Due to the longer duration of ISA-focused investments, I like to look for companies that pay a good dividend yield. I want companies that have paid an above-average dividend consistently for several years, along with growing it annually. The aim of this approach is that the beauty of compounding can occur within the ISA, allowing me to build up a significant return over the years.

Inchcape

The first share on my list is Inchcape (LSE: INCH), a distributor of vehicles in the UK, Europe, and Asia. After a strong 2021 with price growth of over 41%, the company struggled in 2022, falling 16.8%. Despite this, the underlying fundamentals are very appealing, with strong cash generation. The company also has low levels of debt, and significant forecast earnings growth.

The main reason for my interest in the company is the yield of 3%. It is also forecast to hit 3.7% next year. The dividend has been paid consistently for 12 years and is covered by earnings per share (EPS) 2.5 times. This is a good sign and indicates the dividend is relatively safe.

It is, of course, essential to note that profit margins are fairly low, which could cause issues if turnover growth begins to slow. Additionally, the dividend was reduced considerably in 2020 and has only grown over the last year, so this will be important to watch in case it is reduced again.

Nonetheless, the company still represents a good long-term investment opportunity. I would therefore consider adding this share to my Stocks and Shares ISA in 2023.

Glencore

The second share on my list is Glencore (LSE: GLEN), one of the world’s largest commodity traders and producers. The company has had an extremely rapid share price rise over the last two years, gaining 60.9% in 2021 and 40% in 2022. Furthermore, underlying fundamentals are impressive, with solid cash flow, reasonable profit margins, and significant growth forecasts. Turnover is expected to increase by over 30% next year, and earnings per share (EPS) is forecast to grow by a massive 187%.

I find the yield of 4.4% very appealing, more so as it is expected to hit 9.6% next year. This forecast growth is impressive, especially given that the dividend has been paid consistently for the last 11 years. It is also forecast that dividend cover will reach 2.7, indicating that EPS can sustain this new dividend level.

It is important to note that earning margins are pretty low, even after doubling from the three-year average level. Also, debt levels were very high over the last three years and are still significant at almost 47% of market capitalisation.

However, I believe that the company’s forecast dividend growth represents a good opportunity for my Stocks and Shares ISA. Therefore I would be keen to add the company to my portfolio in 2023.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Running a car-making company is fraught with challenges that most fail to overcome. Just look at what happened in the early 1900s. There were once over 2,000 automakers in the United States. And in the space of two decades, that dwindled down to less than 50.

And it seems this pattern is re-emerging. In the last couple of years, hundreds of new electric vehicle start-ups have materialised. Yet despite many brands gaining popularity, it’s difficult to discern which ones will end up on top.

But by investing in the companies that enable the electric vehicle industry to exist, this high failure risk can be bypassed while still capitalising on the rise of electric vehicles. I’m talking specifically about battery metal producers.

FTSE 100 shares powering electric vehicles

Two of the biggest mining groups in the world are Rio Tinto (LSE:RIO) and Glencore (LSE:GLEN). And both serve a critical role in producing the materials required for lithium-ion batteries.

Rio Tinto has begun ramping up its investments in lithium mining. Meanwhile, Glencore is already the global leader in supplying cobalt, copper, and nickel. And it’s not just the batteries that are resource intensive. Additional components like the motor and other internal electronics also require these increasingly precious materials.

An investigation commission by the International Copper Association found that a standard internal combustion engine vehicle requires an average of 23kg of copper to function. By comparison, a battery-powered electric vehicle needs 83kg – 260% more. And similar trends exist for the other materials as well.

This surge in demand is only exacerbated by the rapidly rising number of companies operating in the EV space. And when slapping on supply chain disruptions courtesy of the pandemic, it’s not surprising to see the price of these materials explode recently.

Since mining is a largely fixed-cost operation, both of these FTSE 100 shares have outperformed their parent index.

Understanding the risk

Surging revenues and profits today are a pleasant sight. But it’s not a guarantee for the future. After all, Rio Tinto and Glencore are hardly the only mining companies out there.

With commodity prices rising, the economic viability of mining projects worldwide is improving. As this encourages additional mining activity, it’s likely that supply will eventually catch up to demand and may even surpass it. When this inevitably happens, the price of battery metals will naturally decline, taking the impressive earnings of these FTSE 100 shares with them.

The cyclicality of the mining industry is well known. And some analysts believe that we’re already near the top of a commodity cycle – a risk that ought to be considered.

However, given the long-term demand for these metals continues to grow today, that’s a risk I feel might be worth taking for my portfolio. While I’m not looking to buy these shares today, I think this is a smarter way to capitalise on the electric vehicle revolution. As such, I’m keeping a close eye on both of these businesses.

Home comforts

I believe real estate investment trusts (or REITs) are great ways to build long-term passive income.

They must pay dividends on a minimum of 90% of their annual profits, according to regulations.

The regular rental incomes they receive give them the ammunition to pay out reliable dividends, too. This is critical for those seeking a dependable second income.

