Each month, we ask our freelance writers to share their high concepts for dividend shares with you — right here’s what they mentioned for October!
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Barratt Developments
What it does: Barratt Developments, which builds properties throughout the UK, is the nation’s largest housebuilder by quantity.
By Royston Wild. Building large Barratt Developments (LSE:BDEV) doesn’t provide one of many FTSE 100’s greatest ahead dividend yields.
The truth is, at 3.3% for the monetary 12 months to June 2025, its yield sits under the index common of three.5%. However Metropolis analysts anticipate dividends to rise quickly over the short-to-medium time period, which in flip drives the yield sharply greater.
For fiscal 2026 and 2027, the dividend yields on Barratt shares are 4.2% and 5% respectively.
In fact dividends are by no means assured. And on this case, shareholder payouts may very well be endangered by a recent downturn within the housing market.
Encouragingly, nevertheless, market situations are steadily bettering as mortgage charges develop into extra inexpensive. Barratt’s weekly internet non-public reservation charge per energetic outlet was 0.58 between 1 July and 25 August 2024, newest financials confirmed. This was up from 0.42 a 12 months earlier.
Barratt additionally has a powerful stability sheet it might probably utilise to pay dividends if the market stagnates or worsens once more. Internet money was nearly £870m as of June.
The builder’s shares have dropped round 10% within the final month. This makes it a sexy dip purchase to think about, for my part.
Royston Wild owns shares in Barratt Developments.
Dunelm Group
What it does: Dunelm Group is a UK homewares retailer that sells bedding, curtains, furnishings, mattresses, and extra.
By Charlie Carman. Dunelm Group (LSE:DNLM) affords a 3.7% dividend yield. That’s barely greater than the FTSE 250 common.
Crucially, shareholders have additionally been rewarded with particular dividends in recent times. These aren’t mirrored within the headline yield determine. Together with this 12 months’s extra payout brings the entire yield nearer to six%. However keep in mind, no dividends are assured.
FY24 outcomes had been spectacular. Revenues superior to £1.71bn from £1.63bn in 2023. Pre-tax income additionally climbed to £205.4m from £192.7m.
Furthermore, the outlook appears shiny. Broadly-anticipated rate of interest cuts might spur housing market exercise. A rising variety of residential movers ought to enhance demand for dwelling furnishing merchandise. Christmas is usually a powerful buying and selling interval too.
Dunelm’s founders — the Adderley household — lately bought 10m shares. They continue to be the biggest shareholders by a transparent margin, however there’s a danger this might harm investor confidence.
Nonetheless, there are nonetheless good causes to think about shopping for Dunelm shares in October.
Charlie Carman doesn’t personal shares in Dunelm Group.
M&G
What it does: M&G is an asset supervisor that has purchasers within the UK and a number of different markets worldwide
By Christopher Ruane. M&G (LSE: MNG) has provided a excessive yield for years now. However that doesn’t make it any much less engaging in my opinion.
Its coverage goals to keep up or develop the dividend annually. Clearly, the asset supervisor understands the significance of the dividend to its funding case. September’s interim outcomes noticed the most recent rise. It was modest, with the interim dividend going up from 6.5p per share to .6.6p. However an increase continues to be an increase and the present yield is 9.4%. That pits M&G among the many most profitable of FTSE 100 shares.
The primary half of the 12 months noticed the enterprise generate working capital of £486m – a bit lower than in the identical interval final 12 months, however nonetheless substantial. Its robust model, giant buyer base and ongoing demand for asset administration all work in M&G’s favour as a dividend share. Weak markets might dent demand and income, however I plan to carry – and maintain incomes passive earnings.
Christopher Ruane owns shares in M&G.
Rio Tinto
What it does: Based in 1873, this British-Australian multinational is the world’s second largest metals and mining company. Its prime product is iron ore, however it additionally produces copper, bauxite, diamonds, uranium and a collection of business minerals.
By Harvey Jones. Occasions are robust for commodity shares, and all people is aware of why. China has been the world’s primary supply of demand for years, consuming 60% of the world’s metals and minerals. However the world’s second greatest economic system is on the rack and struggling to show issues spherical.
Nonetheless, issues are trying up as Beijing launches an aggressive new stimulus plan whereas US rate of interest cuts might revive the broader international economic system.
The Rio Tinto (LSE: RIO) share worth is up 5% over 12 months however nonetheless seems good worth with a ahead price-to-earnings ratio of 9.97%. Its shares are forecast to yield 5.81% within the 12 months forward.
The massive hazard is that the most recent Chinese language stimulus plan will fail to shift the dial, and we’ll be again to sq. one.
Nonetheless, with a dividend like this, Rio Tinto’s shares appear like a no brainer purchase for traders with the endurance to attend for higher days.
Harvey Jones doesn’t personal shares in Rio Tinto.
TP ICAP
What it does: TP ICAP is a monetary markets infrastructure firm and operates because the world’s largest inter-dealer dealer by income.
By Kevin Godbold. In August, TP ICAP (LSE: TCAP) launched a constructive set of half-year numbers for 2024. The outlook assertion was upbeat and chief govt Nicolas Breteau mentioned the agency’s deal with diversification “is paying off”.
The enterprise facilitates transactions between monetary establishments, and market volatility can result in improved buying and selling. One danger for shareholders is that markets could develop into quieter resulting in decrease money flows and income for the corporate.
We noticed the chance play out main as much as the coronavirus. Earnings had been declining for just a few years and the administrators rebased the dividend decrease in 2020.
Nonetheless, earnings and shareholder funds have been rising effectively since then. There’s additionally a share buyback programme in operation suggesting the agency has loads of spare money flowing in.
In the meantime, with the share worth close to 234p, the forward-looking dividend yield for 2025 is just under 6.8%, which seems engaging to me.
Kevin Godbold doesn’t personal shares in TP ICAP.
