It’s Dividend Screen of the Week time.
Today, I’ve scanned the market for high-yielding FTSE 100 stocks that have dividend yields of over 5%.
I’ve added in the criteria that each stock must have dividend cover of 1.5 times, because in general, anything less than 1.5 times is considered risky.
Unlike last week, I haven’t added in any dividend growth criteria this week.
A reminder that I use Stockopedia’s screen function, which processes data on a ‘trailing twelve month’ basis. That means that if there has been a recent interim results announcement, those results are incorporated into the computations to create a more up-to-date result. Stockopedia also produces ‘rolling’ data which combines past data and estimated forward data to enable a like-for-like comparison of ratios between companies with different reporting dates.
FTSE 100 5% Dividend Screen
I’ve screened for dividends stocks that meet the following criteria:
- FTSE 100 stocks
- A dividend yield of at least 5%
- Dividend coverage of at least 1.5 times
Here are the results:
The screen returns nine results. BT has the highest yield, while ITV has the highest cover.
From those stocks, I already own Aviva, Legal & General, Imperial Brands and ITV.
Furthermore, I’m giving serious thought to adding Lloyds Banking Group to my portfolio. The bank is forecast to pay out some generous dividends in coming years.
I’m steering clear of BT due to the size of the company’s pension deficit.
Rio Tinto – I like the company but I tend to avoid the miners in my dividend portfolio, for the main reason that these companies have little control over their prices they receive for the products they sell such as iron ore and copper. As a result, revenues and profits can be extremely volatile, and dividends can be at risk of being cut (both BHP and RIO both cut their dividends in recent years).
Taylor Wimpey – Housebuilding is another sector I tend to avoid. The housebuilders can pay big dividends during the boom times, but those dividends can disappear when the cycle turns.
Disclosure: Edward Sheldon, CFA owns shares in Legal & General Group, Imperial Brands, ITV and Aviva.
This article is provided for general information only and is not intended to be investment advice. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.