Have £1,000 to invest? Glencore is a FTSE 100 dividend share I’d buy for the long term
With the FTSE 100 having fallen in the last six months, it may be possible for investors to obtain relatively appealing income returns. In fact, the index has a dividend yield of 4.3% at the present time, which is relatively high compared to its historic levels.
Shares such as Glencore(LSE: GLEN) offer an even higher yield, with the mining stock forecast to have a dividend yield of 5.7% in the current year. Alongside another high-yielder which released an update on Thursday, it could be worth buying for the long term, in my opinion.
The company in question is primary care property investor and developer Assura(LSE: AGR). Its interim results showed the continued growth of its portfolio, with a 6% increase in investment property to £1.8bn. It was able to add 39 properties to its portfolio during the period at a combined cost of £108m, with a further three properties added after the period end at a total cost of £50m.
The company’s current loan-to-value (LTV) of 30% suggests that it has headroom for further investment. Its pipeline remains strong, while the general consensus that primary care should play a larger role in health provision may mean that demand remains resilient over the medium term. And with the company increasing its rent roll by 7% to £97m during the first six months of the year, it seems to be performing well.
Since Assura has a dividend yield of 4.7%, it could offer impressive income returns in the long run. With a stable business model, and what appears to be a strong strategy, it could offer resilient dividend returns in the coming years.
As mentioned, Glencore has a dividend yield which is significantly higher than the FTSE 100. The company appears to have a strong growth outlook, focusing on a range of commodities used in the manufacture of electric vehicles. This provides it with growth potential as electric vehicles are likely to experience rising demand among consumers.
Although resources shares are not especially popular at the present time due to fears surrounding the prospects for the world economy, Glencore’s diversity could help to protect it to some degree from challenges in specific areas. It may also be attractive to investors seeking to find investments which may not be impacted heavily by Brexit, since the prospects of a no-deal appear to still be relatively high.
With Glencore’s dividend in the current year expected to be covered 2.3 times by profit, it seems to have a significant amount of headroom when making payouts to shareholders. While its status as a commodity producer may mean that its shares are relatively volatile, from a long-term perspective it appears to have investment potential and could deliver impressive dividend growth, given favourable operating conditions.
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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.