3 Super-Reliable Dividend Stocks: National Grid plc, HSBC Holdings plc & Imperial Tobacco Group PLC

Look no further than National Grid plc (LON:NG), HSBC Holdings plc (LON:HSBA) & Imperial Tobacco Group PLC (LON:IMT) for a reliable dividend

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

risk

With interest rates set to remain low over the medium term, high-yield stocks have enjoyed increased popularity among savers. However, dividends can be held flat, cut or even not paid and this can make them far riskier than having cash in a savings account. With this is mind, here are three companies that have a strong track record of increasing dividend payments and whose shares also offer good value at current prices.

National Grid

An obvious choice for income-seeking investors, National Grid (LSE: NG) has increased dividends in each of the last three years. However, the key attraction for investors moving forward is the company’s aim to increase dividends per share in line with inflation. While this may not sound so appealing when inflation is below 2%, it could prove to be a major asset for investors in future years, as considerable amounts of quantitative easing could push the inflation rate up.

With shares in National Grid yielding 4.8% and trading on a price to earnings (P/E) ratio of 13.5, they seem to offer an attractive mix of value, income and dividend growth potential.

HSBC

You may be surprised to see a bank in a list of reliable dividend paying companies, however HSBC (LSE: HSBA) (NYSE: HSBC.US) has increased dividends per share in each of the last four years and is set to do so in the next two years as well. Interestingly, HSBC remained profitable throughout the credit crunch and appears to be the most stable of the major banks when it comes to bottom line (and dividend) growth.

Furthermore, HSBC has vast potential when it comes to emerging markets in Asia where, for example, it is well placed to benefit from increasing demand for loans in China. With shares in the bank trading on a P/E of 12.1 and yielding 4.8%, they could be considered a core income holding.

Imperial Tobacco

When it comes to dividend reliability, there are few shares that can beat Imperial Tobacco (LSE: IMT). Over the last four years it has increased dividends per share by 60% in total and, over the next two years, the company is expected to raise them by a further 20%. The main reason for such high levels of consistency is an earnings profile that is extremely stable: people buy cigarettes come economic rain or shine, so whether the UK and global economies are experiencing a boom or bust, Imperial Tobacco should deliver.

With shares in the company trading on a P/E of 12.8 and yielding 4.9%, they could prove to be a highly attractive (and reliable) income play. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of HSBC Holdings, Imperial Tobacco Group and National Grid. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Google office headquarters
Investing Articles

1 reason I like buying S&P 500 shares – and 1 reason I don’t

Will this investor try to improve his potential returns by focusing more on S&P 500 shares instead of British ones?…

Read more »

Young woman holding up three fingers
Investing Articles

3 SIPP mistakes to avoid

Our writer explains a trio of potentially costly errors he tries to avoid making when investing his SIPP, on an…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Here’s how (and why) I’d start buying shares with £25 a week

Our writer uses his investment experience and current approach to explain how he would start buying shares on a limited…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s my 5-step approach to earning passive income of £500 a month

Christopher Ruane explains the handful of steps he uses to target hundreds of pounds in passive income each month.

Read more »

Investing Articles

2 UK shares I’ve been buying this week

From a value perspective, UK shares look attractive. But two in particular have been attracting Stephen Wright’s attention over the…

Read more »

Investing Articles

A lifelong second income for just £10 a week? Here’s how!

With a simple, structured approach to buying blue-chip dividend shares at attractive prices, our writer's building a second income for…

Read more »

Investing Articles

Here’s how I’d use a £20k Stocks and Shares ISA to help build generational wealth

Discover how our writer would aim to turn a £20k Stocks and Shares ISA into a sizeable nest egg by…

Read more »

Investing Articles

Billionaire Warren Buffett just bought shares of Domino’s Pizza. Should I grab a slice?

Our writer takes a look at a few reasons why Domino's Pizza stock might have appealed to Warren Buffett's Berkshire…

Read more »