We asked our freelance writers to share the top dividend stocks they’d buy in April. Here’s what they chose:
Royston Wild: Redrow
A steady flow of positive data continues to stream in from Britain’s housing sector. Last week, for example, news emerged that average home prices in the UK rose at their fastest pace for 17 years in March.
The ultra-low valuations of London’s quoted housebuilders seem at odds with the industry’s resilience, however. The past provides no guarantee that homes demand will remain strong as interest rates rise. Yet I think this risk is more than baked into the share prices of most housebuilding shares.
I believe that FTSE 250-quoted Redrow (LSE:RDW) is one of these brilliant bargain dividend stocks. Today the business — which in February upgraded its medium-term profit guidance — trades on a forward P/E ratio of just 5.6 times. It also carries a large 6% yield at recent prices.
Royston Wild does not own shares in Redrow.
Stephen Wright: BP 8% Cumulative 1st Preference
I’m taking a slightly different theme with my top British dividend stock for April. The BP 8% Cumulative 1st Preference (LSE:BP.A) shares are catching my eye. Preferred shares work slightly differently to common stocks, but Warren Buffett is a big fan. And I think that this one might be a winner.
The shares pay a fixed dividend of 8p/share. Importantly, the company has to pay dividends to its preferred shareholders in full before it can pay dividends to its common stock holders. For an income-seeking investor, I think that the added protection of preferred dividends might be welcome.
Stephen Wright does not own shares in BP Cumulative 1st Preference 8%.
Roland Head: Synthomer
FTSE 250 chemicals group Synthomer (LSE: SYNT) has caught my eye recently. I believe it could be an attractive dividend investment at current levels.
Synthomer benefited from a boom in demand for latex gloves during the pandemic, but it’s now returning to a more sustainable and diverse mix of product sales.
Although I can see some risk relating to management changes and the integration of a recent acquisition, I believe the fundamentals look strong.
Synthomer offers a forecast dividend yield of 5.5% for 2022. I believe it should deliver steady growth over the medium term.
Roland Head does not own shares in Synthomer.
Paul Summers: Taylor Wimpey
My top dividend stock for April is Taylor Wimpey (LSE: TW). Right now, the housebuilder is down to return 7.5% in cash in FY22. That makes it one of the highest-yielding stocks in the FTSE 100.
Sure, the potential for a wobble in the currently booming UK housing market can’t be ignored. With a valuation of just seven times forecast earnings, however, I’d say the market has already priced this in. The income stream is also likely to be covered nearly twice by expected profit. Staying diversified is vital but I’d be happy to buy today.
Paul Summers has no position in Taylor Wimpey.
Andrew Mackie: BP
My standout dividend stock for April is BP (LSE: BP). Although its yield of 4.3% is certainly not the most generous, this figure masks the true extent of the returns earmarked for shareholders.
Buybacks of $4.15bn have already been announced from surplus cash flow in 2021. In addition, the company has committed to return 60% of annual cash flow through buybacks. It estimates that if oil averages $80, that will equate to $7bn. Although the forced sale of Rosneft will likely impact that figure.
It also has the capacity to grow the dividend by 4% a year, at an average oil price of $60. Today, oil is over $100 and I expect it to remain elevated for some time to come.
Andrew Mackie owns shares in BP.
Harshil Patel: Imperial Brands
My top dividend stock for April is Imperial Brands (LSE:IMB). This well-established consumer brand offers a juicy dividend yield of over 8%. That beats the average FTSE 100 yield of 3.5%.
It also has an impressive track record when it comes to dividends, having consistently paid income to shareholders for over 25 years.
Imperial is in the early stages of a multi-year transformation plan. There are always risks involved when it comes to business transformations. That said, it can afford some room for error as this dividend stock trades on a price-to-earnings ratio of just 6x. That looks super cheap to me.
Harshil Patel does not own shares in Imperial Tobacco.
Alan Oscroft: Direct Line Insurance Group
Direct Line Insurance Group (LSE:DLG) is my April pick amongst income shares. The insurance sector might be risky as we face soaring inflation and a possible recession. But I find Direct Line’s forecast 8.2% yield tempting.
My concern is that the dividend is likely to be only just covered by earnings. But there does seem to be cash around to pay it. In March, the insurer announced a share buyback worth up to £100m, in order to reduce its share capital.
That has an additional benefit in that it should help boost earnings per share and support future dividends.
Alan Oscroft has no position in Direct Line Insurance Group.
