Persimmon (H1 trading update)

Persimmon (LSE: PSN) is one of Britain’s biggest and most renowned housebuilders. It builds properties ranging from flats to large family homes located across the UK. The FTSE 100 firm is expected to provide a trading update for its most recent half-year performance ending June 2022 on Thursday 7 July.

Analysts in the UK don’t normally publish earnings previews for six-month periods, so it’s best to compare the firm’s upcoming 2022 first-half numbers to the ones from a year before. The H1 2022 figures can also be useful to determine whether it’ll outperform its FY21 numbers, or even beat analysts’ FY22 forecasts.

In this case, Persimmon is predicted to show slight growth in its numbers as housing supply continues to attempt to match high demand. If the housebuilder posts a better-than-forecasted number on Thursday with positive guidance, it could be on course to beat its financial year estimates.

Entain (H1 trading update)

Entain (LSE: ENT) is an international sports betting and gambling company. It owns brands such as Bwin, Coral, Ladbrokes, PartyPoker, and Sportingbet. Entain will provide a trading update for its most recent half-year performance ending June 2022 on Thursday 7 July.

Based on the earnings preview, Entain expects to have a much stronger second half to its financial year than its first. Nonetheless, a headline beat on its previous year’s H1 results could spell a positive outlook for the firm.

Vistry (H1 trading update)

Vistry (LSE: VTY) is another housebuilder that’s providing investors with a trading update. The Kings Hill-based firm will be updating shareholders on for its most recent half-year performance ending June 2022 on Thursday 7 July.

Just like its peer, Vistry is also expecting modest growth in its numbers. This is expected to come from rising house prices. The key metric to look out for will be its diluted earnings per share metric. A better than expected number could make analysts’ predictions of achieving a much higher EPS later this year possible.

The post Earnings preview: Persimmon, Entain, Vistry appeared first on The Motley Fool UK.

More reading

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• Here’s how £20,000 in this overlooked FTSE gem could make investors £9,089 in annual dividend income over time
• Is now a once-in-a-decade opportunity to buy Vistry shares?
• How to aim for a brilliant £29,295 yearly passive income starting with just £7.77 a day in an ISA
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John Choong has no position in any of the shares mentioned. 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.

The UK’s FTSE 100 is renowned for its portfolio of blue-chip stocks. The index has an average dividend yield of almost 4%, with some dividend stocks boasting yields of 8%-10% on the upper end. With the index in the red this year, there’s room for me to buy the FTSE 100’s top income stocks for a bargain.

High yields are a commodity

Rio Tinto (LSE: RIO) has the FTSE 100’s highest dividend yield of 11%, paying investors approximately £3.07 per share. It’s also worth noting that the mining firm had a stellar 2021, allowing it to pay a special dividend of around £0.46 per share. This brings Rio’s total dividend to £3.53 per share, with its share price also up 8% this year!

While high dividends are attractive, it’s not always sustainable. This tends to be the case with mining companies as they operate in economic cycles. Given that the global economy is expected to slow down this year, Rio’s top line is expecting some bruising. Additionally, China, its biggest customer, still has city-wide lockdowns in place to eradicate Covid. This has halted many construction projects and demand for iron ore. Therefore, I am doubtful that the blue-chip stock can continue generating a high level of passive income for investors.

Bricks and mortar

Persimmon (LSE: PSN) is not historically known for paying a high dividend. Its current dividend yield of 11% is only so high due to its share price plunging 25% this year. That’s because as share prices decrease, yields go up as a result. Nonetheless, the company is expected to pay a dividend of £1.10 per share, down £0.15 from its previous payment.

The reason for this is the firm’s decreasing margins. Its initial dividend of 11% was not well covered by earnings nor forecasts to begin with. Not to mention, higher interest rates are expected to slow the demand for houses. This would have an impact on Persimmon’s sales revenue. Combine that with rising material costs and the FTSE 100 housing giant doesn’t have as much cash to hand out to investors. However, its ex-dividend date is in a month’s time, and could present an opportunity for me to make some passive income on a bargain.

