Investing in income stocks with a high dividend yield is one way I can reduce the impact of soaring inflation on my returns.
With this in mind, here are four high-dividend stocks from the London Stock Exchange I’m considering adding to my dividend portfolio.
Glencore (12.5% dividend yield)
FTSE 100 business Glencore produces and markets a broad range of commodities. It’s a great high-dividend stock for me to buy in this inflationary environment as materials such as copper, iron ore, nickel and lead tend to rise in value along with the products they’re used to create.
The danger of owning income shares like this is that mining problems can be common and destructive for profits. If Glencore can’t get its stubborn commodities out of the ground then revenues suffer.
However, I like this particular commodities business because of its extra role as a market supplier. This can help offset the impact of any potential trouble at its mines on an investors’ total return.
NextEnergy Solar Fund (7% dividend yield)
I think buying energy producers is always a good dividend investing idea during tough times. Electricity demand is essential and so demand remains broadly consistent at all points of the economic cycle. As a result dividend income tends to be more predictable.
It’s why I’m considering buying like NextEnergy Solar Fund, a dividend growth stock that invests in US renewable energy assets. I think earnings here could be particularly strong going forwards as the need for low-carbon energy grows.
Fortunately for this renewable energy stock, the US has some of the most favourable green legislation anywhere in the world. But it’s important to remember that changing laws could have a big impact on investor returns later on.
Vodafone Group (6.2% dividend yield)
Consumer spending is set to worsen in the months ahead as inflationary pressures intensify. But remaining connected through our broadband and mobile phones is something few of us will cut back on. Consequently, I’d buy Vodafone Group shares today.
I am concerned about the €41.6bn worth of net debt the Footsie company had on its books as of March. This could potentially damage its growth plans and reduce future dividends.
However, I believe its broad geographic presence also makes it an attractive stock to buy. Vodafone could thrive as global growth steadily boosts telecoms demand. This could support strong dividend growth over the long term.
Civitas Social Housing (7% dividend yield)
One of the last things people stop paying for when times get tough is accommodation. So profits at Civitas Social Housing are tipped by City analysts to keep rising even as the cost-of-living crisis intensifies, laying the path for additional dividend increases.
This stock offers an extra layer of security that many other property stocks don’t too. The rents it charges are paid by local authorities, meaning related income isn’t vulnerable to cyclical factors like a downturn in the labour market.
I’d buy Civitas even though problems with its acquisition-led growth strategy could harm investor returns. Such issues include competition for social housing properties.