3 Top Dividend Shares For February: HSBC Holdings plc, BAE Systems plc & Aviva plc

HSBC Holdings plc (LON: HSBA), BAE Systems plc (LON: BA) and Aviva plc (LON: AV) look set to line your pockets with cash.

| More on:

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.

In these days of low inflation and low interest rates, where can income-seekers go to get a decent annual supply of cash? You might be surprised to hear of the yields available from some of our big FTSE 100 companies:

Banks

The banks are back to offering attractive annual returns, with HSBC Holdings (LSE: HSBA)(NYSE: HSBC.US) having kept its dividends growing nicely. For the year just ended in December 2014, analysts are expecting a 5.2% yield on the current 613p share price, and they have rises to 5.6% and 6.1% marked in for the next two years.

That should be well covered by earnings, with a P/E ratio of 11 currently, dropping to under 10 by 2016. Cheap income? It looks tempting to me.

Aerospace

The aerospace and defence business is a bit patchy, but BAE Systems (LSE: BA) has been motoring along nicely and has kept its dividends growing too. The share price has put on an impressive 18% over the past 12 months, but even after that we’re expecting a pretty decent 2014 yield of 3.9%.

That’s better than the index average from shares on a very average P/E of under 14, but there’s more as the yield is predicted to continue growing, to 4% in 2015 and 4.2% in 2016.

Insurance

Insurance companies are looking good for income too, with Aviva (LSE: AV)(NYSE: AV.US) expected to yield a relatively modest 3.3% for the year just ended. But forecasts have that rising to 3.8% for 2015 followed by 4.6%. Aviva famously slashed its dividend in 2012 after it became overstretched, but the annual payment is recovering — and being very nicely covered now, it’s looking sustainable.

What about the share valuation? Even after a two-year rise of 46%, we still have a P/E ratio of only 11.3 and dropping as far as 9.5 based on 2016 forecasts.

Why February?

But why am I looking for shares specifically for February? Well, the low price of oil has spooked a lot of investors, and sentiment has been further damaged by the latest struggles in the eurozone as the European Central Bank tries to fight off deflation.

That’s led to a flight for safety, as investors seek companies paying decent dividends and looking like they’re in a good shape to see off the oil crisis and any cracks in the euro. Some shares have already been pushed upwards, so if you want good-value income investments, now could be the time to start doing your homework.

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.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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

Investing Articles

5 steps to start buying shares with under £500

Learn how this writer would start buying shares with a few hundred pounds in a handful of steps, if he…

Read more »

Young happy white woman loading groceries into the back of her car
Investing Articles

The FTSE 100 offers some great bargains. Is this one?

Our writer digs into one FTSE 100 share that has had a rough 2024 to date, ahead of its interim…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£9,000 of savings? Here’s my 3-step approach to aim for £1,794 in passive income

Christopher Ruane walks through the practical steps he would take to try and turn £9,000 into a sizeable passive income…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

I’d buy 29,412 shares of this UK dividend stock for £150 a month in passive income

Insiders have been buying this dividend stock, which offers an 8.5% yield. Roland Head explains why he’d choose the shares…

Read more »

Red briefcase with the words Budget HM Treasury embossed in gold
Investing Articles

Could the new UK budget spell growth for these 6 FTSE stocks? I think so!

Mark David Hartley considers six UK stocks that could enjoy growth off the back of new measures announced in the…

Read more »

Investing Articles

With a 6.6% yield, is now the right time to add this income stock to my ISA?

Our writer’s looking to boost his Stocks and Shares ISA. With this in mind, he’s debating whether to buy a…

Read more »

Dividend Shares

This blue-chip FTSE stock just fell 12.5% in a day. Is it time to consider buying?

Smith & Nephew is a well-known, blue-chip FTSE stock with a decent dividend yield. And its share price just dropped…

Read more »

Investing Articles

At 72p, the Vodafone share price looks to be at least 33% undervalued to me

Our writer looks at a number of valuation measures to determine whether the Vodafone share price reflects the fair value…

Read more »