I didn’t find it too difficult to find 4 dividend shares with yields over 4%. That’s good news for UK investors in my opinion, since it means there is a good choice of stocks available for investors who may be worried about rising inflation.
Aviva plc (LON:AV) (LSE:AV.L) has a dividend yield of 4.3%. While I think this is relatively good, Aviva’s dividends are set to increase over the next couple of years. One reason for this is plans for a higher dividend payout ratio of approximately 50%. Another reason is the potential for improved performance from the business, which could send earnings per share higher and lead to increasing dividends per share. In my view, Aviva’s reorganisation holds growth potential in the long run and I think it could be a good performer on a relative basis.
Persimmon plc (LON:PSN) (LSE:PSN.L) has a dividend yield of 5.25%. I’m slightly cautious about the near term prospects for Persimmon’s shares as I think uncertainty in the UK from both a political and economic standpoint could mean the affordability of houses declines. This may lead to some disappointment for housebuilding shares such as Persimmon in my view, but in the long run I think the company has potential. I feel it has a good strategy and I believe its dividend payment plan has relative appeal at a time when inflation is on the rise.
easyJet plc (LON:EZJ) (LSE:EZJ.L) has a dividend yield of 5.4%. I’m slightly surprised at how high its dividend yield reached, although a share price fall of 34% in the last year explains at least some of it. I think easyJet is experiencing a difficult period at the moment, but due to its financial strength and good business model I believe it will survive and potentially prosper. A lower oil price would normally have been a good thing for easyJet, as it lowers fuel bills. However, it has meant more competition from other airlines which may remain in the short run. Still, I think easyJet has dividend investment appeal.
BP plc (LON:BP) (LSE:BP.L) has one of the highest dividend yields I can find among large-cap shares. It is 7.2%, which is 4x the rate of CPI inflation. Because of this, I think BP has dividend investment appeal, although its ability to pay or raise dividends per share depends on oil and gas prices. In my opinion, they may endure a time of further volatility in the near term. However, due to the potential for higher demand in the long run from developing economies, I think BP’s long term outlook and investment appeal as a dividend stock is relatively positive.