I’m searching for the best dividend stock to buy to boost my income. Here are four on my investing watchlist today.
National Grid
Dividend yield: 5%
I think utilities like National Grid are perfect income stocks to buy as the economy worsens. The essential nature of their services means their profit estimates — and by extension dividend forecasts — stand up even when the economy sinks.
News in recent days has boosted my appetite for this particular FTSE 100 stock too. The prospect of a windfall tax on electricity firms remains a risk as Rishi Sunak runs for prime minister. But Boris Johnson’s ruling out of a levy on Monday indicates the popular position in the ruling Conservative Party.
I also like National Grid because of the lack of competition it faces. This gives earnings visibility an extra shot in the arm.
H&T Group
Dividend yield: 3.8%
Pawnbroker H&T Group’s yield isn’t the biggest out there. But an argument can be made that it’s one of the best dividend growth stocks to buy right now.
City analysts think the total dividend payment will jump to 18p per share in 2023, from 14p this year. This pushes the yield to a healthy 4.9%.
H&T is a share that should thrive as the UK economy struggles and people try to raise money. Depressingly, a survey from abrdn shows that one-in-six Britons are in serious financial difficulties. And the number looks set to grow as inflation heads even higher.
I’d buy H&T even though future changes to FCA regulations could potentially damage profits.
Antofagasta
Dividend yield: 5.3%
China is the world’s biggest consumer of commodities. So investors in mining stocks need to be wary of the threat posed by resurgent Covid-19 cases. At the start of the week, 30m Chinese were subject to fresh lockdowns, and more could follow.
I still think Antofagasta is a high dividend stock worth serious attention though. Its share price could potentially soar during the eventual stock market recovery as demand for its raw materials picks up.
I particularly like Antofagasta because of its focus on copper. The material is an essential metal for electrical applications. As a result, consumption of the red commodity is tipped to explode as spending on green technologies like renewable energy and electric vehicles accelerates.
Springfield Properties
Dividend yield: 5.4%
Buying housing stocks remains attractive to me as newsflow from the industry continues to impress. MJ Gleeson was the latest builder to release strong trading news on Monday and it said profits for the 12 months to June would come in “significantly higher than expectations”.
Rising interest rates pose a threat to housing stocks like this. But I believe this worry is built into the rock-bottom valuations of most of these shares. Take Scottish homebuilder Springfield Properties. This dividend-paying stock trades on a forward PE ratio of just 6.6 times.
MJ Gleeson said this week that “strong first-time buyer demand, intensified by the acute shortage of new homes, will continue unabated over the medium term.”
In this setting I think firms like Springfield should keep delivering healthy profits and dividend growth for some time.
