Dividend forecasts: 3 FTSE 100 stocks with 6%+ yields

The FTSE 100 still offers plenty of choice for income investors. Roland Head looks at dividend forecasts for three high-yield stocks.

| 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.

The Troat Inn on River Cherwell in Oxford. England

Image source: Getty Images

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.

The recent market rally has pushed down dividend yields on some popular FTSE 100 stocks. I’ve been taking a look at the latest dividend forecasts in search of high-yield stocks to buy now.

HSBC Holdings: bouncing back

After a difficult patch during the pandemic, HSBC Holdings (LSE: HSBA) seems to be bouncing back. Rising interest rates have helped to rebuild the group’s profits, which rose from $5.3bn to almost $14bn last year.

Broker forecasts suggest this profit growth will continue into 2023. This is expected to feed through to the bank’s dividend, which could return to its pre-pandemic level of $0.50 per share this year.

Forecasts are never guaranteed, of course. But if City analysts are right, then HSBC shares currently offer a 6.8% dividend yield.

In general, I see this as a very safe bank to invest in. My only concern is the political risk that stems from the bank’s heavy dependence on the Chinese and Hong Kong markets. Some shareholders have called for the bank to be split, although my guess is this won’t happen.

Overall, I think HSBC shares look attractive for income seekers at current levels.

Taylor Wimpey: bargain housebuilder?

Now might not seem like the logical time to buy housebuilding stocks. The market is slowing and conditions could get worse.

However, shares in FTSE 100 housebuilder Taylor Wimpey (LSE: TW.) have fallen by 40% over the last five years. They’re now trading in line with their book value of 120p per share. In other words, the share price is backed by cash, land, and property.

There’s obviously a risk that the UK will suffer a deeper recession than expected. Property prices could fall, weakening the stock’s asset backing.

However, Taylor Wimpey ended last year with net cash of £864m. This should provide a big safety buffer to offset the impact of slowing sales.

I think it looks well prepared for a downturn and reasonably priced. With a forecast dividend yield of 7%, I think this could be a good time to pick up some stock for a long-term portfolio.

Harbour Energy: too cheap?

North Sea oil and gas producer Harbour Energy (LSE: HBR) divides investors. Some say that with the stock trading on three times forecast earnings, this business is clearly too cheap.

Other investors might argue that most of the group’s fields are mature and that it will face big decommissioning costs in future years.

Oil prices may also fall, and it’s likely that future funding will be much more expensive than in the past. Interest rates are rising and investors aren’t as keen to lend money to oil producers as they used to be.

Harbour is getting close to paying off the debt mountain it inherited from Premier Oil. I suspect the firm’s management will then choose to hoard some cash while oil prices are high.

On balance, I think Harbour shares probably are a bit cheap at the moment, but I don’t think they’re a screaming bargain.

However, the 7% dividend forecast for 2023 looks pretty safe to me, so I think Harbour is worth considering.

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.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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

Smart young brown businesswoman working from home on a laptop
Investing Articles

Should I be watching the Greatland Gold (LSE: GGP) share price?

Recent rallies in valuable metal prices has boosted the Greatland Gold share price, but is there still an opportunity for…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

The abrdn share price is down 23% in the last year, should I buy?

Asset management firms have had a rough time lately, but with the abrdn share price down heavily, is now the…

Read more »

Hand of a mature man opening a safety deposit box.
Investing Articles

If I’d invested £5k in red hot BAE Systems shares 5 years ago here’s what I’d have today

BAE Systems shares have smashed the FTSE 100 for years and Harvey Jones is keen to buy more as they…

Read more »

Investing Articles

How I’d aim to earn £16,100 in passive income a year by investing £20k in a Stocks and Shares ISA

Harvey Jones is building a portfolio of high-yielding FTSE 100 dividend stocks that should give him a high and rising…

Read more »

Investing Articles

Down 8% in a month! The BP share price is screaming ‘buy, buy, buy’ at me right now 

When crude oil falls, the BP share price invariably follows. Harvey Jones is wondering whether this is the right point…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Could the 9.8% M&G dividend yield get even bigger?

Christopher Ruane reckons that, although the M&G dividend yield is already close to a double-digit percentage, it could get better…

Read more »

Investing Articles

How much passive income could I earn by putting £380 a month into a Stocks and Shares ISA?

Christopher Ruane explains how he'd aim to turn a Stocks and Shares ISA into four-figure passive income streams each year.

Read more »

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

2 passive income stocks I’m buying before an interest rate cut

With the market expecting interest rates to fall in August, time might be running out for investors looking to buy…

Read more »