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Three 5% dividend stocks you may not have considered (only one is in the FTSE 100)

The Motley Fool logo The Motley Fool 12/8/2018 Edward Sheldon, CFA
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When it comes to investing for dividends, many investors tend to go for the same old FTSE 100 names such as Shell and GlaxoSmithKline. That’s not necessarily a bad thing as these kinds of companies are generally quite stable and have long-term dividend track records. Yet there are plenty of more under-the-radar dividend stocks that also offer colossal yields, and adding a few less-mainstream names can be a good way to boost a portfolio’s diversification. With that in mind, here’s a look at three high-yielding dividend stocks you may not have considered for your portfolio.

Tritax Big Box

Tritax Big Box (LSE: BBOX) is a FTSE 250-listed property company that is dedicated to investing in very large logistics facilities known as ‘big boxes.’ These play an important role in today’s retail environment, as they are used by online retailers such as Amazon and Argos to hold goods before they’re distributed to customers.

Tritax Big Box doesn’t have the same long-term dividend track record as a company like Shell because it was only listed on the stock exchange in 2013. Yet it has built up a solid four-year dividend growth track record, and with the company planning to distribute 6.7p per share in dividends for FY2018, the prospective yield on the stock right now is 5%.

Given that online shopping is likely to continue increasing in popularity in the years ahead, the dividend growth story here looks compelling, in my view.

St. James’s Place

When it comes to high-yielding dividend stocks in the financial sector, names such as Lloyds and HSBC tend to come to mind. Yet another FTSE 100 financial stock that could be worth checking out is St. James’s Place(LSE: STJ). It also offers a prospective dividend yield of 5%.

St. James’s Place specialises in providing tailored wealth management advice to individuals, trustees, and businesses. Through a network of around 3,800 expert advisers, it offers services such as investment planning, retirement/pension planning, risk protection, and inheritance planning. Given that the current financial environment is a bit of a nightmare for savers and investors (low-interest rates, volatile markets, changing regulation etc.) the company looks well placed to continue growing, and should benefit as the UK’s baby boomers retire.

STJ has a phenomenal dividend growth track record and has increased its payout by over 300% in the last five years alone. Yet looking ahead, there could be more dividend increases to come.

Primary Health Properties

Lastly, I’d take a look at FTSE 250-listed Primary Health Properties(LSE: PHP). This is a niche property company that owns and leases a large portfolio of modern, purpose-built healthcare facilities to government healthcare providers and GP practices. Many of its properties are let to NHS organisations.

Primary Health Properties has notched up eight consecutive dividend increases now, and looking forward, City analysts expect the group’s dividend to continue growing in the medium term. This year, PHP has already paid out four quarterly payments of 1.35p per share, which at the current share price, equates to a yield of just under 5%.

Given that the UK population is ageing rapidly, demand for healthcare services is likely to remain robust going forward, and Primary Health Properties looks well placed to prosper. As such, I think it could be an excellent dividend stock for those looking to diversify their portfolios a little.

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Edward Sheldon owns shares in Tritax Big Box, St. James’s Place, Royal Dutch Shell, GlaxoSmithKline and Lloyds Banking Group. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended HSBC Holdings, Lloyds Banking Group, Primary Health Properties, and Tritax Big Box REIT. 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.

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