3 Top Income Stocks: Banco Santander SA, Aviva plc And Admiral Group plc

Banco Santander SA (LON: BNC), Aviva plc (LON: AV) and Admiral Group plc (LON: ADM) could boost your portfolio’s returns.

| 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.

Finding the market’s best income stocks isn’t easy. Indeed, you shouldn’t buy a stock just because it has a high dividend yield, without first assessing the underlying business and sustainability of the payout.

A dividend cut is an income investor’s worst nightmare. And most of the time, dividend payouts are cut without much warning.

Still, there are some stocks out there that offer higher-than-average dividend yields that are sustainable; you just need to know where to look.

Should you invest £1,000 in Admiral right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Admiral made the list?

See the 6 stocks

Income and growth 

Santander (LSE: BNC) cut its dividend last year to save cash, but even after cutting its payout the bank still supports a dividend yield of 4.2%. The payout is covered two-and-a-half times by earnings per share, so it looks safe for the time being. 

What’s more, according to City figures Santander’s earnings per share are set to expand at a rate of 7% to 8% per annum for the next three years. According to the same forecasts, Santander’s dividend payout will increase at a rate of around 10% per annum over the same period. 

Special dividends

Over the years, Admiral (LSE: ADM) has built a reputation for being one of the FTSE 100′s dividend champions. 

The company’s dividend record is highly impressive. Over the past five years, the group has returned a total of £1.1bn to investors via both regular and special dividends. This works out as around 90% of Admiral’s net income generated over the period. 

And analysts expect this performance to continue for the foreseeable future. Figures suggest that Admiral’s dividend payouts will total 95.5p per share for 2015 and 97.3p for 2016, equal to a yield of 6.4% and 6.5% respectively. Looking at the numbers, it seems as if analysts have hiked their dividend forecasts for Admiral’s by around 10% during the past few weeks. 

Throwing off cash 

Lastly, Aviva (LSE: AV), which is flush with cash after its merger with Friends Life earlier this year. 

Specifically, the merger has left Aviva with a £10.8bn capital surplus, covering the company’s insurance commitments by more than 170%. Also, Aviva’s own analysts have stress-tested the company’s balance sheet and believe that, even after a 20% fall in equity values, the group’s economic capital coverage ratio will remain above 170%. Add in the fact that as a result of the Friends Life merger, Aviva’s cash flow will increase by an additional £600m per annum by 2017 and you can see why Aviva’s management had the confidence to hike the company’s dividend payout by 15% when it announced first-half results at the beginning of August. 

The City believes that this dividend growth is set to continue for the foreseeable future. Analysts have pencilled in dividend growth of 17% for next year and 16% the year after. These forecasts suggest that, based on today’s prices, Aviva’s shares will support a yield of 4.5% next year and 5.3% during 2017. 

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

$1bn a day! This S&P 500 share still looks like a stock market bargain after Q1 earnings

The owner of Google and YouTube just announced strong results to the stock market, including another massive $70bn share buyback.

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

3 cheap FTSE 100 stocks with big dividends to consider buying right now

Sector weakness in some FTSE 100 industries has also left some of my long-term favourite stocks offering attractive dividend yields.

Read more »

Diverse children studying outdoors
Growth Shares

Forecast: £1,000 invested in Rolls-Royce shares could be worth this much by next year

Jon Smith talks through both his opinion and analysts’ forecasts when trying to predict where Rolls-Royce shares could head from…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

£5,000 invested in Lloyds shares 5 years ago is now worth…

The price of Lloyds shares has more than doubled over the past five years. However, our writer’s cautious about the…

Read more »

Finger clicking a button marked 'Buy' on a keyboard
Investing Articles

Up 58% in a year, the BT share price could be the FTSE 100 target to beat in 2025

The BT share price has been steadily climbing back since newish boss Allison Kirkby came on board. Is the new…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

£10,000 invested in Nvidia stock 5 years ago is now worth…

Even after the Nvidia stock falls of the past couple of months, its five-year performance remains stunning. And it could…

Read more »

Man thinking about artificial intelligence investing algorithms
Investing Articles

I asked ChatGPT for the best UK stocks to buy for my portfolio in the market sell-off. Here’s what it said

When Edward Sheldon asked the generative AI app for the best stocks to buy amid the market pullback, he was…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Could now be a rewarding moment to buy shares?

Christopher Ruane's looking for shares to buy in a turbulent market. But while he's focused on quality, he's equally interested…

Read more »