The PRS REIT (LSE: PRSR) is one such share I’m considering buying as residential rents soar. The property stock builds and rents out family homes across the UK. And it is expanding its portfolio to make the most of strong market conditions.

The business is looking to build its portfolio from 4,786 homes as of June to 5,600.

Revenues at PRS rocketed 58% in the 12 months to June, a result that drove pre-tax profit 163% higher.

I’m expecting the company’s profits to continue soaring as Britain’s shortage of rental homes worsens. A massive 227,000 new rental homes are needed each year to meet demand, says consultancy Capital Economics.

I’m concerned about the impact of rising construction costs on the REIT’s profits. But I believe that the potential rewards of owning this property share overwhelmingly outweigh this risk.

Today PRS carries a decent 4.8% forward dividend yield. It also trades on a corresponding price-to-earnings growth (PEG) ratio of 0.5. Stocks with readings below 1 are considered undervalued.

9.4% dividend yield!

I’m also considering buying Glencore (LSE: GLEN) shares to boost my long-term dividend income.

The FTSE 100 mining stock faces extreme near-term uncertainty as the global economy cools. The prices of the raw materials it produces and trades might sink if demand slumps.

Pleasingly, however, the projected dividend for 2022 is well covered by anticipated earnings. So even if Glencore earns less than brokers expect there’s a wide margin of safety for investors.

Dividend coverage sits at 2.9 times for this year. A figure of above 2 times is the target for share pickers.

As a long-term investor, I’m more interested in what dividends Glencore will provide beyond 2022. And it’s my opinion that the future is bright as the next ‘commodities supercycle’ drives profits.

Physical consumption of raw materials looks set to soar on the back of trends like rising urbanisation in emerging markets and huge global investment in green technologies.

A decline in the US dollar is also expected to boost commodity demand. This will essentially make it cheaper to buy dollar-denominated assets. There’s also the fact that commodities look dirt-cheap right now.

Glencore’s current share price carries a 9.4% dividend yield. It also trades on a price-to-earnings (P/E) ratio of just 3.7 times.

This all-round value makes it — like the PRS REIT — a top stock to boost passive income.

Strong operating cash flow

The first company I’m looking at is Associated British Foods (LSE:ABF). The business – a food and ingredients specialist and fashion retailer – has seen its share price fall 20% in the past three months. At the time of writing, it’s trading at 1,279p.

An interesting aspect of the company is its dividend policy. For the year ended September 2021, it paid 40.5p per share. This equates to a yield of around 1.61% at current levels. While this isn’t the highest on the market, it’s still competitive.

Dividend policies may be subject to change in the future.

The firm recently released its full-year expectations for the year ended September 2022. It forecasts that revenue will be “well ahead” of last year’s results.

In addition, adjusted operating profit may be higher than last year, while its fashion retail chain Primark could have year-on-year sales growth of 40%.

However, operating profit and earnings per share (EPS) are expected to fall in the coming year. This is largely due to inflation and supply chain issues.  

Despite this, the business has operating cash flow of £2.03bn, meaning that it should be able to navigate through any short-term problems that arise.

Surging profits

Second, I’m drawn to Glencore (LSE:GLEN). In the past three months, the shares have climbed 14% and currently trade at 494p.

The mining firm also has an attractive dividend yield of 4.39%. Last year it paid $0.26 per share. 

The business has benefited from elevated commodity prices over the last couple of years. Much of this has been caused by the economic reopening following the pandemic.

For the six months to 30 June, interim core profit increased by $10.3bn. Furthermore, the company will return $4.5bn to shareholders through a share buyback scheme and a special distribution. It’s good to know that I could gain income in addition to dividend payments.

There is, however, the real threat posed by supply chain issues. In addition, a recession may lead to a downturn in demand for many of the commodities that Glencore produces.

Despite this, the firm is still a major player in the liquefied natural gas (LNG) market. It’s widely expected that the price of LNG will continue to rise as demand increases through the winter. This could be good news for Glencore.

Overall, both companies offer growth prospects and a potentially stable income stream. With these things in mind, I’ll be adding both businesses to my portfolio soon as I steadily rebuild my cash reserves.

Outperforming in 2022

Volatility in commodity prices has been the main reason for outperformance for Glencore this year. In the half-year report, the company spoke of the “global macroeconomic and geopolitical events during the half [creating] extraordinary energy market dislocation, volatility, risk, and supply disruption”.

This might be taken as negative for some businesses. Yet all of the above were positive factors that helped propel adjusted EBITDA to a record $18.9bn for the period. This is an incredible amount to generate, up 119% on the same period last year.

Coal and gas benchmark prices soared, allowing Glencore to benefit from selling at a much higher level than during 2021. The energy market issues have caused problems for companies in other sectors. But for those like Glencore that are associated with the extraction and production at the beginning, it has been a positive.

Some commodities haven’t simply gained value, but rather have gone up and down in price. As Glencore has the capacity to store and ship different goods, it has been able to profit from the volatility. For example, if Metal X fell 10%, it could buy some and hold it. Then if the price moved back higher, it could sell.

Room to go higher

At 494p, the share price is close to the highs of the year at 548p. Interestingly, if it can break this level, it would be the highest price since July 2011.

