4 FTSE 350 quality businesses having higher dividend yields in March 2020 - are you holding any one of these?

The flood of bad macroeconomic news has played devastation with stock prices in the past couple of months. Even global broader indices like Dow 30, S&P 500, FTSE 100, TSX, CAC, DAX and S&P/ASX 200 were not able to hold steady against the blood bath and mid-caps tracking the indices registered a drastic fall over the same period.

Many of large-caps and mid-caps of the UK market are trading near their 52-week lows. There is a steep swing in the stock market at present. Some stocks are hitting their 52-week lows and while others are at multiyear lows.

However, economic rationale suggests that a product is an attractive buy opportunity when it is available at a discounted price. At present, there are many stocks available at dirt cheap prices and offering higher dividend income opportunities for investors. Should you buy stocks trading at significant discounts to their all-time highs with lucrative dividend opportunities? Market experts advise caution arguing that it is like trying to catch a falling knife.

Although, there are stocks trading at the London Stock Exchange which have lost market values because of serious fundamental problems. Investors should try to analyse and find out why they are available at a lower price compared to their peer group.

Typically, stocks plunge for three valid reasons – weakness in general economic conditions, sectoral pain or segment weaknesses and company-specific problems. If there is a general economic slowdown or weakness, the crash would be across the board and not limited to specific verticals.

Are high yielding dividend stocks good to consider at present?

Currently, the global equity market is in a mess. Coronavirus spillover has dented stocks across the board. Government Bond Yield is falling with 10-Year US Treasury Yield is at its record low reflecting that you cannot zero in on a Risk-free nominal rate of return as well. Therefore, stocks which are offering higher dividend yields with consistent dividend payout ratio over the past 5-years with decent free cash flow and proven strong fundamentals could be a relatively better option from the point of view of growth as well as income investors.

4 FTSE 350 stocks are yielding higher dividend yields on the London Stock Exchange.

1. BT Group PLC: United Kingdom-based telecom services provider LON: BT.A engaged in providing fixed-voice services, broadband, mobile and television services. However, telecommunication businesses are boring but never go out of fashion. They are defensive in nature, and if the market is getting volatile and difficult to understand and predict, these companies are relatively safer as a ballpark as they are resilient to some extent against the broader decline. At the current market price of GBX 143.70 (as on March 03, 2020, at GMT 09:18 AM, during the market hours) the stock is available at a dividend yield of 10.87% with a 5-year dividend payout ratio of 64.8% according to data compiled from Thomson Reuters. The current dividend yield of BT. A is approximately 9.3 times of the 10-Year US Treasury Bond Yield, 25.11 times of the 10-Year UK Government Bond Yield and about 2.17 times of the FTSE 100 dividend yield. Its Trailing Twelve Months (TTM) Return on Capital Employed Stood at 16.7%, and Return on Equity (ROE) stood at 20.5%, respectively. However, the stock has delivered a negative price return of 34.8% in a year-over period.

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2. Cineworld Group PLC: London Stock Exchange-traded LON: CINE is an international cinema chain with footprints in approximately nine countries. At the current market price of GBX 141.85 (as on March 03, 2020, at GMT 09:18 AM, during the market hours) the stock is available at a dividend yield of 8.26%, with a 5-year dividend payout ratio of 65.5% according to data compiled from Thomson Reuters. The current dividend yield of the CINE is approximately 8.19 times of the 10-Year US Treasury Bond Yield, 22.06 times of the 10-Year UK Government Bond Yield and about 1.91 times of the FTSE 100 dividend yield. Its Trailing Twelve Months (TTM) Return on Capital Employed Stood at 7.2%, and Return on Equity (ROE) stood at 8.1%, respectively. However, the stock has delivered a negative price return of -49.0% in a year-over period.

3. International Consolidated Airlines Group SA: UK-based airline company (LON: IAG) holds operational interests in the airline and ancillary operations. Its segments include British Airways, Iberia, Vueling, Aer Lingus and others. Since the outbreak of Coronavirus in China till now approximately 69 countries have been severely impacted. Tour, Travel and Leisure companies across the board and, in fact, the entire sector is under huge stress. Shares of IAG have tumbled approximately 30.7% on a YTD basis and at the current market price of GBX 461.40 (as on March 03, 2020, at GMT 09:18 AM, during the market hours) the stock is available at a dividend yield of 5.7%, with 5-year dividend payout ratio of 25.6% according to data compiled from Thomson Reuters. Typically, a lower pay-out ratio with decent fundamentals are likely to be more sustainable in nature. The current dividend yield of the IAG is approximately 5.36 times of the 10-Year US Treasury Bond Yield, 14.43 times of the 10-Year UK Government Bond Yield and about 1.25 times of the FTSE 100 dividend yield. Its Trailing Twelve Months (TTM) Return on Equity (ROE) stood at 25.3%, respectively. However, stock has delivered a negative price return of --28.1% in a year-over period.

4. Barratt Developments PLC: London Stock Exchange-traded LON: BDEV is holding company with operational interests lying in acquiring and developing land, planning, designing and constructing residential property and selling homes, which are constructed throughout the UK. At the current market price of GBX 776.60 (as on March 03, 2020, at GMT 09:18 AM, during the market hours) the stock is available at a dividend yield of 6%, with a 5-year dividend pay-out ratio of 62.5% according to data compiled from Thomson Reuters. The current dividend yield of the BDEV is approximately 5.19 times of the 10-Year US Treasury Bond Yield, 13.98 times of the 10-Year UK Government Bond Yield and about 1.21 times of the FTSE 100 dividend yield. Its Trailing Twelve Months (TTM) Return on Capital Employed stood at 16.4% and Return on Equity (ROE) stood at 16.0%, respectively. Also, the stock has jumped approximately 28% on a YoY basis, and 0.5% on a YTD basis.