Over the past five years, its share price has more than doubled as the group’s reshaped itself around specialist banking and wealth management. Today, the shares trade around 606p, up 115%, with a market-cap of roughly £5.6bn.

But as an income seeker, it was the dividend that caught my eye. At 6.3%, it’s higher than any other major UK bank. So are the shares a no-brainer buy?

Solid, stable results

Investec’s a specialist banking group, operating across corporate banking, private banking and wealth management in the UK and Southern Africa.

According to the group, its focus is on long‑term relationships and disciplined strategy execution. After its recent 2025 results, it was “proud to report a strong performance in a challenging operating environment”.

Results include a 13.9% return on equity (ROE) and over £1bn in pre‑provision adjusted operating profit for the first time. Here’s a few more stats from its latest full-year results (posted in March):

• Net income of £724.51m, up from about £693m.
• Adjusted earnings per share up 4.8% to 82.9p.
• Net interest income up 1.6% to about £1,335.75m. 

Not bad, considering lower rates and competitive pricing continue to pressure its margins. That’s important, because if you’re investing for income, you want a company that holds the line even when times get tough.

So how strong’s the dividend story?

The income angle

The total distribution for the year to 31 March was 38.5p per share, up from 36.5p the year before. Subsequently, it has a trailing yield of about 6.3% and a payout ratio of 46.4%. 

That’s comfortably ahead of Lloyds and HSBC, where yields sit near the low‑3% range, and a shade above Barclays’ 5%. On paper, it looks like the sort of income many UK investors dream about.

But that doesn’t necessarily mean it’s a bargain at the current price.

Cheap or not?

Valuation estimates suggest the shares trade on a trailing price-to-earnings (P/E) ratio of 7.36, with an enterprise value above £9bn.

Compared with similar-sized FTSE 100 challenger banks like IG Group and Lion Finance, Investec offers a higher yield and a cheaper earnings multiple. In fact, on valuation it looks cheaper than any other bank on the index, despite slower earnings growth than most.

So is the market undervaluing it, or do genuine fears keep investors at bay?

The bear case

There are a few obvious challenges. The net interest margin (NIM) is a key metric to consider when assessing bank stocks, and Investec’s is under pressure. Despite larger loan books and deposits, it declined from 2.73% to 2.58%.

If rates stay lower for longer, or competition keeps forcing prices down, that high dividend could start to feel more exposed.

My verdict

As a finance-focused income investor, Investec’s one of the most exciting stories to come along in a while. Results are strong, income appears sustainable and the risks look manageable.

As such, I think it’s a no-brainer to consider at this price point, and I plan to build a sizeable position in the company in the coming years.

Should you invest £5,000 in Investec Group right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Investec Group made the list?

Mark Hartley owns shares in Lloyds and HSBC.

The post Up 115% with a 6.3% yield and P/E of just 7.8! This is my favourite new FTSE 100 dividend stock appeared first on The Twelfth Magpie.

Today is an especially good time to consider investing in FTSE 100 shares too. Why? Analysts think shareholder payouts will reach new highs this year, beating the £85.2bn of dividends generated in 2018.

Have £20,000 to invest in a Stocks and Shares ISA? Here’s how much passive income you could make over the next 12 months.

£88.8bn of dividends?

According to AJ Bell‘s regular ‘Dividend Dashboard’ report, total ordinary dividends from Footsie firms will come in at £88.8bn in 2026. That’s up from the £88bn analysts had tipped in March, and the £86bn at the turn of the year.

These dividend estimates mean the FTSE 100 carries a forward dividend yield of 3.4% for 2026. So if broker forecasts are accurate, a £20,000 investment in a Stocks and Shares ISA would provide £680 in dividends this year if put into an index tracker fund.

But here’s the thing: it means investors would get less in passive income today than they have typically enjoyed in the past.

Beating the FTSE 100

As AJ Bell notes:

Strong gains made by the index this decade [mean] the index has gone up faster than dividends, so the available dividend yield has contracted.

What this means is that while cash dividends have increased, investors get less back in passive income for every pound they invest in a tracker. The forward dividend yield of 3.4% today sits some way below the long-term average that’s closer to 4%.

Yet there’s a simple way investors can get around this. How? By buying individual high-yield Footsie dividend stocks instead. There are currently 36 blue-chip shares with yields above 3.4%.

