5 of the best income shares to buy for the recovery – Motley Fool UK

With the stock market looking like it’s in recovery mode, I’m targeting income shares like these right now.
Image source: Getty Images.

Income shares look primed to make decent investments as the stock market recovers. I arrived at that conclusion because stock prices have been weak in the bear market we’ve suffered.
However, in many cases, dividend-paying companies have been delivering robust trading statements. And dividends look set to continue.
My preference is for businesses with defensive qualities. I think they are better placed to support a stream of shareholder dividends for years to come. The alternative would be to pick high-dividend payers among the more cyclical enterprises.
However, such businesses tend to be battered by changing general economic conditions. And we often see volatile share prices, cash flow, profits and dividends.
I’m keen on smoking product makers British American Tobacco, at 3,431p, and Imperial Brands, at 1,855p. They both keep delivering decent trading updates and sport forward-looking yields just above 7% for 2023. 
The sector’s not for everyone because of the health-damaging nature of the products. And there are some risks. For example, tobacco volumes are in a long-term decline. And both firms carry a fair amount of debt. On top of that, the industry attracts keen regulatory focus.
Nevertheless, I’ve got these income stocks in my long-term diversified portfolio. And I’m hoping the robust cash flows enjoyed by each business will fuel strong shareholder returns in the years ahead.
I’m also holding trading platform provider IG Group. With the share price near 796p, the forward-looking dividend yield is above 6% for the trading year to May 2024. The business has a good multi-year record of dividend payments and tends to thrive when the markets are volatile. And we’ve seen plenty of that.
In March, IGG reported its “highest quarterly revenues of the year”. And the directors reckon the outcome arose because of “continuing momentum” and a strategy “to expand and diversify”. Meanwhile, a share buyback programme started in July.
I’m optimistic that steady trading will drive strong income returns for me in the years ahead. Although, as with any business, nothing is guaranteed.
Although I don’t yet own this one, I like Foresight Solar Fund for income. With the share price near 118p, the historical dividend yield is around 6%. But City analysts predict robust increases ahead.
As the name suggests, Foresight invests in ground-based solar assets. And I reckon the sector will continue to form an important part of the UK’s energy mix far into the future.
The company has a strong multi-year record of delivering steady dividends for shareholders. And I’d buy the stock now for more of the same. Although it’s worth me bearing in mind that any business can miss its estimates because of operational and other challenges.
Within the renewables theme, I’d also invest in Renewables Infrastructure Fund for dividend income. The company invests in onshore wind, offshore wind, solar photovoltaic (PV), and battery storage projects in the UK, Ireland, France, Germany, Spain, and Sweden.
The dividend record is steady. And with the share price near 136p, the forward-looking yield is running around 5% for 2023. We can find out how the business has been going with the interim results due on 4 August. But I’m optimistic.
Kevin Godbold has positions in British American Tobacco, IG Group Holdings, and Imperial Brands. The Motley Fool UK has recommended British American Tobacco, Foresight Solar Fund Limited, and Imperial Brands. 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.
Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.
| Christopher Ruane
Our writer has been considering buying Ibstock shares for his portfolio. Here are a trio of things he finds attractive…
Read more »
| Jabran Khan
Jabran Khan notes that The Compass Group share price is rising. He decides if he would buy or avoid the…
Read more »
| Jon Smith
Jon Smith writes about several ideas he is trying to implement with the FTSE 100 to make his investments work…
Read more »
| John Choong
Burberry recently released a trading update for its Q1 performance. Its share price has risen 5% since. So, should I…
Read more »
| Christopher Ruane
Royal Mail shares have lost half their value in little over a year. But does the health of the business…
Read more »
| Christopher Ruane
REITs are highly exposed to the property market. So could growing interest rates make them a less attractive investment for…
Read more »
| Royston Wild
These top dividend stocks provide exceptional all-round value right now. Here’s why I’d buy and hold them in my portfolio…
Read more »
| Dr. James Fox
Unilever shares continued their recent gains on Tuesday after an earnings report impressed investors. But is this stock still a…
Read more »
View All
Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.
To make the world Smarter, Happier, And Richer
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services.
Read more about us >

We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. Any opinions expressed are the opinions of the authors only. The content provided has not taken into account the particular circumstances of any specific individual or group of individuals and does not constitute personal advice or a personal recommendation. No content should be relied upon as constituting personal advice or a personal recommendation, when making your decisions. If you require any personal advice or recommendations, please speak to an independent qualified financial adviser. No liability is accepted by the author, The Motley Fool Ltd or Richdale Brokers and Financial Services Ltd for any loss or detriment experienced by any individual from any decision, whether consequent to, or in any way related to the content provided by The Motley Fool Ltd; the provision of which is an unregulated activity.
The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested. You should not invest any money you cannot afford to lose, and you should not rely on any dividend income to meet your living expenses. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, administrative costs, withholding taxes and different accounting and reporting standards. They may have other tax implications, and may not provide the same, or any, regulatory protection. Exchange rate charges may adversely affect the value of shares in sterling terms, and you could lose money in sterling even if the stock price rises in the currency of origin. Any performance statistics that do not adjust for exchange rate changes are likely to result in an inaccurate portrayal of real returns for sterling-based investors.
Fool and The Motley Fool are trading names of The Motley Fool Ltd. The Motley Fool Ltd is an appointed representative of Richdale Brokers & Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority (FRN: 422737). In this capacity we are permitted to act as a credit-broker, not a lender, for consumer credit products. We may also publish information, opinion and commentary about consumer credit products, loans, mortgages, insurance, savings and investment products and services, including those of our affiliate partners. We do not provide personal advice and we will not arrange any products on your behalf. Should you require personal advice, you should speak to an independent, qualified financial adviser.
The Motley Fool Ltd. Registered Office: 5 New Street Square, London EC4A 3TW. | Registered in England & Wales. Company No: 3736872. VAT Number: 188035783.
© 1998 – 2022 The Motley Fool. All rights reserved. The Motley Fool, Fool, and the Fool logo are registered trademarks of The Motley Fool Holdings Inc.

source

Leave a Comment