Super-dependable dividend shares, such as Legal & General and Imperial Brands, have a long history of reliable payouts. Explore their track record and future potential.

Super-Dependable Dividend Shares: Legal & General and Imperial Brands

The UK stock market is home to many dividend shares, some of which have been rewarding shareholders with payouts for decades. These reliable income-generating stocks, often referred to as Dividend Aristocrats, are highly valued by investors seeking steady returns. Among these, Legal & General (LSE: LGEN) and Imperial Brands (LSE: IMB) stand out. Both companies have a long history of paying dividends, making them popular choices for those looking for super-dependable dividend shares. But can they continue this impressive track record in the future?

Legal & General: A Steadfast Performer

Legal & General is a well-known name in the UK, providing insurance and asset management services for many years. This company has roots that go back to the early 1800s, making it a trusted household name.

One key attribute of super-dependable dividend shares is a history of increasing payments. Legal & General excels in this area, boasting an impressive 11.3% annualised dividend growth over the past 15 years. Over the last five years, it has focused on a cumulative dividend plan, rewarding shareholders with £5.9 billion in payouts. With an 8.9% dividend yield, it currently ranks as the fifth-highest on the FTSE 100.

What makes Legal & General particularly attractive is its market dominance in an industry characterized by steady and continuous growth. As people live longer, the demand for insurance-related products is expected to rise, ensuring a stable market for the company’s services.

Legal & General is not immune to market fluctuations. Economic downturns can lead to customers withdrawing funds, exposing the company to economic risk. A look at the company’s price chart shows the significant declines it has faced during tough economic times. While its dividend payments are reliable, the stock price can be quite volatile, making it a ride not suited for the faint-hearted.

Imperial Brands: Adapting to Change

Imperial Brands, a major player in the tobacco industry, has been proactive in adapting to changing market conditions. The company has rebranded and embraced the shift towards a healthier, smoke-free society. This move, driven both by profit motives and moral considerations, underscores the company’s commitment to success.

Despite a brief cut during the pandemic, Imperial Brands has a solid track record of increasing dividend payments by 10% per year. With a yield now above 7%, the company is on its way back to pre-COVID levels.

The future for Imperial Brands is uncertain as it navigates the transition away from harmful tobacco products. There is a clear necessity to phase out these products, but there remains a strong demand for tobacco-free and smokeless alternatives. The company’s efforts to meet this demand are promising, and its recent performance reflects this. Over the past three months, Imperial Brands’ stock has risen by 22%, yet it still maintains a low price-to-earnings (P/E) ratio of 8.5, suggesting good value.

The Appeal of Dividend Aristocrats

Earning the title of Dividend Aristocrat is a significant achievement, indicating a company’s ability to provide long-term, reliable payments. These super-dependable dividend shares are highly attractive to investors looking for passive income.

Legal & General and Imperial Brands exemplify the qualities of Dividend Aristocrats. Legal & General’s strong market position and steady growth in the insurance sector make it a solid choice. Meanwhile, Imperial Brands’ ability to adapt and its commitment to increasing shareholder returns highlight its resilience and potential.

Weighing the Risks

While the reliability of these dividend payments is a strong draw, it’s crucial to consider the associated risks. Legal & General’s exposure to economic fluctuations and Imperial Brands’ uncertain future in a transitioning market are factors that investors must weigh.

Super-dependable dividend shares like these offer a blend of stability and potential growth, but they are not without their challenges. Investors should be prepared for market volatility and the possibility of changes in dividend policies in response to broader economic conditions.

Conclusion

Super-dependable dividend shares, such as those offered by Legal & General and Imperial Brands, provide a compelling option for investors seeking steady income. Their long history of dividend payments and ability to adapt to market changes make them noteworthy choices. However, as with any investment, it is essential to stay informed and consider both the potential rewards and risks.

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