Lloyds investors! I’d grab some BIG dividends for an ISA with this 13% yield

Are you mourning the loss of dividend income from Lloyds? I think buying shares in this mega-yielder could help to cheer you up.

| 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.

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.

It’s been an awful start to the month for Lloyds Banking Group investors.

In an age of low economic growth in the UK — and even lower interest rates — ‘The Black Horse Bank’ hasn’t been a decent pick for those seeking ripping earnings growth for some time now. Instead, it was the promise of big dividends that kept stock pickers piling in.

So news today that Lloyds was one of several banks to cancel dividends has gone down like a bucket of cold sick. Sure, it may help save an economy battered by the coronavirus outbreak. It is estimated that canning shareholder payouts for 2019 and 2020 will boost the banks’ lending capacity by £8bn.

But it’s another disappointing blow for UK investors, individuals who continue to be battered by a steady stream of dividend cuts as firms frantically try to build cash. Estate agents Savills and stockbroker finnCap are another couple of London-listed companies to have just cut dividends.

Careful now!

Share investors clearly need to be on their guard like never before (well recent history at least).

That’s not to say investors should sell everything and run for the hills. Far from it. Indeed, there are many great dividend payers that should continue to thrive in spite of the virus. There are some that could even receive a profits boost from the current difficulties in the global economy.

Take Sylvania Platinum (LSE: SYL) as an example. It’s a producer of platinum group metals (PGMs) like platinum, palladium and rhodium. These are popular safe-haven commodities in times of severe macroeconomic, geopolitical and social unrest like these. This AIM-quoted company should therefore ride the likely rise in metal prices in the months ahead.

13% yields!

Don’t think that Sylvania is just a great pick for the current time, however. Thanks to rising auto emissions standards all over the world, the long-term demand outlook for its product looks pretty robust too. Palladium and platinum are widely used to clean up exhaust fumes in catalytic converters.

So what makes the South African digger such a great pick for income chasers? Well, City analysts are forecasting a 5p per share dividend for the current fiscal year (to June 2020). This results in a mighty 13.1% yield.

And unlike Lloyds, Sylvania has the balance sheet strength to make good on broker projections. It’s so financially robust, in fact, that it followed through on another share buy-back exercise just today. The low-cost producer has zero debt on its books and has the sort of cash flows to make jaws drop. It had a cash balance of $33.8m as of December as a result, up significantly from $20.2m a year earlier.

Whether or not you’ve been burnt by Lloyds’ decision to cut dividends, Sylvania is a great income play for these troubled times.

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.

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

3 of my top FTSE 250 stocks to consider buying before April

Buying undervalued UK shares can be a great way to generate long-term wealth. Here, Royston Wild reveals a handful on…

Read more »

Ice cube tray filled with ice cubes and three loose ice cubes against dark wood.
Investing Articles

Just released: our 3 top income-focused stocks to buy before 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 »

Investing Articles

Is this the best chance to buy cheap FTSE 100 shares in a generation?

I want to buy shares when they're cheap, and sell... never, just keep taking the dividends. And the FTSE 100…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

Could NatWest shares be 2024’s number one buy for passive income?

For those of us looking to earn some long-term passive income, how does NatWest's 7% dividend yield sound? It sounds…

Read more »

Investing Articles

£12K in savings? Here’s how I could turn that into £13K annual passive income

This Fool explains how investing a lump sum can help her build a passive income stream to enjoy in her…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s why Rolls-Royce shares are now set to fly over the £4 mark

Once again, Rolls-Royce shares are crushing the FTSE 100. Should I add to my holding of this stock at the…

Read more »

Investing Articles

1 under the radar FTSE 100 AI stock investors should consider buying

Our writer explains why this FTSE 100 pick could be a shrewd investment with its established experience of using AI…

Read more »

Investing Articles

Does the beaten-down Diageo share price make it a no-brainer buy?

Harvey Jones spent years waiting for the Diageo share price to look like good value, before finally buying it in…

Read more »