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I got a bit of a fright seeing the most-bought stocks on AJ Bell’s platform last week – dividend stocks, and plenty of them! These days, this Top Buys list is more often populated by artificial intelligence (AI) giants such as Micron or Nvidia, or blue-chip FTSE 100 firms including Rolls-Royce or BP.
That’s why the number-one and number-two positions in big-yielding dividend stocks came as a surprise to me. Investors must be liking the look of stocks offering yields close to and above the 8% mark! Let’s take a quick look at each.
Big yields
The lowest on the list of the three dividend stocks I’m highlighting – though still in the healthy position of seventh most-bought overall – was Primary Health Properties (PHP). The 91p stock pays a whopping 8.09% yield, one of the highest on the FTSE 250.
PHP rents out healthcare facilities like doctor’s surgeries. This means high occupancy, long leases, and income streams often from government coffers (ie stable). This is one reason the dividend has increased more than 25 years in a row. Although budget cuts from a highly indebted government could be one risk to bear in mind.
Coming in at second place on the list was Imperial Brands. The £20bn market value tobacco firm is a FTSE 100 stalwart, currently paying a yield of 6.14%. What’s the attraction? Outside of a high yield (which is forecast to rise in the years ahead) a sizeable buyback adds to the shareholder returns.
Investors may however, wish to bear in mind this is a company that sells cigarettes. This could be a risk for the yield in future considering the decline in tobacco consumption. And there’s an ethical element that might be a key drawback too.
Most bought
The number-one most bought stock for this week is (drum roll please)… LondonMetric Property (LSE: LMP). Like Primary Health Properties, this stock derives its income from leases, including locations for distribution centres or retail.
Is it worth considering? I think so. The shares change hands for 176p a pop, and currently pay a dividend yield of 7.21%. That makes it the third-highest dividend yield on the FTSE 100.
This is a yield on the rise too, with 11 years of consecutive dividend increases, including a 7.48% growth rate for the last five years.
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The dividend yield was near the 4% figure in 2022. This could be a risk too. A rising yield indicates that investors are not placing as much of a premium on the stock. In Londonmetric’s case, worries about an economic slowdown in the UK may be a factor. A recession could lead to problems with rent collection or occupancy rates, which ultimately may hit the dividend.
While these three have grabbed the top spots (for this week, at least), the biggest takeaway might be that investors are seeking reliable income stocks over ‘jam tomorrow’ growth plays. That could create many more great opportunities in the markets…
Should you invest £5,000 in LondonMetric Property Plc right now?
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And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if LondonMetric Property Plc made the list?
John Fieldsend owns shares in Rolls-Royce and Nvidia.
This story originally appeared on Motley Fool
