3 top dividend stocks to buy now (2024)

Andrew Woods analyses three companies and considers whether they are stocks to buy based on their dividend record and financial results.

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Investing in companies with attractive dividend policies can be a great way to grow an income stream. Having searched through the indices, I’ve come up with what I think are three of the best dividend stocks for me to buy now. Let’s take a closer look.

Smoking hot dividends

British American Tobacco(LSE:BATS) has paid a healthy dividend in recent years, although I’m aware this can be subject to change in the future. For 2021, it paid out 215.6p per share. This equates to a dividend yield based on the current share price of 3,472p of 6.22%.

To put this dividend payment in context, let’s pretend that I’m investing £10,000 in British American Tobacco shares. At current levels, this would buy me 288 shares. I then multiply these 288 shares by the payment per share, which is 215.6p. This means that I could receive £620.93 per year by simply holding stock in the company.

The firm invested £1bn into its non-combustible segment, which is smokeless tobacco, in the first half of 2021. It has clearly spotted a trend of growing users of these products and saw its customer base in this department increase to 19.4m.

Revenue guidance for 2022 is still for growth between 2% and 4%, while earnings are forecast to rise by around 5%.

Despite this, the business is still suggesting that the global tobacco industry volume may fall by 3% this year due to global uncertainty.

Yields made of bricks and mortar

Taylor Wimpey(LSE:TW) has been quite consistent with its dividend policies in recent years. In 2021, the company – a housebuilding firm – paid a dividend of 8.58p per share. At the current share price of 116.5p, this equates to a dividend yield of 7.37%.

In April 2021, the business reported that it had an order book value of £2.97bn, up from £2.8bn one year prior.

The company also stated recently that it was trading in line with full-year guidance for 2022.

However, with interest rates on the rise, there may be a chance that growing mortgage costs deter potential homeowners from buying houses. This could have a negative impact on business for Taylor Wimpey, together with the wider housing market, and may dent future balance sheets and profit margins.

Rising interest rates, rising dividends?

Finally,Barclays(LSE:BARC) paid a dividend of 6p per share last year. At the time of writing, the bank stock‘s shares are trading at 148p, and that payment is equal to a dividend yield of 4%.

In an effort to curb inflation, the Bank of England has been increasing interest rates. They are currently sitting at 1.25%, but this is slated to rise even further in the coming months.

This could be good news for Barclays, because it may be able to charge more for its products, like loans and mortgages.

Furthermore, pre-tax profits more than doubled between 2020 and 2021 from £3bn to £8.4bn. However, I wonder whether economic pressures, like the cost-of-living crisis and rising energy costs, might deter potential customers from taking on more debt through loans and mortgages.

Overall, all three businesses look to be performing solidly. I plan to add all three to my portfolio soon to construct a strong income stream through dividends.