Centrica
Although it feels like investing in a domestic energy supplier such as Centrica (LSE: CNA) (NASDAQOTH: CPYYY.US) is not a particularly good idea at the present time, the figures say otherwise. Certainly, the next few months are likely to be somewhat volatile for the likes of Centrica as energy suppliers are in the news for contributing to a so-called cost of living crisis in the run-up to the General Election. However, with a yield of 6.1% and a price to earnings (P/E) ratio of 14.3, there seems to be a sufficient margin of safety included in its share price that makes now a good time to buy.
Furthermore, Centrica is expected to increase dividends per share by 3.4% next year, which is almost seven times the current rate of inflation and means that it could be yielding as much as 6.3% in 2016. As a result, it looks like a top notch income play at the present time.
AstraZeneca
While AstraZenecas (LSE: AZN) (NYSE: AZN.US) bottom line is undoubtedly in a period of decline, with it being forecast to be 48% lower in 2016 than it was in 2011, it remains a great income play. Thats because it yields 3.8% and, although profits are lower, dividends remain well-covered and sustainable, being covered 1.5 times by profit in 2014.
In addition, AstraZeneca has a beta of just 0.85, which means that its share price should move by just 0.85% for every 1% move in the wider index. This highlights its defensive qualities and, for many income-seeking investors, a low beta and less volatile share price experience can prove to be very desirable attributes in the long run. As a result, AstraZeneca appears to be a sound income stock and could be worth buying at the present time.
Direct Line
2015 is set to be a bumper year when it comes to dividends for investors in Direct Line (LSE: DLG). Thats because the insurer is expected to pay out dividends of 19.8p per share this year, which equates to a yield of 6.3%. Thats among the highest yields on the FTSE 100 and highlights Direct Lines appeal as an income play in the short run.
However, its longer term prospects regarding shareholder payouts are also bright. Certainly, Direct Line is forecast to cut dividends next year, but will still yield 5.7% at its current share price. And, with dividends being well-covered by profit at 1.35 times, Direct Line appears to be a very appealing and sustainable income play for the long run. Therefore, it could be worth buying at the present time and, when bought alongside AstraZeneca and Centrica, could mean that you enjoy a combined average yield of 5.4% this year.
Of course, here at The Motley Fool we’re big believers in the power of dividends over the long term. That’s why we’ve put together a free and without obligation guide called How To Create Dividends For Life.
It’s a simple and straightforward guide that you can put to use on your own portfolio right away. It could help you to find the best income stocks at the lowest prices, thereby improving your income in 2015 and beyond!
Click here to access your copy – it’s completely free and comes without any obligation.
Get FREE Issues of The Motley Fool Collective
Get straightforward advice on whats really happening with the stock markets, direct to your inbox. Help yourself with our FREE email newsletter designed to help you protect and grow your portfolio wealth.
By providing your email address, you consent to receiving further information on our goods and services and those of our business partners. To opt-out of receiving this information click here. All information provided is governed by our Privacy Statement.
Peter Stephens owns shares of AstraZeneca and Centrica. The Motley Fool UK has recommended Centrica. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.