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As inflation reaches a level not seen in decades, I am increasingly looking at earnings stocks to negate its impact on my portfolio. Although we now see some investors moving to value and dividends compared to growth, earnings stocks have long been at the core of my portfolio. For me, passive dividend income is a secondary source of income, and that’s what I want to build on.
Broker AJ Bell expects average dividend yield from FTSE 100 will be about 4.1% in 2022. Football companies are projected to bring shareholders £ 114 billion a year, making it the second best year in revenue record.
Markets around the world are swaying from the current situation in Ukraine … and with a lot of great companies trading at prices that look “discount”, now may be the time for experienced investors to get some potential deals.
But whether you’re a novice investor or an experienced professional, deciding which stocks to add to your shopping list can be a daunting prospect in such unprecedented times.
Fortunately, a team of analysts at The Motley Fool in the UK has shortlisted five companies that they believe can still boast significant long-term growth prospects despite global shocks …
We share the names in a special FREE investment report that you can download today. We believe these stocks can be great for any well-diversified portfolio with the goal of building wealth in the 50s.
So with an average dividend yield of 4.1% I would need to invest a little over £ 150,000 to receive £ 6,000 a year in dividends or £ 500 a month. However, if I had invested £ 100,000 in stocks with a dividend yield of an average of 6%, I could also be earning £ 500 a month. Here are some of the ones I have invested in or have on my watch list to help me maximize passive income.
Stocks with ultra-high returns
It should be emphasized that dividends are by no means guaranteed, and ultra-high dividends are often volatile. Therefore, I am usually wary of these stocks and check indicators such as their dividend payout ratio.
Home builder Persimmon is the highest payer on the FTSE 100. Buying today, I can expect an impressive 11.3% dividend yield. While I think home builders are good long-term purchases that offer attractive dividends and now, there may be short-term pain. Rising interest rates and the crisis of facing have affected the price of their shares.
Life Insurance Specialist Phoenix Group, which owns titles such as Standard Life and ReAssure, is another strong option for passive income. Buying today, I could expect a dividend yield of 8.3%.
Another smaller option Steppe cement. I could expect 10.7% dividend income from this Kazakh cement producer. It’s pretty good for a penny and is one of the best profits LSE. He showed himself well last year against the background of a strong real estate market in Kazakhstan. However, one problem is the spread between the price of buying and selling.
Home builders ’stocks are a good place to look for strong dividend yields, and I think there are long-term growth prospects here as well. Vistry Group it is an attractive passive income opportunity. Buying at today’s price, I can expect an annual return of 7.73%. Barratt Developments offers a dividend yield of 6.3% after a stellar year in which pre-tax profit rose to £ 812.2 million from £ 491.8 million in 2020.
Next on the list Lloyd. The bank offers a decent dividend yield of 4.6%, but I think the UK’s largest mortgage lender also has growth opportunities. Long-term demand for homes looks strong as governments have failed to close the imbalance between supply and demand. Although there may be some short-term pain if demand for real estate falls this year.
Likewise, NatWest does not offer dividend yields as high as others on this list, but it has a healthy dividend payout ratio and it can also benefit from higher interest rates, provided it does not hurt demand. If I bought today, I could expect a dividend yield of 5.1%.
With a diverse portfolio that has some of these stocks, I could hope to make a solid return on my portfolio, but I have to remember that all of these stocks have risks and no dividends are guaranteed.