A 5.6% dividend yield

Take the following FTSE 100 shares, for instance:

With an average yield of 5.6%, a £20,000 ISA investment spread equally across these stocks would deliver dividends of £1,120 in 2026. Investing in a smaller pool of companies means higher risk than a tracker fund. But these six dividend stocks are in great shape to keep paying index-beating dividends in my view.

Take Investec. It’s raised dividends in 14 of the last 15 years, and offered an average 5.5% dividend yield over the past decade.

A top dividend stock

The business provides banking and wealth management services globally. And so during good times profits can soar, underpinning a subsequent sharp rise in dividends. Yet the bank doesn’t pay out an outrageous portion of its profits each year, which means its dividends are sustainable over time. Its payout ratio target is a healthy 35% to 50% of earnings per share (EPS).

The downside is that dividends can fall along with earnings during economic downturns. That remains a real risk yet Investec has impressive financial strength with a CET1 capital ratio of 13%. Even if profits drop, and possibly Investec’s share price too, that strong balance sheet should still see it hit those dividend forecasts.

Put together, I think these six dividend stocks could be a great way to target a passive income.

What income stock do we like better than Investec Group right now?

One of our Share Advisor analysts has just released a brand new stock report that we think is a must-read for any investor looking to try and generate potential income.

And the best bit is that you can see if for yourself, right now, absolutely free of charge!

No jargon. No hard sell. Just a clear look at an income share we think is worth your time.

Royston Wild owns shares in Legal & General and Barratt Developments.

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Its diversified model gives it multiple engines of profit growth, from private banking to wealth management. And forecasts highlight rising earnings and higher payouts, meaning the shares offer an intriguing new route to long‑term passive income.

So, how much dividend income are we potentially looking at?

How big are the dividend rises forecast?

Even now, the international banking and wealth management group gives a dividend yield of 6%. That is nearly double the FTSE 100’s present average of 3.1%, in which the stock will be listed from 22 June. And it is also well above the 3.4% average of the FTSE 250, from which it was promoted, although dividend payouts can vary over time.

But things are set to become even better. Analysts forecast the dividend yield will rise to 6.7% next year, 7.3% in 2028 and 8.3% in 2029.

Only a handful of FTSE 100 firms deliver a dividend yield of this scale.

So what does that mean in cash terms?

Investors taking a £20,000 holding in the stock would make £25,736 in dividends after 10 years.

The figure reflects the forecast 8.3% as an average, and the dividends being reinvested in the stock. This process is known as ‘dividend compounding’ and the longer it continues, the bigger the returns can grow.

On the same basis, the dividends would rise to £219,167 after 30 years — the end of the standard investment cycle for long-term investors.

At that point, the total value of the holding would be £239,167. And that would generate a yearly income (just from dividends) of £19,851!

Just how good is the core business?

Underpinning any firm’s dividends — and powering any rises — is sustained profit growth over time. There are risks here for any business, of course, and Investec is no exception.

A downturn in its key markets could weaken client activity and slow earnings growth. High financial market volatility could reduce wealth‑management fees and pressure the group’s overall profitability.

Nevertheless, analysts expect the firm’s profits to grow by a yearly average of 12.9% to end-2029 at least.

Is there any room for price gains too?

Despite its recent promotion to the FTSE 100, there appears to be plenty of value left in the stock.

On the key price-to-earnings ratio, for example, Investec’s 7.8 valuation is bottom of its peer group, which averages 14.4. The firms include ICG at 10.6, Aberdeen at 11, St James’s Place at 11.5, and Man at 24.7.

So, Investec looks very undervalued on this basis.

It also looks cheap at its price-to-sales ratio of 2.5 against its competitors’ average of 2.9. And it looks a bargain too at a price-to-book value of 0.9 compared to its peer average of 2.4.

My investment view

For income‑focused investors, that blend of rising dividends, strong profit growth and clear undervaluation makes Investec a compelling new Footsie entrant to watch.

I already own shares in Aberdeen and Man, so buying another in the same sector would disrupt the balance of my portfolio.

But it is going on my watchlist to buy, should either of those stocks start to underperform.

Should you invest £5,000 in Investec Group right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Investec Group made the list?

Simon Watkins owns shares in Aberdeen and Man.

The post Aiming for a yearly second income of £19,850? Here’s how it could be done from this newly-promoted FTSE gem appeared first on The Twelfth Magpie.

