When it comes to dividend stocks, Lloyds Banking Group is a popular choice among UK investors. That’s because the stock offers a very attractive dividend yield – currently, the yield is 5.6%.
However, there are plenty of FTSE 100 stocks that offer higher yields than Lloyds at the moment. Here’s a look at three such stocks that I like the look of right now.
Aviva
First up, financial services group Aviva (LSE: AV). It is forecast to pay out a dividend of 31.3p for the current financial year (up from 30p last year), which at the current share price equates to a prospective yield of a high 7.4% – not bad at all in the current low-interest-rate environment.
In my view, Aviva shares remain undervalued. Not only is its forward-looking P/E ratio just 7.3 (less than half the median forward-looking FTSE 100 P/E), but the shares are actually at a lower level than they were three years ago. This is despite the fact that net profit has nearly doubled in this time and the dividend has been increased 44%.
This leads me to believe that, going forward, the shares offer the potential for both capital gains and big dividend payouts. One broker even believes the stock has 50% upside. Overall, I see a lot of value here.
Imperial Brands
Another high-yield stock that I believe offers considerable income appeal at present is tobacco giant Imperial Brands (LSE: IMB). It currently offers a prospective yield of a colossal 12% and trades on a rock-bottom forward-looking P/E of just 6.6.
In my view, Imperial is a classic contrarian buy. Right now, tobacco stocks are completely out of favour due to concerns over declining smoking rates. No one wants to touch them. Yet realistically, smoking is not going to go away any time soon. And there are also other growth drivers for big tobacco such as cannabis. So, I believe it’s way too early to write off IMB.
Interestingly, Imperial recently lifted its full-year dividend by another 10%, which suggests that management is confident about the future. And I’ll also point out that earlier this week, IMB’s Director of Innovation David Newns bought himself £1.4m worth of stock. These are bullish signals, in my view.
WPP
Finally, check out advertising group WPP (LSE: WPP). It currently offers a prospective yield of 6.1% and trades on a forward-looking P/E ratio of 10.
This is another FTSE 100 stock that has been through the wringer in recent years, with its share price falling from 1,900p in early 2017 to just 800p earlier this year on the back of challenging conditions in the advertising market. Recently, however, WPP has shown signs of a recovery – third-quarter results in late October showed a return to revenue growth and the company advised that it had landed some major new clients including eBay and Mondelez.
At the current share price, I believe that WPP shares have the potential to deliver both capital gains and big dividends over the long term. With the company demonstrating that it is turning things around, I think it’s only a matter of time until we see a re-rating here.