2 boring yet consistent dividend shares investors should consider buying in July

Some dividend shares offer the potential for regular returns, with a good record and bright future prospects.

| 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.

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.

When it comes to dividend shares, I’m more interested in consistent returns than exciting businesses and sporadic payouts. High yields are more often than not a red flag, for me at least. However, it’s always worth noting that dividends are never guaranteed.

With that in mind, two consistent stocks I reckon investors should be taking a closer look at are Bunzl (LSE: BNZL) and Howden Joinery Group (LSE: HWDN). Here’s why!

What they do

Bunzl is a business with roots stretching back over 100 years. Although it has changed over the years, the company now focuses on food package delivery and cleaning products.

Should you invest £1,000 in Vanguard Funds Public Limited Company - Vanguard Ftse All-world Ucits Etf right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Vanguard Funds Public Limited Company - Vanguard Ftse All-world Ucits Etf made the list?

See the 6 stocks

Howden is one of the UK’s largest kitchen manufacturing and joinery specialists with a wide presence across the country. It sells its products to trade customers, as well as direct to consumers through its many depot locations.

Bunzl’s investment case

Diving straight into the subject of returns, Bunzl currently offers a dividend yield of 2.3%. This is a great example of a yield that doesn’t get my pulse racing. However, what does excite me is the firm’s track record, as it has raised annual dividends for dividends.

When it comes to passive income, safe and steady increases excite me more than sporadic payouts with high yields. However, it is worth mentioning that past performance is never a guarantee of the future.

One of Bunzl’s biggest draws for me is its size, scale, and experience. With a presence in over 30 countries, and sticky relationships with the majority of its customers, it possesses defensive abilities, if you ask me. This is because the products it offers are essentials. This has allowed the business to generate steady earnings and reward shareholders for years.

From a bearish view, Bunzl’s performance has been hurt in the past, and recently too, based on a trading report released last week, due to economic turbulence. Higher inflation and weaker consumer confidence has led to a drop in spending across its products. This is something I’d keep an eye on, as it could hurt potential returns in the future.

Howden’s investment case

The business has grown quietly into one of the largest suppliers of its kind over the years. This has allowed it to return cash to shareholders consistently. The shares currently offer a dividend yield of 2.3%.

Like Bunzl, Howden has a good track record of payouts in recent years. It has increased its dividend per share for the past four years. Furthermore, before the pandemic, it was on an eight-year streak.

In terms of looking forward, Howden has developed a stellar reputation in the trade, which has allowed it to grow earnings. Due to the current housing shortage in the UK, I reckon the business is primed to continue growing, which should in theory, boost earnings, and investor returns.

The natural risk for Howden is being at the mercy of inflation linked to the vital raw materials it needs to manufacture its products. Higher costs could result in tighter margins and smaller dividends. However, with the current housing shortage mentioned, and popularity of its products and wide presence, this is not something I’m too concerned about.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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.

Sumayya Mansoor has positions in Howden Joinery Group Plc. The Motley Fool UK has recommended Bunzl Plc and Howden Joinery Group Plc. 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

Investing Articles

2 FTSE 100 and FTSE 250 stocks to consider as stock markets plummet!

Looking for lifeboats as growth-crushing trade tariffs loom? Here are two (including a FTSE 100 gold stock) I think merit…

Read more »

Number three written on white chat bubble on blue background
Investing Articles

Just released: the 3 best growth-focused stocks to consider buying in April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer
Investing Articles

£10,000 invested in Watches of Switzerland shares 1 year ago is now worth…

Watches of Switzerland shares have been decimated by Trump’s tariffs on Switzerland. Dr James Fox explores whether this is an…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

Growth stocks are crashing! Here’s what I’m doing now

Our writer shares his thoughts as growth stocks get crushed, as well as a favourite from the Nasdaq that he…

Read more »

Investing Articles

What’s going on with the Nvidia share price now?

The Nvidia share price is tanking. Once the most valuable listed company, Nvidia has seen more than $1trn wiped off…

Read more »

Investing Articles

This FTSE AIM stock has £2.3bn in net cash, and a market cap of £2.4bn!

I love this FTSE AIM stock, but it really hasn’t delivered for me yet. The stock trades with crazily low…

Read more »

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

Down 15% in a week! Are these 5 FTSE 100 fallers screaming buys as markets plunge?

Five of Harvey Jones's favourite FTSE 100 stocks all have the same thing in common – they've fallen around 15%…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

2 stocks that have been crushed and now offer a ton of value

Edward Sheldon has been scanning the market for stocks that offer value after the sell-off. Here are two shares he…

Read more »