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In the near term horizon, the future of the UK economy remains uncertain, mirroring the global financial markets and economies, due to the pandemic of the Coronavirus. The businesses are observing financial discipline and improvising their cost efficiencies in their business model and adapting to the prevalent market conditions. Even in these turbulent times, when most of the markets are in red, the investors can still look forward to an investment opportunity in the form of dividend stocks, of the businesses which are considered fundamentally strong and still have growth drivers up and running. These businesses rely immensely on their deep expertise, efficient business model and generate revenue streams even in the current economic uncertainty due to Covid-19 outbreak. Â Dividend stocks are an ideal form of passive income to create wealth over a period. FTSE 100 index of the LSE has many large-cap dividend stocks which can be looked upon by the investors eyeing for growth.
Wealth is created over a period, the short-term volatilities of investments mostly even out with longer duration. Time is the greatest equaliser, as every individual irrespective of their age, occupation, religion, colour or location on this planet has just 24 hours in a day. It is a limited commodity and cannot be reproduced. Since most of the time is utilised in making active income, for wealth generation one need to opt for some passive sources of income, so that income can be made while sleeping as well. The main advantage of passive income as compared to the active income is that it is scalable to some extent and with increased investment, passive income can be increased as well. Believing in this concept, it can be called more of a proactive approach. As passive income is a function of time, it might not be very encouraging for most of the investors, as it gives very little return in the beginning, but it is worth creating a passive source of income.
Passive income can be made together with Active income. For each dividend stock owned by the investor, the company pays a portion of its earnings in the form of dividend. The investors just get paid for owning the dividend stocks. Dividends have lesser volatility as compared to earnings. Therefore, long term investors with less risk appetite or people looking for a steady source of income may include these stocks in their portfolio for regular income or reinvest dividend for cumulative growth.
Dividend income generated is one of the most preferred ways of generating wealth for investors. These dividends can be in the form of cash dividends, stock dividends, property dividends, and liquidating dividends. Cash Dividends are a part of the profits that is paid to shareholders of the company. Therefore, the companies which are fundamentally strong are more likely to make a regular dividend payment. Board of directors needs to approve the dividend each time they are paid. The board of the company proposes its intention to pay a dividend on the Declaration date. The ex-dividend date/ record date signifies the eligible shareholders for the upcoming payment. The payment date is the date on which the shareholders receive the payment. People investing in dividend stocks can look out for certain metrics such as Dividend Pay-out ratio and Dividend Yield.
Here we will be analysing some of the top FTSE 100 dividend stocks from diverse sectors, quoted on the London Stock Exchange (LSE), these are the stocks which have been adding decent wealth to the investorsâ earnings and can be looked upon, despite mayhem in the markets. These stocks include Persimmon Plc from the Home Construction sector, British American Tobacco Plc and Imperial Brands Plc from the Tobacco sector; BHP Group Plc form the Mining sector and Carnival Plc from the Travel & Leisure sector.
Persimmon Plc (LON:PSN)
United Kingdom-based Persimmon Plc is involved in the business of building affordable homes. The company is highly focused on improving its customer service. In the fiscal year 2019, the company managed to sell 15,855 new homes. The companyâs Total Group revenue stood at £3.65 billion in the fiscal year 2019. The companyâs profit before taxation was recorded at £1,041 million in the fiscal year 2019. The companyâs Return on equity stood at 26.3 per cent in 2019. With Final and Interim dividends of £1.10 and £1.25 per share, respectively, the total return stood at £2.35 per share in 2019. The companyâs Dividend yield (LTM) was recorded at 12.9 per cent.
While writing (before market close, GMT 11:58 AM), the shares were trading at GBX 1,722.50. Stock's 52 weeks High and Low is GBX 3,328.00 /GBX 1,581.00.
British American Tobacco Plc (LON:BATS)
The tobacco and nicotine products company, British American Tobacco Plcâs reported revenue was up by 5.7 per cent to £25,877 million in the fiscal year 2019. The companyâs Adjusted profit from operations grew by 7.6 per cent to £11,130 million in the fiscal year 2019. The borrowings of the company decreased to £45,366 million in the fiscal year 2019 from £47,509 million in the fiscal year 2018. The company made four quarterly dividend payments of 52.6p per share each, the annual dividend increased by 3.6 per cent to 210.4 pence in the fiscal year 2019. The companyâs Dividend yield (LTM) was recorded at 7.7 per cent.
While writing this piece (before market close, GMT 11:54 AM), the shares were trading at GBX 2,557.50. Stock's 52 weeks High and Low is GBX 3,507.00 /GBX 2,249.00.
Imperial Brands Plc (LON:IMB)
Imperial Brands Plc offers tobacco and related products. The companyâs Tobacco & NGP (Next Generation products) net revenue was up by 2.2 per cent on a constant currency basis to £7,998 million in 2019. The companyâs revenue was up by 5.1 per cent to £31,594 million in 2019. The companyâs adjusted net debt reduced to £11,376 million in 2019. The companyâs dividend per share was up by 10 per cent to 206.6 pence in 2019. The companyâs Dividend yield (LTM) was recorded at 15.2 per cent.
While writing this piece (before market close, GMT 11:51 AM), the shares were trading at GBX 1,389.80. Stock's 52 weeks High and Low is GBX 2,673.00 /GBX 1,278.80.
BHP Group Plc (LON:BHP)
The global resources company, BHP Group Plc, is involved in the mining of iron ore, copper and uranium and metallurgical coal. For the first half of the fiscal year 2020, the companyâs attributable profit was up by 29 per cent to US$4,868 million. The companyâs dividend per share stood at 193 pence in 2019. The companyâs Dividend yield (LTM) was recorded at 11.2 per cent.
While writing (before market close, GMT 11:47 AM), the shares were trading at GBX 1,068.60. Stock's 52 weeks High and Low is GBX 2,078.50 /GBX 939.80.
Carnival Plc (LON:CCL)
Travel & Leisure company Carnival Plc operates cruises to a portfolio of holiday destinations across the world. The companyâs revenue increased to $20, 825 million in the fiscal year 2019 due to a rise in revenue from the passenger ticketing segment. The company also made an interest income of $23 million in 2019. The companyâs dividend per share stood at 154 pence in 2019. The companyâs Dividend yield (LTM) was recorded at 14.6 per cent.
While writing (before market close, GMT 11:43 AM), the shares were trading at GBX 999.40. Stock's 52 weeks High and Low is GBX 4,249.00 /GBX 972.40.\
1-year comparative stock price chart of  PSN, BATS, IMB, BHP and CCL
(Source: Thomson Reuters)