An Imperial dividend

The Imperial Brands (LSE: IMB) share price is up 3% this year due to its defensive nature. Pair that with a dividend yield of 8%, and this stock has been a great asset for investors this year.

The tobacco firm released a positive trading update last month. Smokers do not seem to be quitting in a hurry, and its next generation products showed positive results. This indicates that there may be a future for the company when or if cigarettes die out. Management also mentioned that the firm is in line to meet expectations when it reports its half-year results.

We (expect) full-year net revenue growth of around 0-1% on a constant currency basis and adjusted operating profit growth of around 1%.

Source: Imperial Brands Pre-Close 2022 Trading Update

For that reason, Imperial Brands is likely to continue handing out a healthy dividend as one of the index’s best income stocks.

The post Are the FTSE 100’s top income stocks a bargain? appeared first on The Motley Fool UK.

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• Here’s how £20,000 in this overlooked FTSE gem could make investors £9,089 in annual dividend income over time
• How to aim for a brilliant £29,295 yearly passive income starting with just £7.77 a day in an ISA

John Choong has no position in any of the shares mentioned at the time of writing. The Motley Fool UK has recommended Imperial Brands. 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.

A top-quality miner 

Miners are often a good bet during times of high inflation, because the price of materials soars. This happened with Anglo American (LSE: AAL). In fact, in the company’s 2021 full-year report, Anglo turned in underlying EBITDA of $20.6bn, up from $9.8bn the previous year. This was due to the high price of commodities, as both iron ore and copper reached record highs. As the outgoing CEO noted, “these [were] the strongest results [we] ever posted”.  

The results also equated to extremely strong shareholder returns, and including share buybacks, Anglo is returning more than $6bn to investors for 2021. At the current share price, the dividend also has a yield of around 6%, rivalling other large dividend stocks. This certainly helps offset some inflationary pressures and is the reason why I’d buy Anglo for my portfolio. 

There are some risks to point out though. Firstly, the miner has had a poor start to the year, due to both the re-emergence of coronavirus in many parts of the world and weather-related disruptions. This means that production in the first three months of the year was down 10% year-on-year. Further, the current lockdowns in China have seen the price of iron ore slump recently, which means that last year’s excellent results may have been a one-off. But this has now been recognised in the Anglo share price, which has fallen 10% in the past month (but it’s up 11% in 12 months). Therefore, I’m only slightly concerned by this. 

A dividend stock with a yield over 10% 

Persimmon (LSE: PSM) is a housebuilder and one of the top dividend-paying companies in the FTSE 100. In fact, last year, the company paid dividends per share of 225p, which at the current share price, equates to a yield of 10.5%. The same dividend is also expected for 2022. 

This dividend is also sustainable. In fact, in the full-year results, it reported profit before tax of £973m, far higher than the £863m reported a year earlier. This is mainly due to rising house prices and high demand. At the same time, dividends only totalled £750m, meaning that there’s money left over to reinvest in the company for growth. These are signs of a very good dividend stock. 

The main risks include the potential costs the firm may incur for fixing cladding issues on homes. In fact, the firm has already set aside £75m for these purposes, but this amount is set to increase. Further, there’s also the risk that house prices may fall, especially due to rising interest rates. But with a price-to-earnings ratio of under 10, I feel that these issues are priced into the stock, and don’t deter me from buying. 

The post With £1,000, I’d buy these 2 dividend stocks for passive income appeared first on The Motley Fool UK.

More reading

• £7,775 invested in Persimmon shares 5 years ago is now worth…
• Here’s how £20,000 in this overlooked FTSE gem could make investors £9,089 in annual dividend income over time
• How to aim for a brilliant £29,295 yearly passive income starting with just £7.77 a day in an ISA
• £300 a month and 5 high-yielding dividend shares could build a SIPP worth over £175,000!
• No savings at 40? Here’s how to target a £2,320 monthly passive income in retirement

Stuart Blair has no position in any of the shares mentioned. 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.