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I reckon the market sell-off has created some low cost shopping for alternatives within the FTSE 100. Here are three dividend shares I feel are prime buys at present.
This 9% yield appears secure to me
HSBC Holdings (LSE: HSBA) made headlines within the monetary press final week when it took over the UK operations of failed US financial institution SVB Financial (Silicon Valley Bank).
HSBC’s personal share value has fallen sharply too as market worries have mounted. However, I feel the danger of this £110bn large struggling any severe issues is minimal.
Indeed, I used to be reassured by the group’s current 2022 outcomes. These confirmed a secure efficiency and a robust steadiness sheet. The outlook assertion from CEO Noel Quinn additionally appeared extra assured to me than beforehand.
HSBC’s dependence on China stays a danger, for my part, as a result of political state of affairs. But I feel the group’s publicity to Asia additionally gives development alternatives that aren’t out there to UK-only banks.
In specific, I anticipate HSBC to be a giant winner from the reopening of the China this yr.
Broker forecasts counsel a dividend of $0.60 per share this yr, giving a yield of almost 9%. That appears secure sufficient to me. If I didn’t already personal sufficient financial institution shares, I’d most likely purchase be shopping for.
A cut price sin inventory
After a robust rally final yr, shares in British American Tobacco (LSE: BATS) have reversed sharply. The tobacco group’s share value has fallen by almost 20% for the reason that finish of June final yr.
The dangers of investing on this enterprise are apparent sufficient. British American nonetheless makes all of its earnings from tobacco, as its reduced-harm merchandise should not but worthwhile. A protracted-term decline is a danger, particularly within the group’s core US market.
However, gross sales of vapes and different merchandise are rising quick and are anticipated to turn into worthwhile subsequent yr. It’s additionally price remembering that the tobacco enterprise has remained greater and extra profitable than traders anticipated 10-20 years in the past. I believe it will proceed to be true.
As I write, BATS shares are buying and selling underneath £30. That costs them on simply seven instances forecast earnings. With a well-supported dividend yield of 8%, I feel this inventory appears low cost proper now.
A FTSE 100 hydrogen play?
My last selection is industrial group Johnson Matthey (LSE: JMAT). This enterprise is without doubt one of the foremost producers of catalytic converters.
Demand for these costly exhaust units may fall as electrical car use grows. But Johnson Matthey has been in enterprise for over 200 years and has advanced efficiently earlier than.
The firm is now utilizing its current technical experience to increase into the hydrogen market — a sector the place it’s already energetic.
A failed transfer into battery manufacturing has left the enterprise with one thing to show. Other development tasks may fail too.
However, I feel most of this danger is already priced into the inventory. Internal combustion engines received’t disappear anytime quickly — particularly in heavy autos comparable to vehicles and buses, the place the agency has a giant market share.
Johnson Matthey shares at the moment commerce on 10 instances forecast earnings, with a 3.9% dividend yield. That appears like good worth to me for a long-term funding.