As interest rates are at all-time lows, British investors are increasingly looking for passive income from dividend-paying companies. Yet a large number of companies have been cutting or suspending their payouts in order to conserve cash.
The good news is that there are still many strong businesses that are paying stable and reasonably high dividends. With their stock prices down this year, investors have a better opportunity to buy them at lower prices too. Today I’d like to introduce two FTSE 250 members that may deserve a place in a long-term portfolio, especially via a Stocks and Shares ISA.
The gold rush
Gold miner Centamin (LSE: CEY) has recently released Q1 results. It reported a quarterly revenue increase and maintained its annual guidance.
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The group operates a mine in Sukari, Egypt, one of the largest gold deposits in the world. The miner is debt-free, has low-cost production, and had over $350m in cash and liquid assets as of 31 March. It has also reduced its capital expenditures.
As a result, the City believes that the strong balance sheet would enable the firm to weather any potential adverse effects of the pandemic. Management has also reported no material disruption to operations, the supply chain, or gold shipments in recent weeks.
2020 has so far shown us why gold still has a place in many portfolios. While the rest of the market was melting down, gold jumped higher. The gold rally does not seem to be cooling off either. And an increase in the price of the shiny commodity is usually good for mining shares as higher gold prices boost performance.
Year-to-date, Centamin shares are up over 30%. The current price of 166p supports a dividend yield of 4.9% and the shares are expected to go ex-dividend in August. You may also be interested to know that in early May, Berenberg released an analyst note and reaffirmed its ‘buy’ investment rating on CEY, raising the price target to 172p.
Is now the right time to invest? Maybe not, but I’d look to buy the dips.
Sweet dividends
In 2018, FTSE 250 member Tate & Lyle (LSE: TATE) celebrated the company’s 140th birthday at the Thames Refinery in Silvertown, London.
Although shoppers tend to equate the Tate & Lyle brand with packs of sugar in supermarket aisles, the company’s primary focus is actually on producing sweeteners and other bulk ingredients for food manufacturers. Tate & Lyle is also the exclusive UK producer of the Splenda sucralose artificial sweetener.
According to a recent trading statement, the group will release results for the year ended 31 March on 21 May. It reports revenue in three main segments: Food & Beverage Solutions, Sucralose and Primary Products.
The company said that in April, “Food & Beverage Solutions and Sucralose continued to perform well with volume for Food & Beverage Solutions in line with the comparative period and Sucralose 18% higher due to phasing of customer orders“.
On the other hand, “Primary Products volume was significantly impacted. Bulk sweetener volume was 26% lower from reduced out-of-home consumption.. Industrial starch volume was [also] 9% lower reflecting … a general decline in economic activity“.
So far in the year, TATE shares are down 15%, hovering around 645p. The dividend yield stands at 4.6% and the shares are expected to go ex-dividend in June.
Its forward P/E of 11.9 and P/S ratio of 1.2 make me feel quite confident that the price is likely to recover sooner than later.