That’s why I always check the fundamentals before adding income stocks to a portfolio. And one lesser-known FTSE 250 stock that looks compelling today is Investec (LSE: INVP).

Established in 1974, this international specialist bank and asset manager serves a niche client base across the UK, South Africa, and Australia. It operates in three core areas: asset management, wealth and investment, and specialist banking.

It mainly provides services to high-net-worth individuals and businesses, offering private banking, mortgages, portfolio lending, and corporate finance.

Why Investec fits a second income strategy

Investec’s income appeal is strong. The dividend yield has hovered between 6%-7% for the past three years, with a target payout ratio of 35%-50% of earnings. Strong cash flow suggests coverage of 2.5 times, so company profits comfortably exceed dividend payments.

Its dedication to shareholders shines through. The annualised dividend growth rate is 6.25% a year over the past 10 years. For example, it paid 36.5p per share in 2025, up from 34.5p in 2024. This year, it was raised again to 38.5p.

Value investors will also appreciate the attractive metrics. The forward price-to-earnings (P/E) ratio’s estimated around 7.4, well below the sector average of 12.2. The price-to-book (P/B) ratio of 0.86 also looks attractive compared to the industry median of 1.4.

What are the risks?

Geopolitical tensions pose a significant threat. The Iran conflict and resulting oil price spike could reverse possible interest rate cuts, putting pressure on bank stocks. Investec’s own economists note central banks are turning cautious over rate cuts for 2026 as oil prices rise.

Inflation risk could also limit short-term growth. UK March CPI inflation climbed to 3.3% from 3%, and Investec experts warn inflation, oil markets, and equities could face long-term consequences from geopolitical disruption.

Fortunately, its balance sheet appears healthy enough to weather short-term challenges, with a current ratio of 3.3. That suggests no short-term financial worries, albeit potentially inefficient use of capital.

The bottom line

Investec’s a good example of a dividend-paying company to consider for a second income portfolio. But with inflation and interest rates set to remain high, it isn’t necessarily a ‘screaming buy’ — rather, an attractive option.

Still, those considering the stock will need to carefully weigh up these risks versus reward. That’s why, when developing an investment strategy, it always pays to include a range of stocks from various sectors. While some sectors may struggle under certain conditions, others could thrive.

With a highly diversified portfolio, you can reduce the chance of suffering heavy losses due to unexpected risks in one area. I tend to aim for a mix of utilities, retail, healthcare and finance stocks, several of which I’ve covered recently and will continue to do so here at The Twelfth Magpie.

Should you invest £5,000 in Investec Group right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Investec Group made the list?

Mark Hartley does not hold any positions in the companies mentioned.

The post With a 6% yield and a P/E of just 7.4, is this share a screaming buy for a second income? appeared first on The Twelfth Magpie.

Banking on it

First up is Investec (LSE:INVP). Up 23% in the past year and boasting a 5.79% dividend yield, it ticks both boxes straight away.

The banking group makes its money through two core divisions of Specialist Banking and Wealth & Investment. In simple terms, it lends money to wealthy individuals, entrepreneurs and corporate clients, while also earning fees from managing client assets. That combination matters because it gives Investec multiple revenue streams.

This diversification’s helped it over the past year. In its latest full-year results, operating income rose 5% to £2.19bn while adjusted operating profit climbed 4% to £920m. Importantly, costs increased by only 2.8%, demonstrating strong operational discipline.

As for the dividend, the yield remains well above the FTSE 250 average of 3.39%, but also looks sustainable. The latest annual dividend increased to 36.5p per share, with the payout ratio sitting at around 46%. That leaves a sizeable earnings buffer even if trading conditions weaken.

Looking ahead, the outlook appears solid. Investec continues to attract new clients, increase lending volumes and grow funds under management. The South African wealth business has been particularly strong, while the group’s stake in Rathbones gives it exposure to a much larger UK wealth platform.

Of course, risks remain. The bank still has meaningful exposure to the South African economy, which may worry some given geopolitical concerns.

Heading east

Another idea is Henderson Far East Income (LSE:HFEL). In terms of the numbers, the stock’s rallied 24% in the past year with a dividend yield of 9.38%.

The trust makes money in a fairly simple way. It invests across Asia-Pacific shares, focusing heavily on large dividend-paying companies in markets such as Taiwan and Singapore. Its holdings range across all sectors, whichever generate strong cash flows and pay reliable dividends. The managers then pass much of that income on to shareholders through quarterly payouts.

