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Investing in dividend stocks can be a smart way to earn income. This can come in the form of dividend payments or share buyback plans. I have found a couple of companies that I think will help me create a source of income for this. Let’s take a closer look.
Brick and mortar units
The shares in Ibstock (LSE:IBST) are up 8.4% over the past year and, at the time of writing, trade at 191p.
For 2021, the manufacturer of construction materials has a total of 7.5 p. At current rates, this equates to a 3.93 percent dividend yield.
In May, the firm announced it would launch a £30m share buyback scheme. This is simply one way for the business to return profits to shareholders, and therefore an additional way to generate income.
For the six months to June 30, revenue rose 28 per cent to £259m. In addition, cash profit grew by 29% to £71m.
However, I am always aware that this growth is not guaranteed in the future.
These recent results, along with the stock buyback plan, are an indication that the company is in a strong financial position.
However, there is concern that the cost of raw materials needed for Ibstock’s products may rise. This may result in reduced profit margins.
Despite this, the business raised its interim dividend by 32 per cent to 3.3p.
Feeding my income stream
Second, the Rear spring (LSE: BAKK) share price has fallen 10.5% in the past month and shares are trading at 85p at the time of writing.
In the year In 2021, the fresh prepared foods maker paid a dividend of 6.6p, equivalent to a yield of 4.66%. As an investor seeking high returns, I find this very attractive.
However, it is important to note that dividend policies may change at some point in the future.
In the 13 weeks to March 26, revenues were up 11.5%, totaling £485.4m. It also said the business had £180m of liquidity.
However, given Bacavore’s global presence, it still suffers in regions where lockdowns are common, particularly in China. This means that the results are still being blocked due to issues related to the outbreak.
However, the strong liquidity indicates that the company can overcome any short-term problems.
He also expects full-year results to be in line with expectations. This gives me confidence that the weakness in various parts of the world will soon diminish.
Generally, these companies generate attractive profit margins. While there are challenges for both companies, I have every confidence that they will overcome them in the near future. As such, I will soon add these businesses to my portfolio in anticipation of potential future income through dividends, while exposing myself to continued growth.