Inflation is soaring in the UK. This makes it hugely challenging for share investors like me to make any sort of positive return, let alone a decent one, on my hard-earned cash with dividend stocks.
Consumer price inflation in Britain just hit 30-year peaks of 5.4% and economists are predicting it’ll go higher still.
I’m not in panic mode though. I may have to do more looking around but it’s still possible for me to find great dividend stocks that’ll help me to make a positive return on my money.
Here are three of what I believe to be among the best dividend stocks to buy today. Let me explain why I’d spend £1,000 to add each of them to my shares portfolio.
Admiral Group (5.8% dividend yield)
Consumer spending is under the cosh but there are some things we cannot do without. Motor insurance is one of them. We simply can’t legally get around without it, right? This is why I’m considering buying auto insurance giant Admiral Group right now.
On the flip side, Admiral’s travel division could suffer if Covid-19 rates worsen considerably. This could prompt a return of harsh travel restrictions and a leap in claims. However, I believe the resilience of the insurance firm’s other divisions — including its other home and pet insurance arms and its breakdown cover service — offset this threat and make Admiral a solid dividend stock to buy.
Target Healthcare REIT (5.9% dividend yield)
There’s a lot I like about Target Healthcare REIT today. As a care home operator it operates in the highly-defensive healthcare sector. It can therefore expect rents to continue rolling in even as the British economy struggles. It also ties its tenants down on long leases and its rents are linked to inflation.
Under real estate investment trust (REIT) rules, Target is obliged to pay 90% of annual profits out by way of dividends. This makes many of these sorts of companies some of the best dividend stocks to buy right now. But Target doesn’t come without risk, of course. For example, shareholder returns might suffer if its acquisition-led growth strategy fails to deliver the goods, such as if it fails to land decent acquisition targets.
Legal & General Group (6.6% dividend yield)
Legal & General is another FTSE 100 income share high on my shopping list. This particular company generates huge amounts of cash and this allows it to pay out above-average dividends. As a long-term investor, I think it’s a great dividend stock to buy as the global population rapidly ages. I’m expecting demand for its retirement products and other financial services to rise steadily, helped by the fact Legal & General has one of the most trusted names in the business.
I think the Footsie firm is a fine buy, even though it operates in a massively-competitive industry. Revenues could suffer if it struggles against rivals like Aviva and it may have to spend a fortune to keep up, damaging profits (and, consequently, dividends) in the process.