Investing in dividend stocks not only helps with extra income but can also lead to capital appreciation in the long run – we have shortlisted five stocks that are mid-cap companies with attractive dividend policies.
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Investment management companies Investec (GB:INVP), and St. James’s Place (GB:STJ), insurance provider Phoenix Group Holdings (GB:PHNX), real estate company Barratt Developments (GB:BDEV) and fintech company IG Group Holdings (GB:IGG) generate stable dividends – and also have backing from analysts for long-term growth.
Let’s see the stocks in detail.
Investec
Investec is a financial services company focused on banking and wealth management services.
The company painted a fairly optimistic picture in its recently announced trading update for the first half results of the fiscal year 2023. The company expects to post at least 20% higher operating profits for its UK business and 10% higher for its South African business.
The company expects its diverse revenue streams will be of benefit in facing the macroeconomic conditions that could affect the business.
Investec’s earnings are back on track after the slump during the pandemic, and its dividend looks pretty secure. The final dividend for 2022 was 25p per share, including the final dividend of 14p per share.
According to TipRanks, Investec stock has a Moderate Buy rating. The INVP target price is 545p, with an upside potential of 52.6%.
St. James’s Place
St. James’s Place is an investment company providing wealth management and advisory services.
The company’s scale of operations and brand name help it strive in the competitive market. The current tougher economic environment creates demand for the company’s wealth management services as clients aim to keep their money safe.
In the first half of 2022, the company announced an interim dividend of 15.59p per share, which is 35% higher on a year-over-year basis.
According to TipRanks, St. James’s Place stock has a Moderate Buy rating, with a target price of 1,473.67p. It is 45% higher than the current price level.
Phoenix Group Holdings
Phoenix Group provides a range of pensions, savings, and insurance products and services in the UK.
The group has reported a solid performance in the first half of 2022. It has increased its dividend by 3% to 24.8p per share, and the company is confident about inflation having no material impact on the business.
The company is sitting on a healthy pile of cash of £950 million, which secure its dividends.
The PHNX target price is 739.89p, which shows a growth of 41.6% on the current price level. The stock has a Moderate Buy rating.
Barratt Developments
Barratt Developments is among the leading residential property developers in the UK.
The company’s stock is going through a rough stretch losing almost 50% of value YTD. This was further fuelled by tax cuts announced by Kwasi Kwarteng, which created a lot of pressure on mortgage markets.
Looking at Barratt’s annual results for 2022, it feels like the company remains well-positioned to withstand the short-term challenges. Both revenues and profits are growing, and it entered the fiscal year 2023 with a strong order book.
The main highlight for Barratt is its dividend yield which is at 9.19% as compared to the sector average of 2.18%. It also announced a buyback worth £200 million.
According to TipRanks, Barratt Developments’ stock has a Moderate Buy. The average target price is 549.57p, which has an upside potential of 63.3%.
IG Group Holdings
IG Group is a provider of online trading platforms and associated services to its retail and institutional clients.
Recently, the company issued its first quarter update for the fiscal year 2023. The revenue increased by 11% to £241.8 million. The company is optimistic about the high-potential markets, where revenue increased by 56% in the most recent quarter.
The company distributes 50% of its after-tax profits as ordinary dividends, along with special dividends occasionally. In sync with this policy, the company approved a total dividend of 44.2p per share in 2022.
According to TipRanks’ consensus, IG Group has a Strong Buy rating, with a target price of 1,136.67p. It has an upside potential of 50.4%.
Conclusion
Amid a chaotic economic environment, these stocks can provide consistent dividend income to investors – plus the potential for growth over the longer term.
