Betting on a recovery

First up is Quilter (LSE:QLT). The wealth manager has over 500,000 clients being serviced for a range of products, from more traditional investment options to retirement planning.

As of the end of Q1, it had £101.9bn of assets under management. This ticked 2% higher from the previous quarter. A steady increase over time is good for revenue, as the more money the business looks after, the more fees it can generate.

Naturally, this all filters down to the bottom line, enabling dividends to be paid out from profits. At the moment, the current dividend yield is 5.47%, well above the FTSE 250 average.

Part of what’s helped elevate this yield has been the falling share price. Over the past year, the stock’s down 32%. This has been driven in part by poor trading conditions last year. Investor uncertainty and the cost-of-living crisis in the UK haven’t made a great backdrop for wealth managers.

This is a risk going into H2, but I feel the worst is now behind us. Therefore, not only could this be a good stock for income, but if the share price recovers with better sentiment, capital gains could be had too.

A defensive dividend play

Another dividend stock on my radar is Keller Group (LSE:KLR). It’s the world’s largest geotechnical specialist contractor. Projects ongoing around the globe range from the new Miami port terminal to a metro tunnel project in Melbourne.

The dividend yield is 5.31%, which again makes it attractive, in my view. The company financials have been steady over the past few years, but this doesn’t phase me.

Fundamentally, the business is a defensive stock. This means that regardless of how the global economy performs, infrastructure projects will still need to be undertaken. As a result, Keller Group should have a regular stream of revenues.

For example, even during the pandemic the business continued to make an after-tax profit of £21.7m in 2019. It actually jumped to £41.1m in 2020 and increased further in 2021.

So for income investors, I’m confident the company will keep on paying out dividends, irrespective of what’s ahead.

The company has flagged up multiple risks in the latest annual report. This includes supply chain problems, higher interest costs (due to rising rates) and inflationary pressures. These factors have a part to explain why the share price is down 5% over the past year.

On balance, I think investors should consider both dividend stocks as solid additions to an existing portfolio.

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