The best shares to buy now for rising dividends

Paul Summers thinks the best shares to buy for income are those that consistently hike their dividends. Here are two examples he likes.

| 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.

Hand holding pound notes

Image source: Getty Images.

The best shares to buy for income, at least in my view, aren’t those offering the highest payouts. It’s those where dividends are consistently growing that I’d be inclined to invest in. Here are two examples. 

Rising income

Fund manager Liontrust (LSE: LIO) has been hiking dividends by double-digits for years now. It’s done it again today on the back of a great set of full-year numbers. 

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!

Adjusted pre-tax profit jumped 69% to £64.3m over the year to the end of March. On a statutory basis, it more than doubled from £16.5m to £34.9m.

As a sign of its growing popularity, net inflows also jumped 30% to £3.5bn over the period. At the end of March, Liontrust had £30.9bn in assets under management and advice — up 92% on the previous year. Last Friday, this was £33.3bn.    

And those dividends? Today, Liontrust announced it would pay holders a total of 47p per share for the full year. This is up a massive 42% on that returned in 2020 and equates to a trailing yield of 2.8%.

All told, the dividend has now grown an average of 33% per annum since 2017. This is indicative of a very healthy company, in my view. I’d much rather have this than be promised a huge payout by a company that, due to poor trading, never materialises. This is why I think the £1bn-cap could be one of the best shares to buy for income today.

Looking ahead, Lionstrust is hoping to capitalise on the interest in sustainable investment by launching its ESG Trust in July. Importantly, this new vehicle will feature small-cap stocks that most funds shy away from. Assuming this proves a successful strategy, I suspect dividends will continue rising from here.

Another dividend hiker

A second company that’s been consistently raising its dividends is self-storage firm Safestore (LSE: SAFE).

Earlier this month, the company reported a “very strong performance” over the first half of its financial year. As a result, Safestore has predicted that full-year earnings will be “at least at the top end of its previous guidance.” 

All this should be good news for the dividends. Right now, analysts are predicting a 54% jump in the final payout for FY21 (22.9p per share). Based on today’s share price, that becomes a yield of 2.4%.

Again, investors could get a lot more elsewhere. However, these dividends might not be growing at the same clip, if at all. A stagnant income stream isn’t encouraging.

So, taking into account its fairly predictable earnings stream and encouraging store pipeline, I think Safestore is another one of the best shares to buy if I were looking for an increasing income stream.

Never risk-free

Naturally, dividend hikes are based on trading. And by its very nature, trading at any business will fluctuate from year to year. As such, no income stream is too strong to be cut when the going gets tough. This could be the case even for Liontrust and Safestore. Neither are completely immune to macro-economic setbacks.

This is why I think it’s important to ensure that my portfolio is appropriately diversified. In practice, this means holding a bunch of stocks from different sectors. Doing this would allow me to kick back and not get flustered with day-to-day market wobbles.

Our 5 Top Shares for the New “Green Industrial Revolution"

It was released in November 2020, and make no mistake:

It’s happening.

The UK Government’s 10-point plan for a new “Green Industrial Revolution.”

PriceWaterhouse Coopers believes this trend will cost £400billion…

…That’s just here in Britain over the next 10 years.

Worldwide, the Green Industrial Revolution could be worth TRILLIONS.

It’s why I’m urging all investors to read this special presentation carefully, and learn how you can uncover the 5 companies that we believe are poised to profit from this gargantuan trend ahead!

Access this special "Green Industrial Revolution" presentation now

Paul Summers 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.

More on Investing Articles

Futuristic front of NIO car in Norwegian showroom
Investing Articles

Down over 50%, is NIO stock the best EV pick right now?

NIO stock has dipped over 50% in the past year. Does this create the perfect opportunity to buy or are…

Read more »

Buffett at the BRK AGM
Investing Articles

3 Warren Buffett techniques to build my wealth

Our writer shares a trio of Warren Buffett investing habits he hopes can help him build his own wealth.

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Aviva shares are in demand. Should I buy too?

Hargreaves Lansdown investors were piling into Aviva shares last week. This Fool is asking whether he should join the queue.

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

3 reasons why I think the IAG share price could rally this year

Jon Smith writes about how improving risk sentiment could help the IAG share price this year, but not without risks…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

A passive income stock I’ve bought to supercharge my wealth!

I think this UK dividend stock is one of the best to buy for healthy long-term passive income. Here's why…

Read more »

British Pennies on a Pound Note
Investing Articles

3 hot penny stocks I’m buying in June!

With their exciting growth potential, penny stocks can be great investments. I've found three to buy next month based on…

Read more »

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

2 green dividend shares I’d buy with £500

Jon Smith explains two dividend shares with a focus on renewable energy that have caught his eye at the moment.

Read more »

Young black woman walking in Central London for shopping
Investing Articles

Should I buy these cheap FTSE 100 shares before June?

Paul Summers considers whether he should add these cheap FTSE 100 stocks to his portfolio before their next updates.

Read more »