Now’s a great time to go shopping for dividend-paying stocks, in my opinion. Severe stock market weakness in 2022 means dividend yields have shot through the roof for many UK income shares.
Dividend investing could get even more lucrative too as market volatility continues. Here’s a quick look at two dividend-paying shares I’ve bought recently.
The Renewables Infrastructure Group
Demand for shares that have exposure to energy production usually soars when economic conditions sour. Investors flock to them because the essential nature of their services gives them more stable profitability than most other UK shares.
The Renewables Infrastructure Group (LSE: TRIG) hasn’t experienced an upsurge in investor interest however. Its share price is flat since the start of 2022. And it’s fallen in value from the year’s peaks it set in March.
On the plus side, recent weakness means the company’s end yield sits at a fatty 5.2%. It also means, at 135p per share, the renewable energy stock trades on a forward P/E ratio of just 11.3 times.
The Renewables Infrastructure Group owns a collection of wind and solar farms across the United Kingdom and mainland Europe. It also owns a battery storage asset in Scotland. And it’s my belief earnings (and, by extension, dividends) at the business could grow strongly in the years ahead as it builds its portfolio and demand for green energy takes off.
However, profits growth here could be damaged if lawmakers decide to row back on their emissions-cutting targets. But as things stand today, the investment potential of renewable energy stocks like this remains super-enticing.
Persimmon
Housebuilder Persimmon’s 13.5% dividend yield makes it one of the best FTSE 100 income stocks, in my book. In fact, its huge yield is why I bought the housebuilder for my own portfolio last month.
Economists and industry analysts continue to warn of a sharp housing market slowdown as interest rates rise. This is certainly something investors need to consider before buying firms like Persimmon.
But, so far, higher rates are failing to stop home prices from rising at a breathtaking pace. The Office for National Statistics says the average UK home price surged 12.8% year-on-year in May. This is even faster than the 11.9% rise recorded in April
This means trading at businesses like Persimmon remains ultra strong. Forward sales at the company rose year-on-year in the first six months of 2022, to £1.9bn.
Disappointingly, Persimmon has had to reduce its build targets this year, due to supply chain issues and labour shortages. But the company’s share price has fallen further since it made that announcement last month and I think this problem is now factored into the FTSE 100 firm’s share price.
At £17.80 per share, it now trades on a forward P/E ratio of just 7.1 times. When taken with that huge dividend yield, I think Persimmon is too cheap to miss.