2 top dividend shares I’d buy before August and a possible market recovery!

Entrepreneur on the phone.

I tend to prefer buying dividend shares over growth stocks. These companies provide me with adequate returns, but don’t suffer from the same volatility that growth stocks do.

Dividends are also very welcome right now with inflation racing towards 10% in the UK. These payments will help offset the impact of inflation on my portfolio, although I appreciate that dividends aren’t guaranteed.

But I also see now as a good time to buy in general. Stocks are depressed around the world, but a I think a recovery is coming. It might not start as early as August, but it’s coming.

So here are two dividend stocks I’d buy before August.

Crest Nicholson

Crest Nicholson (LSE:CRST) is one of the most embattled housing stocks. It’s had a rough few years with demand for homes in the South East falling on the back of Brexit-related uncertainty. And then the pandemic hit.

To make things worse, a large proportion of the company’s 2022 profits will be wiped out by its fire-safety pledge. Crest expects its commitment to reclad houses will cost it more than £100m.

But things are looking up and the share price is down. Underlying profitability is increasing. In June, the company said it expected full-year adjusted pre-tax profit to be £135m-£140m, compared with £45.9m a year before.

This is clearly an impressive jump and represents a return to the levels frequently achieved before its problems started in 2018/2019.

In its June update, Crest said completions rose to 1,096 year-on-year, from 1,017. Forward sales secured as of 10 June stood at £814.9m from £692m the year before. 

However, as interest rates rise and amid a cost of living crisis, Crest and its fellow housebuilders may suffer from falling demand in the coming months.

But I’d buy Crest for the long run. There’s a dearth of homes in the UK and this isn’t going to change any time soon. Demand will continue to outstrip supply as the population continues to rise, boosted by those from abroad who want to live here.

Crest current has an attractive 5% dividend yield.

Hargreaves Lansdown

Hargreaves Lansdown (LSE:HL) shares have collapsed this year after it became clear its pandemic-era growth was unsustainable.

The firm offers an attractive 4.5% dividend yield, but is also valued like a tech stock to some extent. It has a price-to-earnings ratio of 13 reflecting its potential for growth. I appreciate that’s not particularly large, but it’s considerably higher than other FTSE 100 financial institutions right now.

Hargreaves benefited during the pandemic when people were locked up in their homes, and many turned to investing. Users of Hargreaves’s investment platform soared during this period. But, with offices, restaurants and the wider economy fully open, the firm has seen a slowdown.

According to research from Lloyds, one in 10 Britons began investing during the pandemic. Many of these investors were Millennials or Gen Zers, who are looking to invest for the long run, according to Barclays.

And personally, I prefer Hargreaves Lansdown’s investment platform and customer service. So, in the long run, I see Hargreaves as a winner in the sector, and I’d buy now at the current depressed price.

The post 2 top dividend shares I’d buy before August and a possible market recovery! appeared first on The Motley Fool UK.

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James Fox owns shares in Hargreaves Lansdown, Crest Nicholson, Barclays and Lloyds. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, and Lloyds Banking Group. 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.