Every month, we ask our freelance writers to share their top ideas for dividend stocks to buy with you — here’s what they said for April!
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HSBC
What it does: HSBC is an international bank with historical links to Asia. Today, it operates in over 60 countries.
By Charlie Keough. My top pick for April is HSBC (LSE: HSBA). After increasing its dividend last year from 31 cents per share to 61 cents, it now has a meaty yield of 7.6%. To go alongside that, it recently announced a new $2bn share buyback scheme set to be completed in the first quarter of this year.
I’m also confident that its dividend can keep growing. Granted, its exposure to Asia may be a detriment to its operations in the near term, especially given the current property crisis in China.
However, the region is predicted for major growth in the years ahead as Asian nation’s middle classes keep growing and demand for banking services rises. This should boost HSBC’s profits, which will hopefully see the business keep boosting rewards for shareholders.
The months ahead may be rocky but I’m in it for the long haul. I’m already a shareholder and trading on 6.6 times trailing earnings, I think the stock looks cheap. I plan on buying more shares.
Charlie Keough owns shares in HSBC.
IG Group Holdings
What it does: IG Group Holdings plc is a global financial technology company that provides its clients with online trading platforms.
By Paul Summers: I continue to be positive about IG Group (LSE: IGG) from an income perspective.
The FTSE 250 member boasts a chunky forecast yield of 6.4% at the time of writing. That’s almost double what I’d get from owning a fund that merely tracks the index.
Thanks to decent trading, I reckon there’s a very high chance that investors will receive this money. IG recently revealed that total revenue had been higher in Q3 compared to Q2. This was despite markets being incredibly calm (the company benefits most when the sea gets choppy).
There are still risks here, of course. The industry in which the company operates is regularly a target for regulators. IG must also contend with increasing competition.
But with shares changing hands for only 8 times forecast earnings, I think a lot of this is already in the price.
Paul Summers has no position in IG Group Holdings
Urban Logistics REIT
What it does: Urban Logistics REIT lets out properties to companies specialising in the ‘last mile’ of the supply chain.
By Royston Wild. Property stock Urban Logistics REIT (LSE:SHED) has been one of the FTSE 250’s biggest fallers in the past month. But with inflation still plummeting, now could be the time to buy.
February’s latest reading showed consumer price inflation fall to a better-than-expected 3.4% in March. This has boosted hopes of Bank of England rate cuts in the next two-three months that would, in turn, benefit the net asset values (NAVs) of real estate investment trusts (REIT) like this.
I think this particular trust has exceptional growth potential due to its focus on the final stage of the delivery process. Demand here greatly exceeds supply, an imbalance that looks set to endure as e-commerce grows and a paucity of new developments continues.
I’m also a fan of the excellent all-round value of Urban Logistics REIT today. At 115.6p per share, it trades at a considerable discount to its NAV per share of 162.7p.
Meanwhile, its forward dividend yield sits at a healthy 6.6%.
Royston Wild does not own shares in Urban Logistics REIT.
VP
What it does: VP is a specialist equipment hire group operating in markets such as water, railways and housebuilding.
By Roland Head. I’ve long viewed VP (LSE: VP.) as one of the best quality companies in its sector. A focus on specialist equipment means the firm avoids competing solely on price and maintains more attractive profit margins than some rivals.
VP is exposed to some of the cyclical slowdown in construction and housebuilding – a key risk. But the firm’s infrastructure customers provide a more stable and predictable pipeline of demand that helps to underpin profits.
The 70-year-old company’s most recent accounts showed revenue and profits broadly flat for the six months to 30 September 2023. These results supported a 4.5% increase in the interim dividend, maintaining an impressive 30-year record without a cut (except in 2020).
Chairman Jeremy Pilkington controls 50% of the company’s shares, providing an owner’s eye. With the stock trading close to 10-year lows and offering a dividend yield of almost 7%, I view VP shares as a buy.
Roland Head does not own shares in VP.
