But as my colleague Alan Oscroft explained, things are different these days. I share his view that selling in May could be a very expensive mistake.

If share prices fall in May, that’s fine with me. I hope to do some buying and would like to pay as little as possible for my chosen stocks. Today I want to look at three companies from my shortlist.

An essential business

National Grid (LSE: NG) operates the UK’s electricity and gas transmission network. Most people are familiar with this utility business, although not everyone knows that nearly half its profits come from similar operations in the US.

Some investors are worried about utility stocks at the moment, because Labour has promised to renationalise utilities if it’s elected. This is clearly a risk, but as my fellow Fool Graham Chester has commented, it seems likely that shareholders would be properly compensated.

In my opinion, National Grid is still worth considering for its dividend income. The company’s stable cash flows and long-term outlook mean that its results are fairly consistent. I think the stock’s 5.7% dividend yield could be a good opportunity to buy.

Take the long view

Last summer, shares in FTSE 100 insurer RSA Insurance Group (LSE: RSA) were heading towards 700p. It looked like the group’s turnaround had been completed successfully.

That all changed in September, when the firm warned that high levels of claims for flooding and subsidence in the UK meant that profits would be lower than expected. There were also losses in the group’s specialist division, which insures assets like ships and large buildings.

These problems have disappointed investors and RSA’s share price was still below 550p at the time of writing. But costly claims tend to affect most insurers from time to time. I’m not convinced it’s really a bad news story.

Chief executive Stephen Hester is widely seen as having done a good job so far. Last year’s results showed a respectable 12.6% underlying return on tangible equity, despite setbacks. The shares now trade on 12 times forecast earnings and offer a 5.3% yield. I think this could be a good time for income investors to start buying.

A big opportunity?

When we use companies’ slick websites and smartphone apps, it’s tempting to think that these user-friendly tools are backed by powerful modern systems behind the scenes.

All too often, this isn’t true, especially for banks, large companies and businesses that have been through complex mergers. Many of these firms still run antiquated computer systems that were designed decades ago.

FTSE 100 firm Micro Focus International (LSE: MCRO) makes money by supporting, operating and developing old software so that it keeps working reliably alongside more modern systems.

I think of this business as an iceberg — it’s a lot bigger than it looks on the surface.

I was bullish on Micro Focus when the price was under 1,400p in December. When the shares hit 2,000p recently, I felt priced out. But Micro Focus has dropped to under 1,800p at the time of writing. That’s lifted the forecast dividend yield back to a 5.3%. At this level, I’m tempted to pick up a few.

The post 3 FTSE 100 dividend stocks with yields over 5% I’d buy in May appeared first on The Motley Fool UK.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Micro Focus. 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.

With that in mind, here are two FTSE 100 income shares that could be worth buying today and holding for the long run.

Standard Chartered

Standard Chartered (LSE: STAN) released an interim management statement on Tuesday, with its first quarter performance being relatively impressive. Its underlying profit before tax increased by 10% to $1.4bn. During the period, it announced a number of digital initiatives across Africa, Hong Kong and India, which have the potential to increase its customer base. They could catalyse its performance in an increasingly digitalised banking sector.

With Standard Chartered having resolved its legacy conduct and control issues, it can now manage its capital position more dynamically. This may lead to improving growth prospects after what has been an uncertain period for the bank. With the world economy continuing to grow rapidly, the bank could deliver a fast-growing bottom line over the medium term.

With Standard Chartered yielding 3.4% at the present time from a dividend that is covered 2.8 times by profit, it seems to have scope to raise shareholder payouts over the medium term. Its bottom line is expected to rise by 18% in the current year, with its price-to-earnings growth (PEG) ratio of 0.6 suggesting that it has a wide margin of safety. Therefore, it could have investing appeal from a growth, income and value perspective, and may be worth buying today.

RSA

Also experiencing a challenging period in recent years has been RSA (LSE: RSA). However, it has been able to turn its performance around, with its dividends per share increasing at an annualised rate of 80% over the last four years. Further growth in its dividend is expected in the current year, with it on track to yield 6.1% in the 2019 financial year.

Since RSA’s dividend is due to be covered 1.6 times by profit in the current year, there could be scope for it to rise further. Its increase could be boosted by a forecast rise in net profit of 12% for 2019.

With RSA’s recent updates having been somewhat mixed, the company’s share price has experienced a disappointing year. It has fallen by 17% in the last 12 months, which means it now trades on a price-to-earnings (P/E) ratio of 10.1. This suggests that it offers a wide margin of safety, and could post a successful share price recovery over the long run. Alongside its high and growing dividend, this could lead to an impressive total return over the coming years. As such, now may be the right time to buy a slice of it for the long term.

The post 2 cheap FTSE 100 dividend stocks I’d buy right now appeared first on The Motley Fool UK.

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Peter Stephens owns shares of Standard Chartered. The Motley Fool UK has recommended Standard Chartered. 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.

Despite this, the stock could offer an impressive long-term growth outlook. It may not be relatively popular at the present time, but alongside another FTSE 100 financial services company, it could improve your retirement saving plans.

Solid performance

The underlying performance of Lloyds has continued to be strong despite a tough operating environment. As the most UK-focused of the FTSE 100’s banking stocks, it has performed surprisingly well at a time when GDP growth is falling, interest rates remain relatively low and business confidence is continuing to slide following the 2016 EU referendum.

In the near term, those same drivers could keep the stock’s valuation pegged back. It currently trades on a price-to-earnings (P/E) ratio of around 9, which suggests that it offers a wide margin of safety. And with its bottom line forecast to rise modestly in 2019, its outlook is not as downbeat as the stock market is pricing in.

