The FTSE 100 has fallen sharply over the last week or so, as market volatility has returned after a long stretch of tranquillity. A month ago, the index was hovering around the 7,800 point mark. Today, it’s back under 7,100 points.
When stock prices fall, dividend yields rise. As a result, a tumbling stock market can present fantastic opportunities for dividend investors.
Right now, I’m seeing an abundance of such opportunities.
Take a look at the high yields on these stocks:
Legal & General Group
At the end of January, Legal & General Group (LON: LGEN) shares were trading around 275p. Now, they’re under 250p. With a 15.3p per share dividend expected for FY2017, the stock has an estimated yield of 6.1%.
Royal Dutch Shell
Royal Dutch Shell (LON: RDSB) shares enjoyed a strong run in the latter half of 2017, rising from around 2,050p to 2,600p. However, in the last week, the shares have tumbled as the oil price has declined, and they’re now back at 2,253p. That has boosted Shell’s dividend yield back up to 6%.
Shares in tobacco manufacturer Imperial Brands (LON: IMB) are not having a good run right now. Over the last year, they have declined from 3,770p, to just 2,637p. Yet Imperial increased its full-year dividend by 10% in November, and said just this week that “Cash generation remains strong underpinning our 10% dividend growth.” With a payout of 187.2p expected this year, Imperial’s yield is now a high 7.1%.
Lloyds Banking Group
Lloyds Bank (LON: LLOY) shares were up around 72p a few weeks ago. Now, they’re back at 66.55p, meaning a higher yield is on offer. Analysts currently expect a payout of 4.11p per share for FY2017, which at the current share price, equates to a yield of 6.2%.
Looking away from the highest yielders, there are also plenty of opportunities appearing among slightly lower-yielding stocks. One such example is investment manager Schroders (LON: SDRC). Schroders’ non-voting shares were up around 2,700p at the end of January. Now, they’re changing hands for 2,365p, pushing the estimated FY2017 yield up to a nice 4.4%.
St James’s Place
Similarly, wealth manager St James’s Place (LON: STJ) has seen its shares tumble over the last fortnight. At the current share price of 1,105p, the estimated yield is 3.9% and that’s expected to rise to 4.3% for FY2018.
Unilever (LON: ULVR) is a stock that is often in high demand. As a result, the shares often trade at a high valuation with a low yield. But even Unilever hasn’t escaped the recent selloff. The shares are now back at 3,783p, offering a yield of a respectable 3.6%.
Many investors panic when stocks are falling. However, for dividend investors with a focus on long-term income, market volatility can bring fantastic long-term opportunities.
Are there other compelling dividend opportunities you have spotted? If yes, don’t hesitate to post a comment below.
Disclosure: Edward Sheldon, CFA owns shares in Legal & General Group, Royal Dutch Shell, Imperial Brands, Lloyds Banking Group and Unilever.
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.