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ISA investors! 3 top dividend stocks (including these FTSE 100 heroes) I’d buy for 2020

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UK dividends might be tipped to drop in 2020, but in my opinion, there remains an ocean of top income shares to buy right now. Ferguson (LSE: FERG) is one such hero I’d be happy to buy today amid signs of improving market conditions.

Latest US government data showed the number of housing starts rocketed in December. Up 16.9% to a seasonally-adjusted 1.61m units, this was the fastest rate of growth since 2006. This is a trend that North America-focused plumbing and heating product distributor Ferguson is in great shape to ride.

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It doesn’t offer massive dividend yields. In fact, at 2.5%, the reading for the fiscal year to July 2020 misses the 4.2% reading for the broader FTSE 100 by quite a margin. But the long record it has of growing annual payouts by double-digit percentages makes it worthy of serious attention, in my opinion.

And following the decision to hive off its UK division this year, thereby casting off the threat caused to its operations by Brexit in the medium term and beyond, the outlook for both profits and thus dividends is even rosier. I’d reckon this is a share that should thrive in 2020 and long beyond.

Gold star

I’d also happily buy shares in Polymetal International (LSE: POLY) for 2020. Why? The possibility that gold prices will keep charging over the next 12 months and maybe beyond.

Bullion prices have just shot back towards $1,600 per ounce as fears over the Chinese coronavirus have unfortunately intensified. It’s also the expectation of further monetary loosening by central banks, allied with key geopolitical events like the US presidential election and tough Brexit negotiations that I think will power gold prices higher this year.

Naturally, the effect of this on the likes of Polymetal could be spectacular. The FTSE 100 miner announced last Thursday that 2019 revenues ballooned 19% to $2.2bn, outpacing the 8% increase in mined ounces it recorded last year.

 At current prices, Polymetal carries a bulky 4.8% forward dividend yield. This, combined with a low P/E ratio of 10.7 times, makes it a top buy right now, I feel.

Safe as houses

Redrow (LSE: RDW) is another dividend hero I reckon has all the tools to thrive in 2020. Indeed, I reckon this FTSE 250 firm’s share price could continue to soar next week. Its low forward P/E ratio of 8.6 times certainly leaves room for more meaty gains.

Trading updates from across the housebuilding sector have been extremely bright in recent weeks. And I’m expecting a good set of interim results results from Redrow on February 5. The Conservatives’ general election victory might have lifted trade at these construction giants in recent weeks. But the strength of demand for new-build homes has kept business ticking along nicely since the summer 2016 Brexit referendum.

Redrow said that the market had remained “encouragingly resilient” last time out in November. It said that weekly like-for-like sales rose in the four months to November 1, to 0.67 units per sales outlet versus 0.64 previously. Meanwhile average house prices rose fractionally to £389,000 too.

Conditions are so robust that City analysts expect the firm to keep lifting annual dividends. So for the fiscal year to June 2020 it boasts a chunky 4% yield. This is a great share to buy today for those seeking big payouts for little cost, I believe.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Redrow. 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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