After the long drag of January, February has flown by. We’re now racing through Q1 and I need to continue to keep pace with the stock market. The FTSE 100 is up in 2023, so far, with corporate earnings suggesting cautious optimism for the year ahead. With dividends still being paid by plenty of companies, here are some of my favourites to purchase with free cash.
Light the fire
First up is National Grid (LSE:NG). The share price is modestly down 3% over the past year, with the dividend yield at 4.82%.
The electricity and gas supplier successfully navigated the cold snap in the UK late last year. It has also come out relatively unscathed from the turbulence in energy prices over the past year due to the war in Ukraine.
Looking forward, I expect a much calmer year for the business. This should allow it to push on with the large-scale capital expenditure plan, which it proudly states makes it “one of the FTSE’s biggest investors in the delivery of net zero”.
Even though the circa £40bn investment does take away from cash flow that could be used for dividends, I don’t see this as a major risk. Rather, the commitment to grow the dividend per share in line with CPIH (an inflation gauge) should help me to enjoy rising payments.
Money flowing in
Next up is St. James’s Place (LSE:STJ). The wealth manager has a current dividend yield of 4.27%.
The share price has fallen 13% over the past year, with volatile markets causing investors to get spooked about what it meant for the company. However, I think this was misplaced fear, as the recent full-year results were very impressive.
The profit after tax of £405.4m was up from the 2021 figure of £287.6m, meaning that the dividend per share also increased in line with the pay out policy. The chief executive also commented that “2022 marks the second-best year for new business flows”.
One risk is that if the UK economy enters a recession this year, inflows for St. James’s Place could dry up as it’s a predominately UK-focused entity.
Building for the future
The last FTSE 100 business on my watchlist is Land Securities Group (LSE:LAND). The real estate investment trust (REIT) has to pay out a set amount of income to shareholders in order to keep the REIT status and perks.
As a result, the dividend yield is a generous 5.75% at the moment. This has been pushed higher in part by the falling share price. A 13% dip in the past year reflects the wobble in the property market that we’ve seen.
This remains the key risk going forward for the stock, but one that I feel is tolerable. Given the cyclical nature of the sector, I might not be able to perfectly pick the bottom, but I’m confident the market will be higher when we get an economic recovery. As a long-term investor, that’s why I think now is a good time to buy.
With free cash, I’m seriously considering buying all three stocks with £100 each.
