I am always looking for dividend shares to buy for my portfolio. Right now, I think investors are spoilt for choice when it comes to income investments.
As such, here are a selection of companies that I believe are some of the best dividend shares to buy now.
The best dividend shares
One sector I think is being particularly unfairly punished by the market is the homebuilding sector.
Shares in companies like Taylor Wimpey and Persimmon have been under pressure following the government’s announcement that it would crack down on developers to help fund the country’s cladding crisis.
However, according to analysts, the sell-off has gone too far. Analysts believe these companies have lost significantly more market value than they would have to pay out in the worst-case scenario. I think this presents an opportunity. While there is still a risk that they could be on the hook for billions in potential liabilities, low valuations offset some of this risk.
That is why I would acquire both Taylor and Persimmon for my portfolio today. The former currently supports a potential dividend yield of 5.7%. The latter yields around 9%. On top of this, both companies have cash-rich balance 7.
As well as the homebuilders, I think Hikma and Coca-Cola HBC are also some of the best shares to buy now.
I think both of these dividend shares have unique qualities, which makes them stand out from the competition. Hikma is one of the world’s largest producers of generic drugs. It has substantial economies of scale and resources to invest in developing new treatments. This is its competitive edge.
Meanwhile, Coca-Cola HBC has the bottling contract for its namesake in Europe. This almost guarantees the company’s revenue stream, giving it the flexibility to invest in other business areas and return cash to investors.
Having said all of the above, these companies are both exposed to risks. Challenges they could face in the future include rising cost inflation and competition. Even Coca-Cola HBC is not immune to competition in the soft drinks sector. It may need to increase its marketing spending to maintain its position in the industry.
Despite these risks, I think both organisations appear attractive as dividend shares. Coca-Cola HBC currently supports a dividend yield of 2.9%, with room for growth as the company’s earnings expand. It has also been returning cash to investors by repurchasing shares.
Hikma offers a dividend yield of 2%. The dividend payout is covered 3.5 times by earnings per share, leaving plenty of headroom for further payout increases in the years ahead as the company’s profits expand.
With a potential for both income and profit growth, I think these groups are some of the best shares to buy now. Not just for their income credentials but for their growth potential as well.
The post The best dividend shares to buy right now appeared first on The Motley Fool UK.
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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Coca-Cola HBC and Hikma Pharmaceuticals. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