Asian equity markets have done well given the exposure to tech-linked sectors tied to AI demand and semiconductor growth. This has helped to boost the trust’s net asset value (NAV) and shareholder payouts.

I also think investors are increasingly appreciating the valuation opportunity in Asia. While US shares still look expensive, many Asian dividend stocks trade on far lower earnings multiples while offering much higher income streams. That combination of value and yield is attracting income-focused investors back into the sector.

People still need to be aware that areas such as China are exposed to political risk, with some markets in the region still underdeveloped, posing risks for the trust. Yet I think both stocks could be considered by investors wanting to make the most out of income and growth.

Should you invest £5,000 in Henderson Far East Income right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Henderson Far East Income made the list?

Jon Smith has no positions in the shares mention

The post These 2 income shares yield over 5.7% and are up over 20% in the last year! appeared first on The Twelfth Magpie.

That prolonged price weakness means many top UK shares carry extremely high dividend yields. Plenty also change hands for rock-bottom price-to-earnings (P/E) ratios.

Let me talk you through two cheap dividend shares that have caught my attention: B&M European Value Retail (LSE:BME) and Investec (LSE:INVP). But are they irresistible bargains or classic income traps?

B&M European Value Retail

B&M shares trade on a forward P/E ratio of 7.8 times. They carry a dividend yield of 6.1% for this year too.

That’s very attractive at first glance. However, I think investors need to take care before considering this income stock. Why? Its sky-high dividend yield today is a product of its sinking share price. Over a 10-year horizon, B&M’s yield consistently ranged far lower, at between 2% and 3%.

The value retailer’s been battered by:

• A series of profit warnings as weak consumer spending has battered revenues.
• Accounting errors that have dented investor confidence.
• Rising costs, including greater labour and freight expenses.
• High-profile management departures.

The problem for me is B&M isn’t showing signs of turning the corner… at least not yet. Like-for-like sales at the core B&M UK division dropped 0.6% in the December quarter. Can it recover as the cost-of-living crisis endures? I’m not convinced.

On the plus side, this year’s expected dividend is covered twice by anticipated earnings, providing a strong layer of protection. However, there’s a strong possibility that B&M’s share price will continue sliding, in my view. I’d rather search for other high-yield stocks to buy.

Investec

Investec’s forward dividend yield is 6.4%, more than double the current average for both the FTSE 100 and FTSE 250. It also carries a low P/E ratio of 8 times.

Risks have risen following the start of the Iran War. With the return of inflation threats and the global economy showing signs of stress, the danger of more credit defaults and reduced loan demand has grown. And so Investec’s shares have fallen in value.

However, I think the bank deserves serious attention at these prices. And especially from passive income investors — in my view, current dividend forecasts look rock solid. This year’s predicted payout’s covered two times by anticipated earnings.

What’s more, Investec’s CET1 capital ratio sits at 12.3%, comfortably above regulatory requirements and which should support more market-beating dividends.

Investec’s raised its annual dividend in 12 of the last 13 years. And over the last decade, the dividend yield has regularly averaged a healthy 4%–6%. Unlike B&M, it has a long record of offering attractive yields.

Can the bank keep delivering market-beating dividends? I’m optimistic it can, underpinned by rising demand for financial services, and especially wealth management in which it’s expanding. I think it’s a top income stock to consider.

The post 6%+ dividend yields and low P/Es! Are these income shares screaming buys? appeared first on The Twelfth Magpie.

Investment horizon

Depending on what index you use to track performance, along with how far back you go, the validity of selling stocks in May and buying back late in the year is very mixed. In some years, it works. In others, you’ll have given up the potential for more profit.

Yet the point I think some people miss is that it contrasts a short-term investor with a long-term one. If I’ve bought a stock that I think has the potential to do really well in the coming years, what’s the point of selling it for a few months? Sure, I could be able to buy it back at a slightly cheaper price. But the opportunity cost of not owning it could be massive. Further, if I think it’s got good potential, there’s no logical reason for me to want to sell it, unless it rockets higher in price.

When we look at 2026, the adage doesn’t make sense even at a broader market level. We’re seeing a strong stock market recovery. This is being fuelled by an increasing belief that the situation in the Middle East may be past the worst. If we do see further de-escalation and the easing of supply chain problems, the market could be set for a strong rally over the summer. In that case, I don’t think it makes sense to sell at all.

