Top 5 FTSE 350 High Dividend Yielding Stocks for 2020

In the world of investing, high-yielding dividend stocks are those whose dividend yields are above any of the benchmark's average such as benchmark equity index average dividend yield, or 10-Year Government Bond Yield. However, classification of high yield stocks differs from analyst to analyst, as many analysts consider a 2% dividend yield to be high and many others consider a 2% dividend yield to be a low dividend. However, there is no established benchmark for judging, which is the high dividend yield, and which is a low dividend yield. The analyst community compares the company's dividend yield in terms of the stock price performance, as a steep fall in stock price could substantially increase the stock's dividend yield or vice-a-versa; also an increase in per-share payout ratio, stock's benchmark dividend yield and industry average dividend yield for gauging whether the stock is a true dividend play or not.

Are high dividend yields always justified?

No, it's not the case always; one must analyse the fundamental reason behind a high yielding stock. For instance, if a company's LTM (Last Twelve Month) Dividend per share is GBX 5.0 and let’s suppose the current stock price to be GBX 100.0, then at this price the company’s dividend yield will be 5%. But if the stock price goes for a deep correction of around 30%, then after this correction the dividend yield will surge to approximately 7.1% which is massive, but in a real term actually, the investor is losing money, a capital loss. So, a high yielding stock in which yield has been built upon a steep price correction, is not a fundamentally good bet for adding that high yielding stocks in one's portfolio, unless you are not sure about the reversal in the future price performance of the stock.

On the contrary, if a company is continuously increasing its dividend pay-outs and stock price is also increasing or is on an uptrend, then it could be called a more lucrative bet from the shareholder’s point of view.

Here in this piece of article, we are sharing a list of Top 5 FTSE 350 High Yielding Stocks to look for in 2020

Crest Nicholson Holdings PLC

United Kingdom-headquartered LON: CRST is a home construction company with operational interests in the South half of England. Shares of this £1.30bn market-cap company delivered a price return of 32.5% in a year-over period and traded approximately 2% higher in the past five trading sessions. Along with a decent stock price return delivered by the company to its shareholders, it is also offering a high dividend yield of 6.5%, which is a lucrative yield from an income investors point of view. Also, the company's dividend yield is approximately 200bps above the UK's benchmark FTSE 100 index dividend yield of 4.4%. Also, the stock has significantly outperformed the benchmark index in terms of price performance over the year-long period.

SSE PLC

Shares of this electricity services provider LON: SSE, have garnered gains of approximately 30% in the year-ago period and despite a strong price return it had recorded in the past, its shares are offering a hefty dividend yield of above 6.0%. The relative outperformance between the SSE's dividend yield and FTSE 100 dividend yield is of approximately 200bps. The company is offering a dividend yield which is approximately 10x of the UK 10-Yr Government Bond Yield of 0.61%. The trailing-twelve-month payout ratio of the company stood at 44.1%.

However, despite a decent price return on a YoY basis and offering a high benchmark dividend yield, the stock holds a lower Price-to-Earnings ratio of 10.14x, whereas industry average PE (x) multiple stands at 19.81%.

Persimmon PLC

The £9.9bn market-cap Holding group LON: PSN is engaged in the business of house building within the United Kingdom. Shares of this house building company surged approximately 27.4% on a YoY basis and in the past five trading session, its shares traded approximately 3% higher. However, despite a solid price performance it recorded over the past couple of months, its shares are offering an attractive dividend yield of 7.6%, which is approximately 320bps above its benchmark FTSE 100 dividend yield of 4.4%. Also, the company's dividend yield is approximately 12.45x of the 10-Yr UK Government Bond Yield of 0.61%.

Moreover, the group is among the FTSE 100 constituent companies, offering hefty dividend with a solid price surge as well. The trailing-twelve-month dividend payout ratio of the group stood at 45.26%.

Ibstock PLC

London Stock Exchange-traded LON: IBST is engaged in manufacturing of clay bricks and concentrated products. The outstanding market-capitalisation of the group stands at around £1.22bn, which ranks it among the mid-caps listed and traded on the London Stock Exchange.

In a year-ago period, the shares of the company surged approximately 23.5%, and in the past five trading sessions, its shares have traded higher by approximately 1.5%. Its shares are offering a dividend yield of 5.4%, which is approximately 100bps higher against the UK's broader index FTSE 100. Â Also, the company's dividend yield is approximately 8.8 times of the 10-Year UK Government Bond Yield, which is substantially higher.

British American Tobacco PLC

United Kingdom-based LON: BATS is a consumer goods company that offers tobacco products and nicotine products. Shares of this tobacco company surged approximately 24.0% on a YoY basis, and in the past five trading sessions, its shares traded approximately 1.7% higher.

Also, the stock is offering a dividend yield of 5.7%, which is approximately 130bps points higher against its benchmark FTSE 100 dividend yield of 4.4% and approximately 9.4x of the 10-Year UK Government Bond Yield. The dividend payout ratio of the company stood at 37.15%.