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Highlights:
- Dividends provide stable income to investors even if the stock price is turbulent in the short term.
- For this reason, many investors look for dividend stocks during economic uncertainties.
Amid the rising interest rates, the Bank of England has warned that the UK will go through a prolonged recession. Inflation levels have crossed 11.2% already and may rise further in the coming months. Besides, the economy contracted 0.2% in the latest quarter, reaching 0.4% lower than the pre-pandemic levels.
Due to these factors, there is a lot of uncertainty in the UK's financial market. The global crisis and the geopolitical situation also impact businesses. In this scenario, investors give a lot of attention to dividend stocks, as they tend to be a source of stable income from investments. Especially during situations like recession, investors usually rush to stocks that provide them income, even if the stock value fluctuates.
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Many companies have performed well despite the economic headwinds and, therefore, raised their dividend payouts. This means that investors looking for dividend-paying stocks can check out the below London-listed stocks.
Persimmon (LON: PSN)
The British housebuilding company is a constituent of the FTSE 100 index. As of 18 November, it has yielded a dividend of 18.2% (LTM), as per data from Refinitiv. Over the past year, Persimmon's stock price has more than halved, while its EPS is 2.47. The company holds a market cap of £4,125.65 million.
Rio Tinto plc (LON: RIO)
Rio Tinto is a global mining giant. The FTSE 100 constituent has a dividend yield of 10.8% (LTM) as of 18 November. Its EPS (earnings per share) stands at 13.03, and the market cap is currently at £67,062.08 million. The stock's 12-month and YTD return is 21.70% and 10.77%, respectively.
Diversified Energy Company plc (LON: DEC)
The oil and gas producer is listed on the FTSE 250 index. As of 18 November, it has yielded a dividend of 11.3% (LTM), and its market cap stands at £1,060.45 million. The stock has given a return of slightly above 16% on a 12-month basis.
Ferrexpo Plc (LON: FXPO)
Ferrexpo is a Switzerland-based mining firm and the world’s third largest iron ore pallets exporter. The stock has a market cap of £842.32 million and an EPS of 1.48. It has provided negative return over the past year, as its stock value has tumbled by almost half. As of 18 November, the stock has yielded a dividend of 15.7%
Direct Line Insurance Group plc (LON:DLG)
The British insurer belongs to the FTSE 250 index. Its dividend yield stands at 10.8% as of 18 November. The company has a market cap of £2,759.16 million and its EPS is 0.25. The stock has given a return of -20.01% in the past 12 months.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
