I’d invest £333 in each of these 3 top dividend shares now

Jonathan Smith runs through three of his top dividend shares at the moment, with yields in excess of the FTSE 100 average.

| 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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

If I had £1,000 that I was looking to invest at the moment, I’d consider splitting it up into three chunks. From there, I’d look to pick the three top dividend shares and invest in each of them. This way, I get to spread my risk around so that my chances of getting some form of income overall is high.

Allocating to the property sector

The first dividend share I’d consider investing in is Barratt Developments (LSE:BDEV). Over the past year, the share price is up 19%. The UK-based homebuilder has benefited greatly from the double-digit percentage house price increase over the past year. However, the business has performed well in its own right, irrespective of house price movements.

For example, I covered the full-year results that were released last month. There was a 36.8% increase in home completions versus the previous financial year, as well as a 3% increase in the gross profit margin. When I consider that the profit margin stands at 21%, it gives me confidence that the business is operating efficiently.

I think the strong finances should enable the dividend to be paid well into the future. It currently has a dividend yield of 4.41%. However, one risk is the correlation to house prices. If we do see a correction in house prices next year, I think the dividend will still be paid but the share price will likely fall.

Making a play on gold

A second company I’d invest a third of my money in is Polymetal International (LSE:POLY). The mining company focuses on gold and silver.

In contrast to Barratt, the share price is actually down 19% over the past year. This is one point that has helped to boost the dividend yield. It currently sits at just over 7%.

The latest Q3 results were steady, but not spectacular. In the nine months through to the end of September, revenue for the year is up 4%. It commented that it is on track to meet production targets for the year. One drag that can be seen on the quarterly results is due to lower commodity prices. 

Although this is a risk that I see for this top dividend share, I also see it as a positive. Personally, ahead of a tough winter globally due to Covid-19 and higher energy prices, I think the gold price could rally. I could be wrong here, and a steady winter coupled with higher interest rates could see gold fall.

A sustainable top dividend share

The final stock I’d put £333 into is Phoenix Group Holdings (LSE:PHNX). The insurance company has seen the share price fall 5% over the past year. On the flipside, the current dividend yield is at 7.19%.

The company has a strong focus on the dividend policy for shareholders. In fact, the dividend per share has grown in almost all of the past 10 years. One reason why it can do this is because the nature of the business offers high cash generation. Cash remittances from life companies stood at £872m for the first half of 2021. It’s aiming to have a cash generation target of £1.5bn-£1.6bn for the year.

However, I do need to be careful with the company. The pension policies it buys and manages are exposed to the risk of rising interest rates and a falling stock market, both of which are real risks at the moment.


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

jonathansmith1 and The Motley Fool UK have 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

Two gay men are walking through a Victorian shopping arcade
Investing Articles

The Burberry share price continues to rise despite falling sales!

Our writer looks at how the Burberry share price responded to the company’s first-quarter trading update, which was released earlier…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

What a crazy day for the share price of this FTSE 250 retailer!

Our writer’s taken time to digest the latest results of the FTSE 250’s Frasers Group. And he likes what he…

Read more »

Black woman using smartphone at home, watching stock charts.
Investing Articles

1 year on from the CrowdStrike IT outage, here’s how the S&P 500 stock has done

S&P 500 stock CrowdStrike tanked last year when the company caused a huge global IT outage. Its performance since then…

Read more »

Mixed-race female couple enjoying themselves on a walk
Growth Shares

Aiming to turn £10k into £20k? Here are 3 FTSE 250 shares for investors to consider

Our writer demonstrates how three vastly different FTSE 250 stocks could all double an investment over a decade – and…

Read more »

Burst your bubble thumbtack and balloon background
Investing Articles

The unanswered billion-dollar question hanging over the Helium One share price!

With the Helium One share price stuck around 1p, our writer tries to answer the question that he reckons every…

Read more »

UK financial background: share prices and stock graph overlaid on an image of the Union Jack
Investing Articles

Is the FTSE 100 becoming increasingly disconnected from the UK economy?

The FTSE 100's broken through the 9,000 barrier for the first time, yet the British economy's shrinking. Should investors be…

Read more »

Bearded man writing on notepad in front of computer
Investing Articles

I’ve just invested £12.06 in this FTSE 250 stock

Why has a FTSE 250 housebuilder that Stephen Wright's been watching for some time suddenly jumped to the top of…

Read more »

UK financial background: share prices and stock graph overlaid on an image of the Union Jack
Investing Articles

Why I think the FTSE 250 could outperform the FTSE 100 this decade

Our writer takes a lesson from history and outlines why he thinks the FTSE 250 could beat the FTSE 100…

Read more »