5 high dividend stocks to buy in April

These five 8%+ dividend yield stocks have each caught the eye of Christopher Ruane as potential additions to his portfolio.

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With April beginning this week, I have been looking for income-generating ideas on the stock exchange. Here are some high dividend stocks I would consider buying in the coming month, with an eye on holding them for their long-term passive income potential.

Imperial Brands

The tobacco maker Imperial Brands is the owner of Gauloises and Winston among other well-known brands. The company has a large business across dozens of markets. Last year it reported sales of £32.8bn, a little bit higher than the prior 12 months.

Profits after tax came in at £2.9bn. The company generated substantial cash to fund its dividend and the yield is 8.5%. I think the biggest threat to the yield is a decline in cigarette smoking. That could hurt revenues and profits. Imperial has been building a portfolio of non-traditional tobacco products that might help it maintain the dividend even if cigarette sales collapse.

Direct Line

The financial services group Direct Line has a consistently profitable business. Last year, post-tax profits slipped 1% to £446m. That is still sizeable. It reflects the benefits of the company’s iconic brand and large customer base.

The dividend increased by 2.7%. That means the Direct Line yield is now a tasty 8.3%. Inflation could mean claim settlement costs eat into profits. But I would be happy to buy and hold this dividend payer for my portfolio today.

M&G among high dividend stocks I’d buy

Another name on the list of high dividend stocks I would buy for my portfolio is investment manager M&G.

The company’s recognised name helps attract and retain clients. Doing that is important for its profitability and indeed one risk is that if clients move their funds elsewhere, M&G will see lower profits. But last year it managed to increase assets under management.

As with many high dividend stocks, this is a very cash generative business. After a tiny dividend increase last year, the shares yield 8.1%.

Synthomer

With a current yield of 9.7%, chemical company Synthomer looks appealing to add to my ISA. Last year did see a big dividend jump, though, so the prospective yield could well be lower. But I think demand for the sorts of aqueous polymers the company produces is likely to remain high.

After a 34% decrease in the Synthomer share price over the past year, I think now is a buying opportunity for my portfolio. One risk is a global recession hurting profitability. In the depths of the 2009 financial crisis, the shares fell to less than a tenth of today’s price. But from a long-term viewpoint, I like the company’s established business and am attracted by its yield.

Income & Growth Venture Capital Trust

The Income & Growth venture capital trust currently yields 10%. With its model of investing in early stage companies, results and therefore dividends tend to move around a lot. Sometimes the companies perform well, while in other years the trust suffers from its holdings doing badly.

But with a diversified portfolio, proven track record in selecting businesses in which to invest, and a double-digit yield, I would consider adding Income & Growth to my portfolio today.

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.

Christopher Ruane has shares in Imperial Brands and M&G. The Motley Fool UK has recommended Imperial Brands and Synthomer. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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