The Footsie is packed with terrific dividend stocks that can deliver robust passive income streams. But inflation is rising at its fastest pace for 40 years, making it more difficult for me to find shares to make a positive return in real terms.
The average FTSE 100 dividend yield sits at 3.7%. So investors like me need to do some scouting around to find strong stocks that provide inflation-beating yields. Here are two Iām considering buying today.
Home comforts
I bought Footsie housebuilders to generate a strong long-term passive income. Itās my belief that Britainās supply crunch will take years to resolve. And in this time, property prices will continue to shoot up, driving developer profits higher and higher.
Bank of England rate rises in response to inflationary pressures pose a threat to homebuyer demand. But Iām encouraged by the resilience of the market, despite the impact of these increases and falling confidence.
Government data today shows that average home values in the UK rose 9.8% year-on-year in March. The pace at which prices continue to hit new record highs (to £278,436 in March) leaves plenty of scope for the housebuilders to make big profits and continue paying big dividends to their shareholders.
A great passive income stock
This is why Iām considering adding Persimmon (LSE: PSN) to my own shares portfolio. I already own Barratt Developments and Taylor Wimpey. But the 10.8% dividend yield at Persimmon for 2022 makes it the best-paying developer on the FTSE 100 today. It also outstrips the pace at which inflation is currently increasing.
Persimmon said in late April that ādemand remains strongā and that its order book stood at a robust Ā£2.8bn. Iām expecting sales of its new-builds to remain robust amid weak ongoing availability of existing homes entering the market.
13.1% yields!
Diversfied miner Rio Tinto (LSE: RIO) is another FTSE 100 dividend stock with inflation-beating yields right now. For 2022, its divided yield sits at a whopping 13.1%. This is even bigger than Persimmonās huge reading.
Rio Tinto looks set to profit from a variety of so-called āsupertrendsā during the 2020s and beyond. This suggests to me it could deliver market-beating shareholder returns not just today but over the long term.
A FTSE 100 mining hero
Mining is an unpredictable business and catastrophes can occur at any time, hitting production. This is something to consider when assessing the profits potential of firms like Rio Tinto.
Still, it’s my opinion that the possible rewards of owning Rio Tintoās shares outweigh these dangers. Demand for Rio Tintoās copper, for instance, should rise strongly, in my opinion, as the green revolution takes hold. The highly-conductive metal is used to make renewable energy technology and electric vehicles.
Sales of its iron ore — a critical ingredient in steelmaking — is meanwhile expected to boom as infrastructure spending lights up across the globe. Rio Tinto also produces other critical commodities that whose demand will rise strongly over the next decade as the global economy grows.
Like Persimmon, Rio Tinto is a top inflation-beating FTSE 100 share Iād happily invest in today.
