We asked our freelance writers to share the top dividend stocks they’d buy in June. Here’s what they chose:
G A Chester: Bunzl
Distribution and outsourcing specialist Bunzl (LSE: BNZL) doesn’t have the highest yield in the FTSE 100. But it does have a track record of 28 consecutive years of dividend increases at a compound annual growth rate of 10%. Growth has been supported by a successful bolt-on acquisition strategy.
I’ve always liked the company’s significant exposure to non-cyclical and less-cyclical customer markets. And the business has been highly resilient through the pandemic. The share price has underperformed the Footsie so far in 2021, and I reckon a starting yield of 2.4% makes this a good time for me to buy for long-term income.
G A Chester has no position in Bunzl.
Roland Head: Direct Line Insurance Group
FTSE 250 insurer Direct line Insurance Group (LSE: DLG) is my top dividend stock, thanks to an 8% dividend yield that I believe is sustainable.
This well-known motor and home insurer has been investing in new technology over the last couple of years to improve its underwriting. Direct Line has also been expanding its business insurance division, where sales rose by 16.1% during the first quarter.
One risk is that new regulations banning price hikes for renewal customers could affect Direct Line’s profits over the next few years. However, the new rules were expected, and my experience is that larger companies generally handle regulatory changes more easily than smaller rivals.
I see Direct Line as a buy at current levels.
Roland Head owns shares of Direct Line Insurance Group.
Ben Hargreaves: National Grid
I think buying shares in National Grid (LSE:NG) could be a solid investment for a dividend-focused portfolio. The company has a strong presence in the UK but also has a large presence in the US, where it serves approximately 10 million customers. This adds geographic diversification to its strengths, amid the stable environment it operates in as a utility company.
National Grid offers a dividend of 5.2% and its share price has grown by 11% in the year-to-date. One note of caution is that the share price has only risen by 14% over the last three years. However, when dividends are accounted for, I believe following a buy-and-hold strategy with National Grid in the long term should make it a solid earner.
Ben Hargreaves has no position in National Grid.
Edward Sheldon: Unilever
My top dividend stock for June is consumer goods giant Unilever (LSE: ULVR). It currently offers a prospective dividend yield of around 3.4%.
I like Unilever for a few reasons. One is that the company is a reliable dividend payer with an excellent dividend growth track record. Over the last 70 years, Unilever has grown its payout by around 8% per year.
Another reason I like the stock is that it has long-term growth potential. With more than 50% of its revenues coming from the world’s emerging markets, there’s plenty of room for growth.
There are risks to the investment case. One risk is that its brands could lose their appeal. Overall, however, I think the long-term risk/reward proposition here is attractive.
Edward Sheldon owns shares in Unilever.
Kevin Godbold: SSE
FTSE 100 energy company SSE (SSE) has endured operational troubles in recent years but the business is growing now. The directors have steered operations towards renewables, such as wind generators. And the financial figures are on an improving trend. For example, I like the recent record of robust and rising cash flow. The company rebased the dividend lower for the trading year to March 2020, but it’s been moving higher since, with City analysts predicting further incremental increases ahead.
With the share price near 1,540p, the forward-looking yield is around 5.5%. I’d be keen to buy some of the stock and lock that rising income from this improving business into my diversified portfolio.
Kevin Godbold does not own any SSE shares.
Christopher Ruane: Imperial Brands
As income stocks go, Imperial Brands (LSE: IMB) is hardly a secret. But I still think it’s a top dividend stock for my portfolio.
Its yield exceeds 8%. That makes the tobacco giant one of the highest yielding FTSE 100 shares.
It recently raised its dividend. I took that as a sign of confidence that Imperial’s new strategy of focussing on cigarettes in its five key markets has started well.
It did cut its dividend last year, though, and uncertain future demand for cigarettes is a risk.
Christopher Ruane owns shares in Imperial Brands.
Rupert Hargreaves: Direct Line
Insurance group Direct Line (LSE: DLG) is one of my favourite income investments. The company is one of the country’s largest insurers, which gives it a robust competitive advantage. Specifically, it has lower costs and a lower loss ratio than most of its peers.
As a result, Direct Line is quite profitable, and management is committed to returning as much profit as possible to investors.
At the time of writing, the stock offers a dividend yield of 7.3%. In addition, the group is also returning cash to investors by repurchasing shares.
These cash returns could come under pressure if the company has to deal with higher than expected losses. An increase in costs may also lead to reduced profit margins.
Despite these risks, I’d buy more shares in June.
Rupert Hargreaves owns shares in Direct Line.
