As interest rates plunge to near-zero, top FTSE 100 dividend stocks yielding more than 20 times base rate look more attractive than ever. Theres certainly nothing negative about the following three yields.
Berkeley buzz
HousebuilderBerkeley Group Holdings (LSE: BKG) cant deny thatthe last 12 months has been rough, with the share down26% in that time. Like all of the sector, Berkeleyhas suffered a post-Brexit blowout, with the share price plungingfrom 3,285p on 23 June to just 2,492p today, a drop of 24%. The market may think dimly of its prospects buttrading at nine times earnings and yielding just over 8% theres plenty to build on.
There has been little sign of a housing market collapse since the referendum: latest figures from Rightmove may show asking prices falling 1.2% in August butthis is partly aseasonal summer blip and they remain4.1% higher than a year ago. The growing population and urgent housing shortage make it hard to creditDeutsche Banks prediction that UK house prices will drop 10%. The Bank of Englands rushto slash interest rates shouldmake mortgage finance even more affordable andprop up demand. If autumn statement stimulus fromnew Chancellor Philip Hammond includes a housebuilding programme, then Berkeley could be topping outagain.
Group therapy
Insurer Legal & General Group (LSE: LGEN) has also had a rough year with its share price down 21%, despite leaping 15% in the last month. Last week it cheered investors by posting a 22% leap in profits before tax to 667m, driven by its annuity arm, which outshone its strugglinginvestment management and insurance businesses.Net cash generation jumped16% to 727m and the group delivered a 20% return on equity.
Chief executive Nigel Wilson said the group should continueto deliver attractive shareholder returns despite current financial and political uncertainty, as it tapped into long-term growth drivers such as ageing populations, globalisation of asset markets and welfare reform. Trading at 11.46 times earnings the price still looks right, and with its 6.24% yield covered 1.4 times the income should continue to flow. Forecast earnings per share growth of 11% this year and 4% in 2017make Legal & Generala buy for me.
Making its Marks
For whats partly a fashion company,Marks & Spencer Group (LSE: MKS) has been embarrassingly mismatched for years, with its cutting edgefood business overshadowing the clothing arm. Ithasrepeatedly failed to pull off the trick of keeping its conservative customers happy while luring youngblood. First quarter results showed the same painfulstory, with total food sales up 4% and clothing and home sales down 8.3%.
It remains to be seen whether its strategy of shunning promotions will pay off in the long run, but its certainly causing short-term pain. Barclays recently predicted a painful transition, warning that clothing price cuts arenecessary but will continue to hit like-for-like sales. With food now accounting for more than 50% of grouprevenue, maybe itshould simply give up on clothing. Ahem. Trading at 10 times earnings its problems are priced-inand the 5.4% yield tempts, especially since its nicely covered 1.9 times. Forecast EPS falls of 13% this year, followed by 14% and 2% in 2017 and 2018, suggest the high street giant has a long road ahead of it.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Berkeley Group Holdings. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
