The Motley Fool

3 shares I’d buy today with dividend yields over 8%

Image source: Getty Images.

Many big companies have suspended their dividends this year. They’re anxious about paying out cash until the outlook for the post-lockdown economy becomes clearer. Despite this, there are still some dividend shares to buy with high yields.

Today I want to look at three stocks with dividend yields over 8% that I’d buy today.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

This newcomer has potential

My first pick is FTSE 100 insurance and asset manager M&G (LSE: MNG). This business was spun out of insurer Prudential last year, to allow the Pru to concentrate on its faster-growing Asian business.

The shares have performed poorly so far and currently trade on just seven times forecast earnings.

However, M&G’s legacy life insurance business provides very stable cash flows. Capital generation is expected to total £2.2bn by 2022, most supporting the dividend. Alongside this, M&G aims to generate fresh growth in its asset management business by expanding its product offering and entering new markets.

Unlike some rival firms, M&G maintained its final dividend for 2019 and paid out a total of £410m to shareholders on 29 May.

Analysts expect a similar payout for 2020, giving the stock a forecast yield of around 11%. My analysis suggests this should be achievable. I rate M&G as a share to buy at current levels.

A cash machine

Not everyone is comfortable investing in tobacco stocks. But these ‘sin’ stocks remain highly profitable. They also generate a lot of spare cash, most of which is returned to shareholders.

Although Imperial Brands (LSE: IMB) recently cut its dividend by one third, the new payout still gives the stock a forecast yield of around 9.5%. Although this would normally be a warning sign, I don’t think that’s the case here.

The group’s free cash flow in recent years suggests to me that the new payout will be comfortably affordable. It will also allow Imperial to speed up debt reduction, which I welcome for the greater security it should give shareholders.

This is an old business in a sector that’s facing decline. But it’s one of the biggest players in the market, with a decent brand portfolio and very strong cash generation. For pure income investors, I believe it could make sense to buy shares in Imperial.

A share to buy today?

The largest shareholder of mining and steel group Evraz (LSE: EVR) is Russian billionaire (and Chelsea football club owner) Roman Abramovich. Mr Abramovich owns almost 29% of the company. My sums suggest his dividend payment last year was about $314m.

Perhaps because of its concentrated ownership, Evraz pays out most of its earnings as dividends each year, only retaining the cash it needs to support its operations and service its debt. I’d guess this is what major shareholders such as Mr Abramovich really want.

I’m sometimes cautious about Russian stocks, but Evraz is a FTSE 100 member and also operates in the US. Rightly or wrongly, I think this reduces the risk that political problems will affect this business.

Analysts expect Evraz to pay around $0.40 per share in dividends for 2020, giving the stock a forecast yield of 10%. This payout could vary depending on how the global economy recovers from the COVID-19 lockdown. But I still see this as a share to buy for high-yield investors.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Roland Head owns shares of Imperial Brands. The Motley Fool UK has recommended Imperial Brands and Prudential. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.