Of course, this doesn’t mean all stocks will go up. There may be situations where a struggling company deserves to be removed from a portfolio. But from a high-level view, selling now ahead of May doesn’t really make sense to me.

Trending higher

In terms of a company that I think is primed to do well in the coming months, I’ve got my eye on Investec (LSE:INVP). The specialist bank is up 43% over the past year.

The latest trading update from last month had plenty of encouraging signs. It spoke of delivering “a resilient performance” and of good progress in modernising the digital platform. Revenue growth is supported by increased client activity and positive net inflows into funds under management.

Between now and November, we’ll get further trading updates and quarterly updates on progress. Given the current momentum, I expect the updates to be positive, with the share price then potentially continuing to trend higher. On that assumption, I don’t think it would be wise to avoid the stock until the end of this year.

Of course, I could be wrong. If economic conditions deteriorate, loan losses can spike, wiping out earnings momentum. This could trigger a stock sell-off, meaning that a dip could be bought later in the year.

On balance, I’m thinking seriously about adding the stock to my portfolio. But I think Investec is a good example of a stock that disproves the notion of selling right now in favour of hanging on.

The post Should I sell FTSE 100 stocks ahead of May and go away? appeared first on The Twelfth Magpie.

Investec (LSE: INVP) has implemented an aggressive dividend policy following the pandemic, when it was forced to slash dividends by 50%. But since then, it’s been ramping up its shareholder payouts for five solid years, raising the full-year dividend from 13p to 36.5p — a massive 180% increase.

Naturally, this has caught the attention of income investors, helping to boost the stock price by 168.5% since 2021. Impressive growth. Yet despite it all, the company doesn’t appear overvalued. In fact, it sports a shockingly-low forward price-to-earnings (P/E) ratio of only 6.8.

Numbers like that don’t come along often, so I had to find out what’s going on. Surely, there’s a catch?

Promising forecasts

Investec isn’t a well-covered stock but I managed to find two analysts with 12-month targets between 675p and 790p. Between the two, that’s an average increase of 29.9% from today’s price.

Earnings are expected to rise from 82p per share to around 98p by 2028, with revenue expected to reach £2.42bn, up from £2.14bn.

But most critically, the dividend is forecast to reach 45p per share by 2028 — a meaty 24% increase. Even if the price forecasts don’t materialise, the dividend income alone would make the shares worth considering.

So what are the risks?

Fundamentally, the company looks in decent shape, with modest earnings growth expected and steady growth in loans and customer deposits. However, there are a couple of clear issues.

The motor finance probe from the FCA means Investec’s sitting on a £30m provision for potential redress (and the final amount could be higher). Interest‑rate pressure is another concern, as easier monetary policy has already started to squeeze net interest income and could contain margins if rates stay low or fall further.

So the key risks for investors are uncertainty around the motor finance redress, credit losses if the economy weakens, and the impact of lower interest rates on profitability.

None of that puts the business in crisis but it’s worth keeping an eye on — in particular, how the FCA ultimately settles the motor finance matter.

My verdict

It’s impossible to say what’s ‘the best’ value and income play in any market, but Investec certainly looks appealing. Unfortunatley, the risks it faces are largely out of its hands. But how it deals with the eventual outcomes will make all the difference.

In my opinion, it’s one of the most promising bank stocks in the UK right now — especially for those looking to boost their portfolio’s average yield.

But it’s not the only strong income stock to consider in today’s market. With prices falling, I’ve noticed several other FTSE shares that look attractively undervalued.

For example, fellow challenger bank OSB Group offers a decent 6.6 yield and P/E ratio of just 6.7. Meanwhile, financial comparison site MONY Group sports an 8% yield with a forward P/E of just 8.3.

Whatever you ultimately decide, remember — diversification’s key to reducing risk during these volatile times.

The post With an 8% dividend yield and P/E below 7, is this the best value and income play on the FTSE 250? appeared first on The Twelfth Magpie.

ISA benefits

Any of the growth stocks mentioned could be best bought via a Stocks and Shares ISA. The benefit of housing the portfolio here is that when dividends arrive or the stocks are sold, an investor doesn’t have to pay any tax. If we’re talking about growth stocks that have significantly increased in value, this tax saving could amount to a lot of money.

Please note that tax depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

I know that we’re talking about past performance here when considering the last five years. However, these are stocks with clear momentum. It’s very plausible that the share price rally could continue in the coming years, banking further profits for active investors. However, past performance alone isn’t a guarantee of the future, and this should be noted.

