3 big dividend shares to buy today

Paul Summers picks out three second-tier dividend shares to help take the sting out of rising prices.

| 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

With inflation at a 30-year high and showing no signs of slowing down just yet, I think it’s prudent for me to have at least some of my cash stashed away in high-yielding dividend shares.

Here are three that jump out at me, two of which I already own in my Stocks and Shares ISA. All are from the FTSE 250.

IG Group

I’ve held stock in trading platform provider IG Group (LSE: IGG) for a few years now, partly due to the income on offer. I’ve never gone so far as to calculate the actual figure. However, this company must have increased the value of my ISA by thousands of pounds in dividends alone. And with the shares yielding a forecast 6%, I’ve no intention of selling yet.

Another thing I really like about IG is that it’s geared to perform well in choppy markets. Sure, we might not see a repeat of the explosion in trading that we saw during the pandemic. Even so, the firm must be making healthy profits from the volatility we’ve seen on an almost daily basis in 2022.

An investment here isn’t devoid of risk. Companies often find themselves subject to scrutiny from regulators and new rules can temporarily dent earnings while it adapts. IG is also far from the only option available to market participants in this space.

Nevertheless, a P/E of just 8 looks brilliant value.

Moneysupermarket.com

A second FTSE 250 dividend share that I’d buy more of is price-comparison specialist Moneysupermarket.com (LSE: MONY). That’s despite the shares losing over a third of their value in the last 12 months.

One silver lining for me throughout this is that Moneysupermarket has continued to pay dividends. It now offers a massive 7% dividend yield.

Of course, this may be reduced if trading doesn’t improve soon. As things stand, the payout is covered only 1.2 times by profit. Ideally, I’d be looking for something in the region of two times profit.

On a positive note, CEO Peter Duffy remarked last month that the company had seen a “strong recovery” in its Money and Travel divisions in Q1. I reckon the rise in the cost of living we’ve seen since has pushed more households to save money where they can by visiting its site.

At 13 times earnings, Moneysupermarket looks cheap for an otherwise high-quality share. I’m more than prepared to wait for a recovery, enjoying the income stream in the meantime.

Vistry

A final big dividend share from the FTSE 250 I’ve got my eye on is housebuilder Vistry (LSE: VTY), formerly known as Bovis Homes.

I’m usually wary of owning stocks like this. The housing market is notoriously cyclical and I do wonder if fears over a UK recession (not to mention a return to normal working conditions for many) could bring the post-pandemic property boom to an end in 2022.

Again however, a lot of this looks priced in. Vistry’s stock currently trades at just five times forecast earnings. That’s even cheaper than FTSE 100 rivals such as Taylor Wimpey and Persimmon. A stonking 9.1% yield, safely covered by profit, could be worth the risk.

Vistry would also help to diversify my portfolio, allowing me to mitigate the impact of any dividend cuts elsewhere.

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.

Paul Summers owns shares in IG Group and Moneysupermarket.com. The Motley Fool UK has recommended Moneysupermarket.com. 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

A pastel colored growing graph with rising rocket.
Investing Articles

Here’s how long it’s taken £1k of Nvidia stock to turn into £10k today!

Our writer explains how money invested in Nvidia stock less than three years ago has grown in value over tenfold…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
US Stock

3 red flags I’m seeing right now for the S&P 500

Jon Smith points out some concerns he has with the S&P 500 at current levels and picks one stock he's…

Read more »

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

UK dividend shares are outperforming US tech stocks!

UK dividend shares aren’t just for passive income investors. Over the last 12 months, they’ve been outperforming their US tech…

Read more »

DIVIDEND YIELD text written on a notebook with chart
US Stock

Here’s how much passive income an investor could make with £2k in Meta stock

Jon Smith looks at Meta stock from a different angle to normal, considering it as an option for an investor's…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

1 of my top UK shares is up 15% in a day! Is it still a buy for me?

Celebrus shares are soaring after strong full-year results. At a P/E ratio below 13, is it one of the best…

Read more »

Close-up of children holding a planet at the beach
Investing Articles

£10,000 invested in Jet2 shares 2 years ago is now worth…

Jet2 shares have surged in recent months and finally appear to be pushing towards fair value. Dr James Fox shares…

Read more »

piggy bank, searching with binoculars
Investing Articles

This FTSE 100 blue-chip could rise 26% in 12 months, according to brokers

While this FTSE 100 dividend stock has put investors through the wringer in recent years, some analysts see brighter skies…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

A 3-step passive income strategy to target major wealth

Want to invest in the stock market to build up a passive income stream? There's no fiendlishly complex multi-step mystique…

Read more »