With interest rates at record lows, I’ve been looking for dividend stocks to add to my portfolio today. Here are three companies I’ve been taking a closer look at recently with the view of opening a position.
At the top of my list is the blue-chip telecoms giant BT (LSE: BT.A). Strictly speaking, this isn’t a dividend stock. BT axed its second-half dividend in May 2020, leaving investors with just the 7.7p per share payment for the first half of the year.
For the current fiscal year, which ends at the end of this month, there will be no dividend at all. However, the group has signalled its intention to restart payouts in its next fiscal year.
Analysts have pencilled in a dividend of 7.4p per share. This could provide a prospective yield of 5.2% on the current stock price.
That said, there’s no guarantee the company will hit this target. A sudden increase in capital spending costs, or a fall in net profit, could weigh on income and derail BT’s recovery. These are the key challenges the group faces right now.
Still, despite these risks, I think this dividend stock offers potential. That’s why I’d buy the company for my portfolio today.
The second company on my list of dividend stocks I would buy today is Ferrexpo (LSE: FXPO).
Thanks to a record rise in iron ore prices over the past 12 months, this company was recently able to declare record dividends for its 2020 financial year of $0.72 (52p). That implies investors have seen a total income return of 14% this year.
It’s unlikely, in my opinion, that we will see a repeat of this in 2022. Iron ore prices are incredibly volatile, which means companies can earn record profits one year but report substantial losses the next. This is the most considerable risk the corporation currently faces.
However, Ferrexpo has always been happy to return excess profits to investors in boom times.
So, while the dividend yield might decline next year, I’m optimistic that this dividend stock will remain an income champion in the long run. That’s why I would buy the company for a diversified portfolio of UK shares today.
The final company on my list is one of the oldest listed UK businesses, Tate & Lyle (LSE: TATE).
With a yield of 4% at the time of writing, this dividend stock offers an attractive income level for investors. I’m also incredibly encouraged by its dividend history. For the past six years, Tate’s per-share dividend has stayed steady.
Of course, past performance should never be used as a guide to future potential. So, just because the company has been able to maintain this dividend in the past does not mean that it will continue to do so. Indeed, the organisation faces many challenges, such as volatile commodity prices and competition. These could impact its profit margins in the long run.
Still, the ingredients business operates in a relatively defensive sector, which gives me confidence in its long-term outlook. While the group does face challenges, I would buy the shares for this reason as part of my diversified portfolio of dividend stocks.
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Rupert Hargreaves has no position in any of the shares mentioned. 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.