagued with fears right now. Here's why I firmly believe those fears improve our passive income prospects.

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Investing Articles

2 cheap UK shares to buy right now!

Recent market volatility means many top stocks now trade at rock-bottom prices. Here are two cheap UK shares I'm thinking…

Read more »

Rolls-Royce's business aviation engine, the Pearl 700
Investing Articles

The Rolls-Royce share price is just pennies. Am I missing something?

As the Rolls-Royce share price lingers in penny stock territory, our writer revisits the investment case that has attracted him…

Read more »

Compass pointing towards 'best price'
Investing Articles

How to put a valuation on the Woodbois share price

The Woodbois share price has fallen from its recent spike, so should I buy now? And how can I work…

Read more »

Inflation in newspapers
Investing Articles

I’d fight inflation with these 2 FTSE 100 dividend shares

With inflation hitting a 9%, I'm boosting my passive income and turning to these two FTSE 100 dividend stocks.

Read more »

New Ways of Investing - Hands Only Using Smart Phone
Investing Articles

2 cheap Footsie stocks to buy for BIG dividends!

The recent stock market sell-off leaves plenty of top stocks looking too cheap to miss. Here are two great Footsie…

Read more »