There’s a lot of uncertainty in the world as we head into 2022. However, one thing that I think is certain is the need for me to take advantage of passive income via dividends. This is mainly due to the low interest rate environment that we find ourselves in. Yet passive income is also a benefit if my work might be restricted due to Covid-19 next year.
With that in mind, here are two stocks that I’m considering buying for income.
A durable stock for passive income
The first company on my radar is Legal & General (LSE:LGEN). The dividend yield is 6.17%, and hasn’t dropped below 6% for the past year. In terms of share price performance, the stock has moved almost 19% higher in the past year.
The company specialises in pension and annuities management, but also has a broader investment management arm. Although it’s not the hottest growth stock in the world, the reliability and consistency of business operations is appealing. I’m also impressed with how the business is moving with the times. In the latest results, it spoke of growing “ESG-aligned asset origination”, including in clean energy, residential property and digital infrastructure.
In terms of risks, LGEN will likely suffer in the case of another market crash. The funds being managed by the company will have allocations to stocks, bonds and other financial instruments that could perform badly in a downturn. Ultimately, this is a risk I’m happy to take given the high levels of passive income.
Capitalising on the property market
The second company I’m interested in is Persimmon (LSE:PSN). It actually has a higher level of passive income from dividends than L&G, with a dividend yield of 8.53%. The share price has risen marginally over the last year, gaining 2.91%.
Some people are starting to turn away from property stocks, citing rising interest rates as too much of a risk. The concern is that higher rates makes it more expensive for mortgages, particularly hindering the first-time buyers segment. I acknowledge this as a risk, but don’t see it as enough to put me off buying.
The main reason for this is that Persimmon has a healthy forward order book. In the last update in November, the company had forward orders of £1.15bn. It’s doing well on completions as well, with expectations that new home sale completions for the full year will be 10% above last year.
So I hope the business has enough in the tank to keep providing high levels of passive income via dividends to investors. This time next year, I can assess whether this order book is materially lower for 2023, or if it has held steady.
I’m considering buying both of these stocks for my portfolio. The passive income from each is above average, along with what i see as positive outlooks.