Income stocks form the core part of my portfolio. With inflation hitting levels not seen in decades, strong dividend yields are helping my portfolio grow. Today, I’m looking at two dividend big-hitters that aren’t overly well known.
So, are these two lesser-known stocks right for my portfolio?
Centamin
Mining stocks have generally seen their share prices shoot up this year. But Centamin (LSE:CEY) is an exception to this.
In March, the Jersey-registered gold miner recently announced a big hit to profits due to lower revenue and an impairment on assets in Burkina Faso.
However, 2022 should be a better year for Centamin. The miner said gold production is expected to be between 430,000 ounces and 460,000 ounces, up from 415,370 ounces in 2021.
Meanwhile, there appears to be some upward pressure on costs. Cash costs are expected to be $900-$1,000 per ounce produced. Centamin said all-in sustaining costs were expected to rise to $1,275-$1,425 an ounce sold.
By comparison, in 2021, fourth-quarter cash costs stood at $972 per ounce produced, and all-in sustaining costs were $1,256 per ounce sold.
Centamin has kept its production guidance despite production falling year-on-year in Q1.
However, the price of gold is very important to profitability. In Q1 of 2022, Centamin achieved $1,883 per ounce, up from $1,778 in Q1 of 2021. Today the spot price is $1,833.
This stock is down 26% over the last year and 51% over two years. It has a price-to-earnings ratio of 11.5, which isn’t expensive, especially with 2022 looking like a better year than last. It’s offering an 8.6% dividend yield at today’s price.
I’ve already bought Centamin shares, but may buy more, especially after seeing board members buying too. This is normally a good sign.
M&G
M&G (LSE:MNG) is a UK investment manager offering a very attractive 8.4% dividend yield.
Pre-tax profit fell substantially in 2021, following losses resulting from short-term fluctuations hitting investment returns and higher restructuring costs.
However other financials remained strong. Assets under management also remained relatively flat at £370bn. Net outflows from retail asset management were offset by inflows from institutional investors.
Adjusted operating profit before tax fell to £721m from £788m in 2021, but was ahead of forecasts.
M&G has a fairly consistent source of income in that customers are charged for services. But, the company makes more money if certain returns thresholds are hit. This greatly enhances M&G’s income. In that respect, this year’s market volatility may not be good for it.
However, the long-term prospects are positive. HSBC recently upgraded it to Buy.
“We see M&G offering very attractive total capital return yields at an average of 20% per annum over 2022-24, which correspond to the group returning circa 60% of its market cap to shareholders over three years,” HSBC said.
I’m currently looking to add this one to my portfolio.