Paul Summers: Premier Miton Group
Small-cap asset manager Premier Miton (LSE: PMI) is likely flying under the radar of most income hunters. However, a 48% hike to the interim dividend after a 17% rise in profits may change this.
Analysts are forecasting PMI will yield 5.2% in FY21 based on the share price as I type. That’s far more than the derisory 0.46% I’d get from the best Cash ISA.
Sure, the company’s line of work makes returns hard to predict. However, I think a P/E of just 12 takes this into account. A healthy balance sheet is also reassuring.
Paul Summers has no position in Premier Miton Group
Alan Oscroft: City of London Investment Trust
City of London Investment Trust (LSE: CTY) has been dubbed a “Dividend hero” by the Association of Investment Companies, after raising its dividend for 54 years in a row. We’re looking at yield of around 4.8% now, which I find very attractive. Where does the trust put its money? It goes for UK equity income, with a spread of top FTSE 100 stocks in its portfolio.
So that’s my top dividend stock for June. Oh, and probably for July, August, next year, and five years time too… I see City of London as a serious long-term income investment.
Alan Oscroft owns shares in City of London Investment Trust.
Nadia Yaqub: The Renewables Infrastructure Group
I think The Renewables Infrastructure Group (LSE: TRIG) offers me a great way to get exposure to the green energy sector. It’s a diversified portfolio of renewable energy assets located throughout the UK and Europe.
TRIG consists of 77 investments across solar, both onshore and offshore wind as well as battery storage. These assets generate revenues from the sale of electricity and government-backed green benefits.
With economies focusing on net zero carbon emissions, this should act as a tailwind for TRIG shares. The investment trust isn’t cheap. It trades on a 13% premium to Net Asset Value (NAV). But given its dividend yield of over 5%, I reckon this stock is attractive for income investor in me.
Nadia Yaqub does not own shares in The Renewables Infrastructure Group.
Royston Wild: ITV
A slew of positive news from the advertising industry leads me to believe that ITV (LSE: ITV) is a great income stock to buy today.
ITV has itself seen a steady pickup in ad revenues in recent months. The emergence of Covid-19 variants could of course see this turnaround swiftly expire if infection rates balloon again. But for the time being there is plenty to get excited about as advertising income marches higher and ITV’s production units get back to work.
Okay, ITV’s 3.7% dividend yield for 2021 may be chunky rather than jaw-dropping. But City expectations of a sustained profits recovery — and with them predictions that dividends will keep marching higher — nudges the yield to a very-handsome 4.3% for next year.
Royston Wild does not own shares in ITV.
Harshil Patel: Persimmon
Persimmon (LSE:PSN) is my top income stock pick. It offers a forecasted dividend yield of 7%! This UK-based housebuilder aims to build good quality homes at a range of price points.
Demand for newly built homes remains healthy, and average selling prices are higher than in 2020. In its most recent trading update, it said that its average private sales rate this year is “well-ahead” of 2020.
Persimmon has high-quality land holdings, a strong balance sheet, and rising demand for its homes. That said, dividends can reduce if trading deteriorates. However, so far this year trading has been strong. Therefore, I expect to receive the forecasted 7% of dividend income.
Harshil Patel does not own shares in Persimmon.
Manika Premsingh: Imperial Brands
It has a hefty 9.4% dividend yield, but tobacco biggie Imperial Brands (LSE: IMB) faces two criticisms.
One, tobacco stocks are going out of vogue as the world gets healthier.
Two, it is often seen as a ‘sin stock’ in a time of ethical investing.
Here are my counter-arguments. First, tobacco companies are transitioning into healthier alternatives. Besides, for now tobacco demand is strong, evident from Imperial Brands healthy recent earnings.
Second, considering tobacco as ‘sin’ is debatable for me. Civil society and policy makers have done their bit to make consumers aware of its downside and also protect bystanders from harmful effects of second-hand smoke. Beyond that, consuming tobacco is a conscious adult choice.
It is my top dividend stock for June.
Manika Premsingh has no position in Imperial Brands.
We think that when a company’s CEO owns 12.1% of its stock, that’s usually a very good sign.
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Still only 55 years old, he sees the chance for a new “Uber-style” technology.
And this is not a tiny tech startup full of empty promises.
This extraordinary company is already one of the largest in its industry.
Last year, revenues hit a whopping £1.132 billion.
The board recently announced a 10% dividend hike.
And it has been a superb Motley Fool income pick for 9 years running!
But even so, we believe there could still be huge upside ahead.
Clearly, this company’s founder and CEO agrees.
The Motley Fool UK has recommended Bunzl. 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.