Five 5%+ Yielders You Can’t Afford To Ignore: Centrica PLC, De La Rue plc, KCOM Group PLC, Ashmore Group plc, DX (Group) PLC

Centrica PLC (LON: CNA), De La Rue plc (LON: DLAR), KCOM Group PLC (LON: KCOM), Ashmore Group plc (LON: ASHM) and DX (Group) PLC (LON: DX) all support dividend yields of more than 5%!

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

Here are potential candidates. 

Well covered

At the top of the list is Centrica (LSE: CNA). Centrica cut its dividend payout earlier this year, but the company has since recovered some composure. After cutting the annual payout to investors by 30%, Centrica’s dividend payout is now covered 1.5 times by earnings per share, which makes it safer than most.

Should you invest £1,000 in ITV 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 ITV made the list?

See the 6 stocks

Indeed, SSE’s dividend payout is only covered 1.2 times by earnings per share, and while National Grid‘s dividend cover also stands at 1.5 times, it’s dividend yield is only 4.7%, compared with  Centrica’s 5.3%. What’s more, as Centrica is one of the UK’s largest utility companies, it’s unlikely the company will suddenly disappear overnight. Centrica currently trades at a forward P/E of 12.7. 

Printing money

Next up is De La Rue plc (LON: DLAR). Just like Centrica, De La Rue has fallen out of favour with the market this year after cutting its dividend payout by around 40%. Nonetheless, now that the company’s dividend payout has been reduced to a more sustainable level, it looks as if it is here to stay for the foreseeable future. 

De La Rue’s new dividend payout of 25p per share is covered 1.8 times by earnings per share. At present levels, the company’s dividend yield is 5.4%. De La Rue currently trades at a forward P/E of 10.4. 

The best yield around 

Mid-cap telecoms group KCOM (LSE: KCOM) earns itself a place on this list thanks to the company’s highly impressive 6.1% dividend yield. The payout is currently covered 1.5 times by earnings per share and analysts are expecting management to hike the payout by 10% next year.

If City predictions prove true, KCOM is set to yield 6.8% next year and 7.0% during 2017. The company currently trades at a forward P/E of 11.5. 

Falling out of favour 

Ashmore (LSE: ASHM) is the riskiest pick in this article. The company’s shares currently support a dividend yield of 6.2%, but according to City forecasts, next year the company won’t be able to cover its dividend payout with earnings from operations. In other words, there’s a chance that Ashmore could be forced to slash its dividend payout next year. 

City analysts currently expect Ashmore’s earnings per share to fall 23% next year to 15.5p, just below the company’s expected dividend payout of 16.7p per share. Based on these forecasts Ashmore currently trades at a forward P/E of 17.4. 

Can it deliver?

Lastly, independent mail group DX (LSE: DX). DX supports a dividend yield of 7.1% or 6.1p. With earnings per share of 10.85p expected for next year, DX’s dividend payout looks safe for the time being, but the market doesn’t seem to trust the company. 

You see, DX currently trades at a forward P/E of 8.0, which signals to me that investors are wary of the group’s growth. However, only you can decide if the company is suitable for your portfolio. 

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 recommended Centrica and KCOM Group. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

0.45x EV-to-EBITDA: this is the cheapest UK stock, IMO

This UK stock has come under increasing pressure in recent weeks, but I don’t think it’s warranted. Here’s a closer…

Read more »

Investing Articles

Can the Rolls-Royce share price hit £13 in the coming year?

After a stunning couple of years for the Rolls-Royce share price, can it keep up its recent momentum? This writer…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s how a £20k ISA could produce £1,580 of passive income in the next year

A Stocks and Shares ISA stuffed with dividend shares can be a lucrative source of passive income. Christopher Ruane explains…

Read more »

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »