AUS
NZ
UK
CA
USA
IND
Summary
- Many of the FTSE 100 Heavyweights had slashed or cancelled their dividend pay-outs due to the impact of the novel Coronavirus
- People prefer to have a dividend stock in their portfolio as it possesses the feature of compounding
- There are various Businesses which have made consistent dividend payments in the past and have a higher dividend pay-out ratio
The outbreak of the novel coronavirus has caused serious carnage to the UK’s stock markets. Institutional investors and fund managers have lost a lot of wealth amid the coronavirus crisis. In just a month’s time, FTSE 100 index fell by more than 30 per cent in March.
The market witnessed a major selloff by the panic-stricken investors, and in the passing few months has been a difficult journey for the dividend seeking investors. In the pre-crisis period, investors could have easily relied on FTSE 100 dividend-paying stocks for regular income. However, things have certainly changed during the unprecedented crisis induced by the deadly pandemic. Heavyweights of the FTSE 100 such as Barclays Plc (LON:BARC), BT Group Plc (LON: BT.A) have slashed or cancelled their dividend pay-outs due to the cascading impact of the novel coronavirus.
A dividend stock is an ownership share of the shareholder in a company which pays a portion of the profits while systematically creating a stream of income. Based on the pay-out ratio of the company, the dividend is given to the shareholders. For example: If a company has a pay-out ratio of 50 per cent. It means that it will be distributing 50 per cent of its retained earnings to its shareholders and the remaining 50 per cent will be used in clearing its short-term obligations, further investments of the company and launching a new product. The company tries to compensate both its common shareholders and the preferred shareholders, where the priority is given to the preferred shareholders.
Though, there is no difference in buying a stock and buying a dividend stock. People prefer to have a dividend stock in their portfolio as it possesses the feature of compounding. Compounding means that the dividend earnings would be reinvested over a period. It is important to note that the dividend pay-out should ideally be at par with the inflation rate to generate a better income from these stocks.
In this article, we would be reviewing five companies, which have a resilient business model and growth catalysts to see through the unprecedented crisis and sustain in the long term. The nature of business in which these companies operate is non-cyclical in nature, which implies they have stable revenue streams irrespective of the economic cycle. These companies have made consistent dividend payments in the past and have a higher dividend pay-out ratio.
- Tesco Plc: Dividend Payout-95.80%
Tesco Plc (LON:TSCO) is a multinational retailer of general merchandise and has been under investors radar lately. On 25th June 2020, at the time of writing (before market close, GMT 2:18 PM +1), Tesco Plc shares were 0.97 per cent down against its previous day closing price and were trading at GBX 225.10. Stock's 52 weeks High and Low has been recorded at GBX 258.90 /GBX 211.20. The beta of the company stood at 0.75, reflecting lesser volatility as compared to the benchmark index. Tesco Plc’s total M-Cap (market capitalisation) while writing stood at £22,260.62 million. The company has a dividend pay-out ratio of 95.80 per cent.
- Prudential Plc: Dividend Payout-84.10%
Prudential Plc (LON: PRU) is an FTSE 100 financial services company, primarily dealing in insurance services. On 25th June 2020, at the time of writing (before market close, GMT 2:30 PM +1), Prudential Plc shares were 2.25 per cent up against its previous day closing price and were trading at GBX 1,204.50. Stock's 52 weeks High and Low has been recorded at GBX 1,790.00 /GBX 710.80. The beta of the company stood at 1.18, reflecting higher volatility as compared to the benchmark index. Prudential Plc’s total M-Cap (market capitalisation) while writing stood at £30,732.34 million. The company has a dividend pay-out ratio of 84.10 per cent.
- British American Tobacco Plc: Dividend Payout-81.20%
British American Tobacco Plc (LON:BATS) is a London, United Kingdom domiciled multinational consumer goods company which primarily deals in tobacco and related products. On 25th June 2020, at the time of writing (before market close, GMT 1:44 PM +1), British American Tobacco Plc shares were 0.88 per cent up against its previous day closing price and were trading at GBX 3,082. Stock's 52 weeks High and Low has been recorded at GBX 3,507.00 /GBX 2,382. The beta of the company stood at 1.13, reflecting higher volatility as compared to the benchmark index. British American Tobacco Plc’s total M-Cap (market capitalisation) while writing stood at £70,088.16 million. The company delivered a price return of 8.68 per cent in last one year. The company has a dividend pay-out ratio of 81.20 per cent.
- Unilever Plc: Dividend Payout-75.10%
Unilever Plc (LON:ULVR) operates in the fast-moving consumer goods segment and has a global presence. On 25th June 2020, at the time of writing (before market close, GMT 2:10 PM +1), Unilever Plc shares were 0.63 per cent down against its previous day closing price and were trading at GBX 4,452. Stock's 52 weeks High and Low has been recorded at GBX 5,324.00 /GBX 3,726.00. The beta of the company stood at 0.49, reflecting lesser volatility as compared to the benchmark index. Unilever Plc’s total M-Cap (market capitalisation) while writing stood at £52,350.17 million. The company delivered a price return of 3.06 per cent on a year to date basis. The company has a dividend pay-out ratio of 75.10 per cent.
- Legal & General Group Plc: Dividend Payout-57.80%
Legal & General Group Plc (LON:LGEN) is engaged in providing products and services related to insurance and investment management. On 25th June 2020, at the time of writing (before market close, GMT 2:39 PM +1), Legal & General Group Plc shares were 1.83 per cent up against its previous day closing price and were trading at GBX 217.10. Stock's 52 weeks High and Low has been recorded at GBX 318.40 /GBX 138.60. The beta of the company stood at 1.30, reflecting higher volatility as compared to the benchmark index. Legal & General Group Plc’s total M-Cap (market capitalisation) while writing stood at £ 12,718.60 million. The company has a dividend pay-out ratio of 57.80 per cent.