In fact, Lloyds has an ambitious growth strategy. It is investing heavily in its digital growth capabilities, while further acquisitions cannot be ruled out following the purchase of MBNA. And with dividends continuing to rise so that it has a yield of around 5.5% at the present time, the total return potential of the stock seems to be high.

While the FTSE 100 may be at a record high, Lloyds proves that there are still cheap stocks on offer for long-term investors. Buying it now could lead to improved portfolio performance in future years.

Low valuation

Also offering encouraging long-term growth prospects is FTSE 100 insurance company RSA (LSE: RSA). It released interim results on Thursday which showed a rise in earnings of 18%, as well as dividend growth of 11%. The company’s activity levels were high across all divisions during the period as it seeks to build capability in order to outperform in its markets.

The company’s underwriting results were below its targets due to adverse weather costs. Underwriting profit of £171m was 23% lower than in the same period of the previous year. However, the underlying performance of the business remains relatively solid, and this suggests that it could deliver improving results in future.

In fact, with RSA forecast to post a 10% rise in earnings in each of the next two financial years, investor sentiment could improve. The stock trades on a price-to-earnings growth (PEG) ratio of just 1.4, which suggests that it may be undervalued. With a dividend yield that is expected to be in excess of 5% next year, the total return on offer could be high. This may allow it to outperform the FTSE 100 and boost your retirement prospects in the long run.

The post Why the Lloyds share price could revolutionise your retirement saving plans appeared first on The Motley Fool UK.

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Peter Stephens owns shares of Lloyds Banking Group. 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.

Furthermore, over the medium term, their dividend growth could signify to investors that they are performing well from a business perspective. This could increase demand for their shares and help to push their valuations higher.

With that in mind, here are two FTSE 100 shares which seem to offer sound income futures. Buying them now could be a shrewd move.

Strong performance

Having experienced a challenging period in 2013 when it recorded a pre-tax loss, insurance company RSA (LSE: RSA) has delivered a strong recovery. Under a refreshed management team and with a new strategy it has been able to not only return to having a black bottom line, but has also delivered three consecutive years of double-digit earnings growth.

In fact, in the last three years, its net profit has increased at an annualised rate of around 38%, which suggests that it has found a successful strategy. This has allowed it to raise dividends per share by 87% in the last two years, with further growth set to come.

RSA is expected to report a rise in shareholder payouts of over 30% per annum in the next two financial years. Its capacity to pay a higher dividend is set to improve, with its earnings due to increase by 15% this year and by a further 6% next year. Even with its strong growth in shareholder payouts, it is still due to have a dividend coverage ratio of 1.6 next year. This suggests that its 5.1% forward dividend yield is highly sustainable over the long run.

Declining sentiment

In the last year, the share price of water services company Severn Trent (LSE: SVT) has fallen by around 20%. Investor sentiment towards the stock and the wider utility sector has been weak, with uncertainty surrounding regulations being a key factor. Investors also appear to be in an increasingly bullish mood, which has reduced demand for defensive shares to some degree.

The company’s share price fall means that it now has a dividend yield of around 5%. This is historically high for the stock, and suggests that it may offer good value for money after its decline in valuation.

With Severn Trent expected to deliver earnings growth of 8% per annum over the next two financial years, a higher dividend seems to be very affordable. The company is due to record a rise in shareholder payouts of almost 11% per year in 2018 and 2019. Given that inflation is now below 3%, this could make the stock an appealing income play at a time when the FTSE 100 continues to be relatively volatile.

The post The FTSE 100 income shares that could help to make you a millionaire appeared first on The Motley Fool UK.

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Peter Stephens 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.

Improving performance

Reporting on Monday was global speciality and reinsurance products company Lancashire Holdings (LSE: LRE). It announced its range for the estimated net ultimate losses arising from hurricanes Harvey, Irma and Maria, as well as the two recent earthquake loss events in Mexico.

The aggregate estimated net ultimate losses for these events is expected to be in a range of $106m to $212m, after anticipated recoveries from its outwards reinsurance programme and the impact of outwards and inwards reinstatement premiums. The estimate falls well within the company’s modelled loss ranges for these types of catastrophic events.

Clearly, it has been an eventful period for the company, and the final settlement of all claims is likely to take place over an extended period of time. However, the business appears to have a strong balance sheet and sound operating model. This should ensure that its income prospects remain upbeat, with the stock currently yielding 6.4%.

Looking ahead, Lancashire Holdings is expected to increase its earnings by 41% next year. This puts it on a forward price-to-earnings (P/E) ratio of 15.3, which seems to be a fair price to pay for the company given its strong income outlook. With a dividend yield of more than twice the rate of inflation, the stock could become an increasingly popular income play.

Impressive outlook

Also offering an upbeat outlook for income investors is RSA Insurance (LSE: RSA). The company has delivered a successful turnaround in recent years after having experienced some regulatory challenges. Under its management team, it has put in place a sound strategy which is expected to record a rise in net profit of 11% in the current year, followed by further growth of 18% next year.

This rate of growth puts RSA on a price-to-earnings growth (PEG) ratio of just 0.7, which suggests that it offers growth at a reasonable price. Alongside this, the company continues to have a relatively high dividend yield. It currently stands at 3.5%, but with dividends due to rise by 37% next year, it is expected to yield 4.7% in 2018.

Despite such a rapid rise in dividends being forecast over the next year, RSA’s dividend cover is expected to remain at 1.8 times, which suggests that further dividend growth is on the cards. As such, now could be the perfect time to buy it ahead of a potentially improved period of performance for the company’s share price and total return.

The post 2 great dividend stocks under £10 appeared first on The Motley Fool UK.

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Peter Stephens 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.