Dividend stocks provide shareholders with a great opportunity to earn more from their investments. Many stocks on the FTSE 100 and FTSE 250 offer excellent dividend yields as high as 10% — or more!
Dividends in the UK have increased in the past few years as the underperforming economy has resulted in rising yields. But now things are improving and with summer coming and an election on the horizon, it could all change.
So I’ve dug out two lesser-known dividend stocks that could continue paying high dividends throughout the year.
Company
Forward P/E ratio
Forward dividend yield
Nordic American Tankers (NYSE: NAT)
8.2 times
11.5%
Impact Healthcare REIT (LSE: IHR)
7.9 times
8.1%
Nordic American Tankers
Nordic American Tankers is a fledgling tanker firm based in Bermuda that boasts a tiny staff of only 17 and a market cap of £833m. It owns and operates Suezmax double-hull crude oil tankers employed in competitive spot markets.
Although price action has been underwhelming of late, its recent Q4 and FY 2023 results came out positive. Net profit doubled from the previous quarter and revenue was up 15% from last year.
But much of that growth could be the result of two short-term factors: a drought in the Panama Canal and Houthi rebel attacks in the Suez. Both have pushed up the leasing rates for tankers, helping boost the company’s profits. Neither factor is expected to continue indefinitely, so profits could fall in the coming months or years.
Still, the company currently has a very lucrative 10% dividend yield with no pause to payments in the past decade. But the yield has been volatile, at times dropping to 2% and at other times increasing to 15%. That makes it difficult to estimate the dividend returns but, on average, they should remain quite high.
Overall, I think it’s an interesting – if somewhat risky – dividend stock that could deliver decent returns if things go well.
Impact Healthcare
Impact Healthcare is a real estate investment trust (REIT) specialising in the healthcare sector. This is a particularly defensive industry as demand for healthcare is unlikely to disappear overnight. And REIT rules dictate the fund must pay out 90% of rental profits as dividends.
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However, persistently high interest rates have put pressure on the real estate market over the past year. This has made it difficult for the fund to achieve significant gains, with the shares down 4.8%. If interest rate cuts continue to be delayed, the share price may fall further in 2024.
Still, it sports an attractive 8.6% dividend yield and an excellent track record of making payments. Since 2018, all quarterly payments have been honoured and the yield has increased steadily. I think the current price also looks cheap compared to peers — with a price-to-earnings (P/E) ratio of only 7.3, it’s lower than other REITS like Target Healthcare and Primary Health.
It’s also worth noting that the fund includes an ongoing charge of 1.51%, so this should be taken into account when estimating potential returns.
The post 2 lesser-known dividend stocks to consider this summer appeared first on The Motley Fool UK.
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Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended Primary Health Properties Plc. 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.
