3 Stocks with Over 5% Dividend Yield to Watch as UK Consumer Spending Pegged At £50 Bn

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Summary

• A study has found that cash savings in the last one year increased by nearly 46 per cent.
• The economy is expected to get a boost worth £50 billion in consumer spending this year.
• People have in the last one year collectively saved as much as £192 billion extra.

As soon as the lockdown is lifted, the UK economy is expected to get a boost worth £50 billion in consumer spending this year. A study by the Centre for Economics and Business Research (CEBR) and financial mutual Scottish Friendly has found that cash savings in the last one year increased for nearly 46 per cent of people, and they gave collectively saved approximately £192 billion. The extra money that would be pumped in would go into sectors such as hospitality, travel, and retail.

Also read: British consumer spending plummeted 2.3% in December: Barclaycard survey

The study has found that people intend to spend the extra savings by eating out and going for domestic and international holidays. The study analysed savings data for 50 years and interviewed 4,000 people to reach a conclusion. It also warned that inflation could go beyond the government’s 2 per cent target.

About 34 per cent would spend more on travel and accommodation for international trips, and while 29 per cent intend to spend their extra savings on domestic holidays this year, the survey said.

In this article, we look at three stocks from these sectors that have over five per cent dividend yield and could be greatly impacted by the surge in consumer spending.

TUI AG (LON:TUI)

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The FTSE 250 Germany-based travel and tourism company has a dividend yield of 10.5 per cent. For the quarter ended 31 December 2020, the group’s revenue fell 87.6 per cent to €478.5 million against a revenue of €3,850.8 million for the same period a year ago. The company said that the drop was because of travel restrictions across key European markets between November and December 2020. The group’s underlying loss came in at €699 million compared to a loss of €146.7 million for the same period a year ago.

Also read: TUI AG (LON:TUI) secures a rescue package for €1.8 billion

The company has, however, said that 2.8 million customers were already booked for the summers, and capacity plans have been maintained at 80 per cent of 2019 summer levels.

The shares of the company traded at GBX 424.80, down by 0.61 per cent on 17 March at 08:17 GMT+1 and had a market capitalisation of £4,698.81 million.

Marstons Plc (LON:MARS)

The British brewery, pub, and hotel operator has a dividend yield of 7.61 per cent. For the quarter ended 2 January, the company said total pub revenue came in at £54 million. It said that its business was materially hampered because of the Covid-19 restrictions across England, Scotland, and Wales.

Also read: Marston's (LON:MARS) to take over 156 Brains pubs in Wales, save 1.3k jobs

The company said that it used the initial proceeds of £233 million received from the joint venture with Carlsberg UK to reduce debt. It also said that the profit from Marston's disposal into the JV is expected to be around £280 million.

The shares of the company, with a market capitalistaion of £625.17 million, were trading at GBX 98.35, down by 0.25 per cent on 17 March at 08:13 GMT+1.

International Consolidated Airlines Group (LON:IAG)

The FTSE 100 airline holding company, which owns British Airways, has a dividend yield of 5.74 per cent. For FY20, the company’s total revenue was €7,806 million, a drop of 69.4 per cent from €25,506 million in FY19. It announced a loss of €4,325 million in FY20 against a profit of €2,387 million in FY19.

Also read: International Consolidated Airlines Group (LON:IAG) to acquire Air Europa

IAG CEO Luis Gallego said that the company’s results reflected the serious impact of Covid-19 on its business. He said that despite the crisis, the company managed to boost liquidity, which was at €10.3 billion and was higher than the beginning of the pandemic.

The company’s shares were trading at GBX 216.80, up by 0.56 per cent and had a market capitalisation of £10,718.5 million on 17 March at 08:52 GMT+1.