Top 5 dividend stocks to buy in December

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Highlights

  • UK companies’ dividends are seen rebounding after they witnessed a sharp drop in the previous year.
  • The market estimates the FTSE All-Share Index’s dividends per share this year to rise by 35 per cent, on a year-on-year basis, from 2020

UK investors seeking to invest in dividend stocks have reason to cheer, as dividend pay-outs by the several UK listed companies have been reinstated or increased this year amid the gradual recovery in the economy, as per reports quoting investment management firm, the Royal London Asset Management.

This rebound in dividend pay-outs comes after a tough 2020, where dividends had dropped down to their lowest yearly total, which was last seen in 2011.

2020’s total dividends were down by 44 per cent to £61.9 billion due to the impact of uncertainty related to the pandemic.

According to an FT Advisor media report, the market anticipates the FTSE All-Share Index’s dividends per share in 2021 to rise by 35 per cent from 2020.

However, it is forecasted to be mainly flat and to have a slow recovery up to 2023 due to expectations of the average pay-out being lower than its pre-pandemic levels of 2019

Given this background, let us take a look at the top 5 FTSE listed large-cap and mid-cap stocks with a dividend yield of over 8.5 per cent:

  1. Evraz PLC (LON: EVR)

Evraz is a steelmaking and mining giant. The company recently said it is targeting its earnings before interest, tax, depreciation and amortisation (EBITDA) growth to be around US$ 630 million between 2021 and 2026.

Evraz’s dividend yield stands at 12.8 per cent, and its five-year average dividend yield is at 10.8 per cent.

The company has a market cap of £8,553.76 million as of 26 November. It has given shareholders a one-year return of 43.02 per cent.

  1. BHP Group PLC (LON: BHP)

BHP is an Anglo-Australian metal and mining giant. The company recently approved a US$ 1.5 billion worth of capex for its Scarborough project located in Western Australia’s North Carnarvon Basin.

The company also stated it has entered into a share sale agreement with an Australian petroleum company Woodside Petroleum to merge their oil and gas businesses.

BHP’s dividend yield stands at 10.8 per cent, and its five-year average dividend yield is at 5.3 per cent.

The company has a market cap of £ 42,452.64 million as of 26 November. It has given shareholders a one-year return of 11.06 per cent.

  1. Rio Tinto PLC (LON: RIO)

Rio Tinto is a global metal and mining major. The company in its recently released results offered to purchase its 3.750 per cent notes due 2025.

The company said about US$ 759.948 million of its aggregate principal amount of these securities would be purchased at a price of US$ 1,097.32 per US$ 1,000 principal amount.

Rio’s dividend yield stands at 10.4 per cent and its five-year average dividend yield is at 5.6 per cent. The company has a market cap of £ 58,257.43 million as of 26 November.

  1. Carnival PLC (LON: CCL)

Carnival is a cruise operating group and is one of the world’s largest travel leisure firms.

The company owned luxury cruise line Cunard reported that new itineraries for its Queen Elizabeth ships between February and May next year would go on sale this month, replacing its previous schedule.

The company’s dividend yield stands at 8.6 per cent, and its five-year average dividend yield is at 6.0 per cent. The company has a market cap of £2,586.36 million as of 26 November.

  1. Imperial Brands PLC (LON: IMB)

Imperial Brands is a tobacco company. The group recently reported its FY 2021 organic adjusted revenue rose by 1.4 per cent (at a constant currency rate) to £7,589 million from the previous year.

The group stated its FY 2021 dividend per share stood at 139.08 pence per share, from 137.7 pence per share in FY 2020.

IMB’s dividend yield stands at 8.6 per cent, and its five-year average dividend yield is at 8.5 per cent.

The company has a market cap of £ 15,085.75 million as of 26 November. It has given shareholders a one-year return of 3.55 per cent.


 

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