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Listed below are three FTSE 100 dividend shares I’d purchase after the latest market bounce. These aren’t simply the best yielders within the index (though one yields 8%). As a substitute, they’re corporations I feel ought to be capable of keep, or improve, their dividends, even throughout a recession.
A secure haven?
Luxurious items could be a secure haven in a recession as rich consumers proceed to spend. Excessive-end vogue group Burberry (LSE: BRBY) isn’t the most affordable FTSE 100 inventory to purchase right this moment, however I feel it may very well be the most effective.
Demand is bouncing again as loyal clients return to the group’s shops after the pandemic. New strains such because the Lola purse vary are stated to be performing nicely.
I love Burberry’s excessive revenue margins, sturdy model and lengthy historical past. The dividend has not been reduce since its 2001 flotation and I feel additional progress is probably going.
I feel the primary threat with Burberry is that it’d fall out of favour with Chinese language consumers, who account for a sizeable chunk of gross sales. Lockdowns in China have stored shops shut and restrict journey, however over the following six months we must always discover out extra.
Burberry shares at present commerce on 15 occasions forecast earnings, with a 3% dividend yield. I see the inventory as a long-term purchase.
A secure 8% yield?
My subsequent decide has one of many highest dividend yields within the FTSE 100. Housebuilder Barratt Developments (LSE: BDEV) has earned a five-star HBF ranking for the final 13 years. Gross sales have doubled over this era and earnings have soared.
Regardless of this sturdy document, Barratt’s share value has fallen this yr because the market has priced in a recession. Because of this, the shares now provide a forecast dividend yield of 8.2%.
How secure is that this payout? Barratt’s latest market replace for the yr to 30 June reported “sturdy nationwide demand” and a stable order guide.
This yr’s dividend ought to be lined twice by earnings and Barratt has loads of money.
The issue is that if the housing market goes to gradual, it’s solely simply beginning to occur. It’s too quickly to know the way housebuilders will carry out over the following couple of years.
Personally, I don’t count on a serious housing crash. I feel Barratt’s 8% yield may very well be secure.
This FTSE 100 inventory is recovering
Packaging group Mondi (LSE: MNDI) was hit tougher than some rivals by the invasion of Ukraine. The group beforehand generated about 20% of its earnings in Russia.
Luckily, the remainder of the enterprise is performing nicely. Mondi has been capable of cross increased prices onto clients, defending its revenue margins. The group’s web revenue for the primary half of 2022 was €536m, simply 3% decrease than through the closing six months of 2021.
Mondi has a number of traits I search for in a dividend inventory. It’s extremely worthwhile, generates loads of money and has comparatively low debt ranges. In my opinion, these elements mix to make the dividend safer than some friends.
The short-term outlook may very well be unsure, as a widespread recession might see demand for packaging droop. Nonetheless, I feel these dangers are in all probability priced into the inventory. Mondi shares commerce on lower than 10 occasions forecast earnings and provide a 4% yield.
Mondi is on my checklist as a dividend purchase.
