The markets have been weak. And because of that there are more companies available that can be considered decent dividend shares.
Fast-moving consumer goods
For example, fast-moving consumer goods company Unilever looks cheaper than it has for ages. With the share price near 3,728p, the forward-looking dividend yield for 2023 is just over 4%.
And I think that income is worth having. Unilever’s compound annual growth rate for its dividend is running above 6%. And I’d be happy to own the shares for at least 10 years.
One concern is inflation, and how that might affect the business. But at the end of April, the company said it was coping well. And it’s managing to raise selling prices to offset rising input costs.
Earnings look set to decline this year. The company is investing to shore up the strength of its brands. But it isn’t immune to weaker general economic conditions. Nevertheless, Unilever has a strong business with a good record of execution.
Looking ahead, City analysts expect a bounce-back in earnings during 2023. But it’s possible for any business to miss its estimates. Nevertheless, despite the risks, the stock tempts me now.
I’m also focusing on smoking products maker Imperial Brands (LSE: IMB). With the share price near 1,870p, the forecast dividend yield is around 7.7%. That’s for the trading year to September 2023.
The company has managed to execute an orderly withdrawal from the small part of its operations in Russia. And the May half-year report had an optimistic tone regarding the future for the business. Trading has been essentially flat in the first half of 2022. But the company expects recent selling price increases to “support a stronger revenue performance in the second half”.
Of course, the sector is not for everyone given the health concerns regarding the products. And the company has quite a large pile of debt. However, cash flow remains solid and there’s no sign of a dividend cut ahead.
My third dividend pick is energy business Renewables Infrastructure (LSE: TRIG). The company invests in operational renewable energy generation projects. And that means onshore and offshore wind and solar photovoltaics assets in the UK and Northern Europe.
I like the firm’s consistent multi-year trading and financial record. And with the share price near 134p, the forward-looking dividend yield is just over 5% for 2023. However, the pace of dividend growth has been slow with a compound annual growth rate running at just below 2%.
There’s an obvious risk that cash flow and profits could decline if the wind doesn’t blow or if the sun doesn’t shine. But in February with the full-year report the company said it delivered a “robust” financial performance in 2021. And that was despite “volatile commodity markets and the lowest wind resource in the company’s history”.
For me, a long-term investment in Renewables Infrastructure is worth considering in today’s energy environment.