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Summary
- The equity market has taken all the prevailing uncertainties in stride and just ended the second quarter on a favourable note
- Dividend stocks are a source of relatively stable passive income, which continues to remain a popular investment choice in the face of Covid-19 crisis.
- Income investors now need to be able to trust their dividend stocks, more than ever.
Despite an incredible market recovery during the last three months, the overall outlook remains a bit murky for the UK markets. The recent rise in coronavirus cases in many of the states has raised the spectre of a second wave of the pandemic. However, no one really knows how this thing is going to play out. Will a vaccine be ready before a serious second wave, or would we just have to learn to live with this virus for some more time, or will the virus simply fade away by its own? These are some of the questions that everyone is looking for answers. That said, so far, the market has taken all these uncertainties in stride and just ended the second quarter on a favourable note. However, the big question is where it goes from here. Needless to say, there are many challenges and uncertainties that remain, and it's very difficult to know the future with any degree of certainty, especially in the current environment. However, we should look at investing as a long-term game plan.
Dividend stocks are a source of relatively stable passive income, which continues to remain a popular investment choice in the face of Covid-19 crisis. For the investors who want to take a safe step, a prudent decision in picking dividend stocks comes to the fore. The focus is mainly on two aspects – dividend growth and sustainability, and high dividend yield. Instead of being overly concerned about the volatility of the stock market, investors tend to buy dividend shares in a company with a decent track record of paying sustainable dividends, reflecting growth in distributing its profits in the form of cash dividends. Increasingly dividends are becoming an essential part of an investor’s portfolio. They help in supplementing monthly wages in work or fund retirement.
Is it Safe to Bank upon Dividend Stocks for Retirement Investment?
The longest downfall in the market has blown up in spectacular fashion. Thanks to the coronavirus pandemic that led to the shutdown of economic activities all around the world. As a result, investors have been sent scrambling to find the safest dividend stocks to buy. Stocks are staggering, interest rates are plumbing the depths, and the spectre of defaults and bankruptcies are on the horizon. Income investors now need to be able to trust their dividend stocks, more than ever. Hefty yields are of no good if a company cuts or suspends its pay-out.
Dividends guarantee an income. This is the reason many investors prefer to buy dividend stocks. As seen in the past, even during recessions, some of the dividend stocks continue to pay investors the dividends. It’s all about sticking to the current portfolio with long term perspective, and closely monitoring sectoral trends and taking exposure to income players that are going relatively immune to the broader economic and market turmoil.
Retirement planning is an important aspect of a person’s financial life. The retirement planning process is not that complicated, if started early and if financial discipline is followed. But it is a long term process, and various factors have to be kept in mind. This includes identifying sources of income, estimating expenses, investing in long terms savings or an investment scheme, as well as the management of current and potential assets and risk. In the retirement planning process, dividend-paying stocks could play an important role.
In short, income investors need super safe dividend stocks right now, below we have discussed five good dividend stocks which can be considered while funding the portion of your retirement.
- Glaxosmith Kline PLC
Glaxosmithkline PLC is a healthcare company. It focuses on the development, manufacture and commercialisation of pharmaceuticals, vaccines and consumer healthcare products. The company has declared a dividend of 19 pence per share for Q2 2020.
As per the statutory filings, the company reported that as on 31 December 2019 its dividend per share was 80 pence, dividend per share growth was (0.57) per cent, and dividend cover was 1.17. The dividend yield of the company was recorded as 4.50 per cent.
Stock Performance
Glaxosmith Kline PLC (LON: GSK) stock was trading at GBX 1,558.20 on 18 August 2020, at 11:56 AM, up by 0.17 per cent from its previous close of GBX 1,555.60. The 52-week low/high price was GBX 1,374.60/1,846.00. It was having a market capitalisation (Mcap) of £78,049.86 million. The volume traded at the time of reporting was 1,069,055. The company recorded a negative return on price, which was 12.47 per cent on a YTD (Year to Date) basis.
- Evraz PLC (LON:EVR) is a vertically integrated steel manufacturing and mining company, headquartered in London. An interim dividend for 2020 of US$291.37 million (US$0.20 per share) has been declared by the company.
As per the statutory filings, the company reported that as on 31 December 2019 its dividend per share was 75.00 ¢, dividend per share growth was (3.85) per cent, and dividend cover was 0.31. The dividend yield of the company was recorded as 14.06 per cent.
Stock Performance
Evraz PLC (LON:EVR) stock was trading at GBX 355.90 on 18 August 2020, at 12:06 PM, up by 1.34 per cent from its previous close of GBX 351.20. The 52-week low/high price was GBX 203.40/535.40. It was having a market capitalisation (Mcap) of £5,116.54 million. The volume traded at the time of reporting was 556,491. The company recorded a negative return on price, which was 13.52 per cent on a YTD (Year to Date) basis.
- WPP PLC (LON:WPP) is a holding company engaged in providing communications services, such as advertising, media investment management, data investment management, public relations and public affairs, branding and identity, etc.
As per the statutory filings, the company reported that as on 31 December 2019 its dividend per share was 60.00 pence, dividend per share growth was (0.30) per cent, and dividend cover was 0.84. The dividend yield of the company was recorded as 5.63 per cent.
Stock Performance
WPP PLC (LON:WPP) stock was trading at GBX 620.00 on 18 August 2020, at 12:27 PM, down by 0.06 per cent from its previous close of GBX 620.20. The 52-week low/high price was GBX 483.70/1,077.50. It was having a market capitalisation (Mcap) of £7,599.49 million. The volume traded at the time of reporting was 963,672. The company recorded a negative return on price, which was 41.95 per cent on a YTD (Year to Date) basis.
- BAE Systems PLC (LON: BA.) is a British aerospace, defence and security company, operating through five divisions comprising of the Electronic Systems sector, the Cyber & Intelligence sector, the Platforms & Services sector, Air sector and Maritime sector. The company declared an interim dividend of 13.8p per share in respect of the year ended 31 December 2019.
As per the statutory filings, the company reported that as on 31 December 2019 its dividend per share was 23.20 pence, dividend per share growth was 6.58 per cent, and dividend cover was 2.00. The dividend yield of the company was recorded as 4.11 per cent.
Stock Performance
BAE System Plc (LON: BA.) stock was trading at GBX 539.40 on 18 August 2020, at 12:34 PM, up by 0.78 per cent from its previous close of GBX 535.60. The 52-week low/high price was GBX 438.90/669.00. It was having a market capitalisation (Mcap) of £17,226.10 million. The volume traded at the time of reporting was 1,548,229. The company recorded a negative return on price, which was 6.69 per cent on a YTD (Year to Date) basis.
- Hays (LON:HAS) is a recruitment company, operating in regions like Australia & New Zealand, Germany, United Kingdom and Ireland, etc.
As per the statutory filings, the company reported that as on 30 June 2019 its dividend per share was 9.40 pence, dividend per share growth was 6.70 per cent, and dividend cover was 1.18. The dividend yield of the company was recorded as 5.98 per cent.
Stock Performance
Hays (LON:HAS) stock was trading at GBX 122.50 on 18 August 2020, at 12:43 PM, down by 0.08 per cent from its previous close of GBX 122.60. The 52-week low/high price was GBX 92.00/183.50. It was having a market capitalisation (Mcap) of £2,056.90 million. The volume traded at the time of reporting was 297,115. The company recorded a negative return on price, which was 32.93 per cent on a YTD (Year to Date) basis.
