2 dividend stocks yielding above 7% that aren’t banks or miners

Jon Smith looks at some lower-profile choices of dividend stocks to include in a portfolio with above-average dividend yields.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Hand of a mature man opening a safety deposit box.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Over the past year, some of the most attractive dividend stocks have been from the banking and commodity space. For example, the yield on NatWest Group went from 3.6% at the start of 2023 to 6.54% at the moment. For those who already have enough exposure to these sectors, here are two ideas I like from other parts of the market.

An understated food company

The first company is Bakkavor Group (LSE:BAKK). It sits in the FTSE 250, with the share price flat over the past year. Yet with a dividend yield of 7.17%, it’s certainly one to have on the radar.

The business refers to itself as the “global leader in the fresh prepared food industry”. It focuses on three main markets for the food, namely the US, UK and China.

In the half-year results, revenue jumped by 7.4% on the same period last year. Operating profit was up 12.7%, and this filtered all the way down to the bottom line. Thanks to this, the dividend per share was increased by 5%. Strong financials like this help to give investors confidence that the dividend is sustainable and could continue to grow over the next year.

One risk to note is the impact of China on the business. The Chinese economy is going through a flat spot at the moment. Concerns about the health of the large property developers and how much government aid could be provided is a worry.

Yet with the Bakkavor financial forecast for H2 being upgraded, I feel this is a strong name to consider adding to an income portfolio.

Powering up the future

Next up is the Bluefield Solar Income Fund (LSE:BSIF). The business is focused on buying and managing a diversified portfolio of low-carbon assets in the UK. These are mainly sites with large amounts of solar panels.

The fund is appealing for income investors with a current yield of 7.09%. The 17% fall in the share price over the past year has helped to push this higher.

The net asset value (NAV) of the sites hasn’t materially fallen. So the drop in the share price puts it at a 12% discount to the NAV. In theory, in years to come this should correct itself, with the stock moving back higher.

I think one of the reasons for the fall this summer is related to the increase in the revolving credit facility that was announced. Although the business doesn’t have to make use of the new £110m of credit, I think it needs to be careful about debt levels going forward. Currently the leverage level is 41% of the gross asset value. I don’t think it would be wise to increase this much more.

As well as the strong income payments and NAV discount, another tick is that the company is very ESG-friendly. This is a business that’s saving 120,000 tonnes of CO2 emissions each year! Putting it all together, I believe this is another strong pick.

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.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Dividend Shares

Investing Articles

How I’d use an empty Stocks and Shares ISA to aim for a £1,000 monthly passive income

Here's how using a Stocks and Shares ISA really could help those of us who plan to invest for an…

Read more »

Investing Articles

I’d buy 4,186 Legal & General shares to aim for £14,616 a year in passive income

A relatively small sum invested in Legal & General shares can be transformed into much bigger passive income over time…

Read more »

Investing Articles

Great dividend stocks! Here’s the forecast for Associated British Food shares to 2027

Associated British Foods' shares have dropped in value this year. Does this present a dip-buying opportunity for dividend investors to…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

Should I buy National Grid shares for the big dividend before it’s too late?

This year's price weakness has left National Grid shares on what looks like a tempting valuation. I hope it doesn't…

Read more »

Investing Articles

There are now 5,000 ISA millionaires! See the surprising UK dividend shares they’re buying

The number of ISA millionaires is growing all the time and guess what? They're really into blue-chip dividend shares listed…

Read more »

Investing Articles

Here’s how I’d invest a £20k Stocks and Shares ISA to help build long-term wealth

Read how our writer thinks about turning a £20k Stocks and Shares ISA into a bigger pot by taking a…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

Here’s how I’d aim to turn £9,000 of abrdn shares into £1,960 a month in passive income!

abrdn shares deliver one of the highest yields in any FTSE index, enabling a relatively small amount to be turned…

Read more »

Investing Articles

With a P/E ratio of 9, is the Aviva share price a bargain?

Christopher Ruane looks at the Aviva share price and considers some strengths and weaknesses of the FTSE 100 insurance business.

Read more »