Lloyds investors! I’d grab some BIG dividends for an ISA with this 13% yield

Are you mourning the loss of dividend income from Lloyds? I think buying shares in this mega-yielder could help to cheer you up.

| 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.

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.

It’s been an awful start to the month for Lloyds Banking Group investors.

In an age of low economic growth in the UK — and even lower interest rates — ‘The Black Horse Bank’ hasn’t been a decent pick for those seeking ripping earnings growth for some time now. Instead, it was the promise of big dividends that kept stock pickers piling in.

So news today that Lloyds was one of several banks to cancel dividends has gone down like a bucket of cold sick. Sure, it may help save an economy battered by the coronavirus outbreak. It is estimated that canning shareholder payouts for 2019 and 2020 will boost the banks’ lending capacity by £8bn.

But it’s another disappointing blow for UK investors, individuals who continue to be battered by a steady stream of dividend cuts as firms frantically try to build cash. Estate agents Savills and stockbroker finnCap are another couple of London-listed companies to have just cut dividends.

Careful now!

Share investors clearly need to be on their guard like never before (well recent history at least).

That’s not to say investors should sell everything and run for the hills. Far from it. Indeed, there are many great dividend payers that should continue to thrive in spite of the virus. There are some that could even receive a profits boost from the current difficulties in the global economy.

Take Sylvania Platinum (LSE: SYL) as an example. It’s a producer of platinum group metals (PGMs) like platinum, palladium and rhodium. These are popular safe-haven commodities in times of severe macroeconomic, geopolitical and social unrest like these. This AIM-quoted company should therefore ride the likely rise in metal prices in the months ahead.

13% yields!

Don’t think that Sylvania is just a great pick for the current time, however. Thanks to rising auto emissions standards all over the world, the long-term demand outlook for its product looks pretty robust too. Palladium and platinum are widely used to clean up exhaust fumes in catalytic converters.

So what makes the South African digger such a great pick for income chasers? Well, City analysts are forecasting a 5p per share dividend for the current fiscal year (to June 2020). This results in a mighty 13.1% yield.

And unlike Lloyds, Sylvania has the balance sheet strength to make good on broker projections. It’s so financially robust, in fact, that it followed through on another share buy-back exercise just today. The low-cost producer has zero debt on its books and has the sort of cash flows to make jaws drop. It had a cash balance of $33.8m as of December as a result, up significantly from $20.2m a year earlier.

Whether or not you’ve been burnt by Lloyds’ decision to cut dividends, Sylvania is a great income play for these troubled times.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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 Investing Articles

Investing Articles

How much would I need to invest in income shares to earn £300 a month?

What kind of lump sum would be required to earn £300 a month by taking advantage of some of the…

Read more »

Investing For Beginners

Up 31% in a month, could this FTSE 250 stock be getting bought out?

Jon Smith takes a look at speculation that's pushing the share price of a FTSE 250 share higher and considers…

Read more »

Investing Articles

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

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

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »