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Do Today’s Results Make Top Dividend Buys Of Tullett Prebon Plc, Taylor Wimpey plc And Direct Line Insurance Group PLC?

In this article, I’ll take a look at three popular income stocks that have just released full-year results. Is there good news for dividend investors?

Tullett Prebon

Interdealer broker Tullett Prebon (LSE: TLPR) has struggled to deliver organic growth as market changes have reduced demand for its voice broking services. However, today’s results suggest that the firm is solving this problem with well-judged acquisitions.

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Revenue rose by 13% last year, while pre-tax profit was 9% higher at £93.7m. Much of this was due to a 26% increase in revenue from energy trader PVM, which Tullett acquired in 2014. Oil brokers enjoyed a strong year last year thanks to volatile oil prices.

Tullett hopes to complete the acquisition of rival ICAP‘s global broking business later this year. This may be one reason why Tullett’s 2015 dividend was left unchanged at 16.9p. However, this provides an attractive 4.8% yield.

Tullett shares look affordable, with a P/E of 10.9 based on today’s results and strong cash generation. In my view, Tullett could be a solid income buy.

Direct Line

High levels of competition have slowed growth for insurers like Direct Line Insurance Group (LSE: DLG), but the tide may be starting to turn.

Today’s results show that while gross written premiums only rose by 1.7% last year, motor premiums rose by 4.8% last year, and they grew by 7.1% in the final quarter of 2015 alone. Direct Line’s operating profit rose by 2.9% to £520.7m, while return on tangible equity, a measure of profitability, rose from 16.8% to 18.5%.

Most shareholders are drawn to Direct Line for its dividend. The group announced a 4.5% hike in the final dividend to 9.2p this morning. There will also be a second special dividend of 8.8p, as Direct Line returns surplus cash.

In total, Direct Line will have paid dividends of 50.1p for 2015, giving a whopping 12.3% trailing yield. Because this included a one-off 27.5p per share special dividend following the sale of its international division, it’s not fair to expect a repeat in 2016. Analysts are currently forecasting a 21.6p payout for this year, giving an attractive prospective yield of 5.3%.

Taylor Wimpey

Housebuilders are enjoying near-perfect market conditions at the moment. High prices are combining with strong demand to generate record profits. In its latest results, Taylor Wimpey (LSE: TW) said sales rose by 16.9% to £3,139.8m last year, while operating profit rose by 32.5% to £637m. As a result, Taylor Wimpey’s operating margin hit a new high of 20.3%.

The firm ended last year with a record order book for 7,484 homes, up from 6,601 at the end of 2014. It’s clear that housebuilders are currently in a sweet spot where high demand is combining with high prices to generate record profits. Taylor Wimpey’s average selling price rose by 8% to £230,000 last year.

Taylor Wimpey announced a maintenance dividend of 1.67p per share today plus a 9.2p per share cash return, which is planned for July. Combined, these give the shares a 5.9% yield.

Taylor Wimpey said today that sales growth has continued into 2016. Further cash returns are expected for 2016 and 2017. However, housebuilding shares have cooled since last summer as the market starts to price-in the growing risk of a slowdown.

I’d continue to hold housebuilders, but I wouldn’t buy.

To be honest, I believe there are better income buys elsewhere in today's market. One stock on my own watch list is a firm that's been chosen by the Fool's investment gurus for A Top Income Share From The Motley Fool.

The Fool's experts expect this mid-cap firm to report strong profit growth over the next few years, as trading conditions improve in key markets.

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Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.