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2 hot stocks I’d buy with dividends yielding 6%

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There are a multitude of reasons why I believe Stobart Group (LSE: STOB) should prove a lucrative dividend share in the years ahead.

I am particularly excited by the future revenues potential of its Aviation division, though, thanks to the shortage of airport capacity in the South East of England, a situation that should attract more and more airlines to fly to and from London Southend Airport.

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Stobart saw the number of passengers trudging through the Essex air base, which it operates, boom 25% year-on-year during the six months to August, to 610,492. And the London-based business is investing heavily to keep revenues marching higher (these advanced to £97.5m during the first fiscal half from £12m in the same 2016 period).

Budget flyer easyJet is to base a fourth aircraft at Southend from summer 2018, boosting passenger numbers by an extra 270,000 each year, while Flybe is due to add an extra two aircraft up to and including next summer, which is anticipated to bolster traveller numbers by an extra 250,000 per annum.

Looking elsewhere, Stobart’s Energy division provides plenty of long-term sales opportunities, the company putting in place measures to deliver and process 2m tonnes of biomass by the end of the current fiscal year. And its Rail unit should benefit from a rise in the number of projects slated from 2019 onwards to improve Britain’s transport network.

Disposals set to continue

Even though Stobart is predicted to endure some bottom-line turbulence in the near term — earnings are predicted to sink 74% in the year to February 2018 — the financial windfall created by ongoing disposals should keep dividends on an upward slant.

Indeed, the FTSE 250 star raised  £112m in net cash proceeds following the partial divestment of Eddie Stobart Logistics in the first half. And this encouraged the business to hike the quarterly dividend to 4.5p per share from 3p a year earlier.

City analysts say that the full-year dividend should march to 17.5p per share from 13.5p in the prior period, which results in a super 6.1%. The good news does not end here either and Stobart, assisted by an estimated 276% profits improvement, is expected to raise the payout to 18.2p. This figure yields a solid 6.4%.

A forward P/E ratio of 135.5 times may turn off many investors, but I reckon Stobart’s terrific turnover prospects, along with its mountainous yields, still makes it a great selection.

Another brilliant dividend buy

With Britain’s housing shortage on course to last for many years yet, I believe Taylor Wimpey (LSE: TW), just like Stobart, is also in great shape to deliver brilliant shareholder returns long into the future.

The City maintains a positive view on Taylor Wimpey, and predicts that earnings will swell 6% and 9% in 2017 and 2018 respectively. With cash flows also continuing to impress, dividends are expected to ring in at 13.6p per share for this year and 15.1p for the forthcoming period.

The FTSE 100 business boasts yields of 6.8% and 7.5% for this year and next and, when you also throw in a mega-low prospective P/E ratio of 10.4 times, I reckon the builder is a brilliant buy right now.

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Royston Wild owns shares in Taylor Wimpey. The Motley Fool UK has no position in any of the shares mentioned. 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.

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