Strong historical gains

The JP Morgan American Investment Trust is up 80% over the past five years. It focuses on buying and selling US stocks to try to outperform the S&P 500. The largest holdings currently include the likes of Nvidia, Alphabet, and Microsoft. I like the trust because it can provide easy exposure to the US market, diversifying a UK-heavy ISA. Further, given that most AI leaders and big tech companies are listed in America, I think growth in these sectors in the coming years should further lift trust.

Another share is JTC, a specialist outsourced services firm for finance companies. The stock is up 121% in the last five years, as regulations have become tighter, along with a boom in private equity companies. The business has been growing for several years with double-digit organic growth. I think this can continue as it scales internationally and cross-sells other services to existing clients.

A risk for both companies is a broader economic slowdown. This would likely reduce the American Investment Trust as tech stocks take a hit. For JTC, it could see clients cut back on the amount of business being outsourced, as cost-cutting starts to be felt.

Banking on it

Investec (LSE:INVP) is another good example, with the stock up 184% in the period mentioned. The firm has done well in recent years because it’s not just a regular ‘vanilla’ bank. The group has exposure to specialist banking, wealth management, and asset management, giving it multiple avenues for growth. The latest trading update for March showed core loans rose by 7.4% and deposits by 5.7%, both versus last year. These are good metrics to show higher customer demand.

I think it could keep doing well if higher-value advisory and wealth operations continue to expand. That said, one risk is growing competition in the wealth space. Other banks are realising this is an area of growth, so Investec’s market share could be eroded depending on how well it retains clients. Overall, I think all three stocks could be considered for future gains within an ISA.

The post 3 growth shares for an ISA that have beaten the FTSE 100 for the past 5 years appeared first on The Twelfth Magpie.

Take the following three dividend stocks. Each trades on a forward price-to-earnings (P/E) ratio of below 10 times. They also carry an enormous dividend yield above 5%. Here’s why I think they deserve serious consideration today.

Investec

Shares with low P/Es and sky-high yields are often signs of companies that are experiencing dividend problems (or are tipped to). This isn’t the case with investment bank Investec (LSE:INVP), which has a P/E of just 6.9 and carries a 7% dividend yield.

Like many UK stocks, Investec’s shareholder payouts dropped during the Covid-19 pandemic. Excluding this turbulent period, they’ve risen every year since 2010. Analyst predictions of another rise this financial year (to March 2027) look in good shape, with the expected dividend covered 2.1 times by anticipated earnings.

Investec’s share price might be blown off course if tough economic conditions hit profits. But that strong cover should at least mean dividends meet expectations.

Over the long term, I expect both earnings and dividends to rise strongly as the financial services market booms. Investec’s strong brand power puts it in an especially strong position to seize this opportunity.

Mears

Mears (LSE:MER) provides maintenance and repair services for thousands of homes across the UK. It straddles both public and private sectors, though it typically operates under long-term contracts with housing associations and local authorities.

Today it trades on a forward P/E ratio of eight, and its dividend yield is 5%. This year’s dividend is covered a healthy 2.5 by anticipated earnings. So what are the risks?

With a strong reliance on government contracts, profits are greatly influenced by policy changes that impact budgets. But on balance, I think its still a rock-solid stock to consider — after all, demand for quality residential property remains stable at all points of the economic cycle.

Looking longer term, I think it could deliver brilliant all-round returns as Britain’s booming population drives housing demand.

Custodian Property Income REIT

As its name implies, Custodian Property Income REIT (LSE:CREI) is designed to deliver passive income to shareholders. In this respect it isn’t alone — all real estate investment trusts (REITs) must pay at least 90% of rental profits out in dividends.

So what makes this particular one so special? Firstly, its 7.1% dividend yield for this financial year (to March 2027) is one of the sector’s highest. And its forward P/E ratio is a snip at 9.9.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

With interest rates falling and the UK in low-growth mode, Custodian could experience occupancy and rent collection issues going forward. But I’m confident it can sidestep such problems given its wide operational wingspan.

In total, it has 430 tenants across a variety of industries, meaning it enjoys stable income streams over time. And it has customers tied down on long contracts which further improves earnings visibility.

The post Seeking stock market bargains? 3 dividend stocks with 5%+ yields to consider appeared first on The Twelfth Magpie.