Hunting for big dividends is something I like to do. I’m not alone in this regard, with many investors rating income as a key aim for their investment portfolios. So if I put my interest in growth stocks to one side for a moment, here are the top stocks I’d buy now when wearing my dividend-hunter hat.
A steady dividend payer
One of the top stocks for me to buy now, in my opinion, is Aviva (LSE:AV). The UK-based insurance company has seen its share price rise by 11% in the last year. It also offers a dividend yield of 4.88%.
I wrote about the company in depth last week. In short, the latest results showed high cash remittances and good net inflows in the Savings and Retirement division. This supported 5% growth year-on-year in the dividend per share. The business also forecast a 40% increase in the dividend for the coming year.
The focus on the dividend policy and the cash-generating nature of the business ticks boxes for me.
As a risk, I’m a little concerned about the pressure that activist investor Carl Icahn could put on management in the future. I think this is a risk that could hinder the business and distract it from operations. But I’d buy nonetheless.
A higher-risk option
Another company that I rate highly for dividends right now is TP ICAP (LSE:TCAP). The dividend yield is 6.41%, with the share price down 38% over the last year.
TCAP doesn’t have the simplest of business models. It acts as a financial intermediary between banks, brokers and funds in order to execute transactions. This is done sometimes due to the size of the trades, or because the buyer or seller doesn’t want their identity widely known.
It performs well when market volatility is high. That’s the reason why I think it’s a top stock to buy now. Q1 has been very volatile, not only for stocks but also commodities. I think this will continue into the summer and that should be good for revenue and profitability.
That said, the business does operate in a niche area of finance. Whether the need for this kind of institution will continue several years down the line due to the push towards digital, remains to be seen.
A final top stock to buy now
A final option for income is Kingfisher (LSE:KGF). The dividend yield has shot up recently, thanks to the dividend declared in late March of 8.6p per share. This increased the yield from around 3% before to 4.86% now.
The rise in the dividend payment reflected the strong performance of the company in 2021. As the earnings report made clear, it was a “year of record revenue and profits” for the business. It put this mainly down to gaining higher market shares in the UK and France, as well as it managing product availability well.
This meant that post-tax profit jumped 42.3% versus the previous year, allowing the dividend per share to also increase by 50.3%.
But inflation could put profit margins under pressure this year. The DIY products sold could be susceptible to large price increases. This could put off some customers from buying. But it doesn’t deter me from buying the shares.
