Image source: Getty Images
April is almost here and it's a great time to look for the best dividend stocks to buy.
The stocks and Shares ISA contribution limit will be renewed on April 6, so researching and considering these potential investments now may be timely.
global financial technology
The first action that catches my attention is GIG (LSE: IGG) in the FTSE 250 index. The company describes itself as a global financial technology company that offers online trading platforms and educational resources. For most investors, it is a well-known provider of spread betting platforms.
Speculation and investment often go hand in hand, and IG services are increasingly popular judging by the steady cash flow the company enjoys.
The stock has consistently paid dividends since at least 2018. It didn't even reduce the payout in the pandemic year, unlike some companies.
With the share price close to 729p (March 28), the prospective yield for the business year to May 2025 is around 6.5%. That level of potential income is attractive to me.
However, there are risks. Perhaps the most important is that the company operates in the financial sector, known for its cyclical nature. If traders and investors are deprived of additional cash due to deteriorating general economic conditions, IG's business could suffer.
However, City analysts have forecast a double-digit percentage rise in profits next year and a modest improvement in the dividend.
Trading is going well at the moment. In March, the directors reported a stable and active customer base and the business achieved a “solid” evolution of income in the quarter.
Ultimately, despite the risks, I would investigate and consider IG now for inclusion in a diversified portfolio focused on dividend income.
Wealth management and banking
Another company that seems interesting in the financial sector is Invertec (LSE: INVP), which is also on the FTSE 250 index.
It's an international bank and wealth manager based in the UK, and the dividend track record looks pretty good. Like most banks, the company cut the dividend in the pandemic year, but it recovered.
In 2018, Investec paid a dividend of 24 pence per share, but for the business year to March 2025, the payout will likely be around 37 pence. That seems like good progress to me. However, as with IG, Investec is exposed to cyclical risks in its sector.
Earnings, dividends, and share price can be volatile as the overall economy rises and falls. I think the stock price chart illustrates the point:
However, on March 20, the company delivered a strong pre-closing trading update and trading statement. Business has been good for the company and it looks like the situation will continue, at least for the time being!
With the share price close to 527p, the expected forward dividend will yield around 7% for the next trading year. Sounds like an attractive potential income to me.
Cyclic sets like these can be difficult to judge. However, as a whole, I think these two have qualities worth exploring. I would be tempted to do more research now with a view to acquiring some of their shares.