I think that this price could be seen by the end of this year. One reason for this is due to the drivers above that have ensured Glencore has enjoyed a strong year so far. Given the state of the global economy, along with the continued uncertainty around energy prices, volatility should remain high. I don’t see any reason why the business won’t be able to continue to deliver strong full-year results, surprising the market.

I think the stock could rally even more as excess profits get paid out in the form of dividends. The current dividend yield is 4.75%. This might not seem exceptional but the share price is rallying as well. If we see another generous payout, I think income investors could flock to buy Glencore shares.

The main risk to my view is that we see a material re-pricing lower of commodities such as oil, coal and natural gas. This could happen if we get a sudden resolution to the war in Ukraine, or if there’s large scale Government intervention. In such a case, Glencore could be caught off guard and suffer from lower prices.

I see this as unlikely in the near term and see little to stop the share price marching to fresh highs. Therefore, I’m looking to add the stock to my portfolio.

And here are two on my radar today.

Frontier Developments

The video games industry has ballooned in size over the past decade and today it’s worth more than the film and music industries combined.

And thanks to rapid technological improvements — which have given birth to the e-sports craze — it looks poised for further explosive growth during the next 10 years.

That’s why I’ve invested in technical and creative services business Keywords Studios. And it’s why I’m thinking about buying games studio Frontier Developments (LSE: FDEV) shares for my portfolio as well.

Frontier has a number of ultra-popular games franchises under its belt. These include the Jurassic World, F1 Manager and Elite Dangerous titles. And right now they’re in extremely high demand. They powered revenues at the business 26% higher in the 12 months to May to record levels of £114m.

The games industry is hugely competitive. And costly game development problems can be common, so success here isn’t guaranteed. But Frontier’s impressive momentum and the huge investment it’s making in software development are very encouraging. The business raised its headcount by as much as a quarter last year.

I also think the tech company’s low valuation bakes in the threat posed by rival developers. Today, it trades on a price-to-earnings growth (PEG) ratio of just 0.4. A reading below 1 suggests that a stock is undervalued.

Glencore

I think Glencore’s (LSE: GLEN) a great share to buy to exploit the upcoming commodities supercycle.

Some of the raw materials it mines and trades include copper, which is a key component in electric vehicles (EVs) and renewable energy technology, plus nickel and zinc. These materials are used in the manufacture of EV batteries. 

It also mines iron ore and ferroalloys, demand for which should soar amid global construction activity, plus aluminium, whose applications include power lines, consumer electronics and skyscrapers.

Glencore’s more recent push into lithium adds extra appeal too. It’s inked deals to become involved in the recycling of lithium-ion batteries. And according to reports it’s looking to begin trading the battery metal to exploit soaring EV demand.

I’m a little concerned about the company’s huge exposure to fossil fuels. For example, 24% of group earnings are generated from coal production. This is a risk as the world transitions from dirtier fuels towards other sources like renewables.

Having said that, I believe the bright demand outlook for Glencore’s other commodities makes up for this.

Today the FTSE 100 firm trades on a forward price-to-earnings (P/E) ratio of 3.8 times. On top of this it boasts a gigantic 10.2% dividend yield. I think it’s a top value stock to buy right now.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Safestore Holdings

What it does: Safestore is a leading self-storage provider operating throughout the UK and Europe via a network of 179 locations.

By Zaven Boyrazian. Safestore Holdings (LSE:SAFE) is the UK’s largest provider of self-storage solutions, with 179 facilities around the UK and Europe. In total, the group has just over 7.6 million square feet of leasing space at an 84.3% occupancy rate as of July 2022.

While self-storage is hardly the most exciting sector, it provides a critical service that’s growing in demand and generally resilient to economic shifts.

So far this year, Safestore’s revenue has grown by a solid 15.6% overall and 12.8% on a like-for-like basis. Management has also been exercising a bit of pricing power to bolster its average storage rate by 9.1% to £28.59 per square foot. And with only a handful of fixed operating costs, net profit margins stand at an impressive 42.7%

Despite delivering consistently impressive results, shares currently trade at a dirt-cheap P/E ratio of just 3.9. Pairing this with a 3.1% dividend yield makes me believe a bargain income opportunity has emerged for my stocks and shares portfolio.

Zaven Boyrazian does not own shares in Safestore Holdings.

NatWest

What it does: NatWest is a banking firm based in the UK. It specialises in a number of products, including personal and commercial banking.

By Andrew Woods. For 2021, NatWest (LSE:NWG) paid a dividend of 10.5p per share. At the time of writing, this payment equates to a dividend yield of around 4.66%. Although that’s not the largest yield on the market, I still consider it to be solid.

The company has been benefiting from a trend of rising interest rates. Rates have risen to 2.25% in the UK and may well climb higher as central banks seek to bring inflation under control.

Higher rates basically mean that banks can charge more for borrowing services. However, since they make loans and mortgages more expensive, some customers may be put off taking on more debt amid the cost-of-living crisis.

Regardless, the firm posted an operating pre-tax profit of £2.6bn for the six months to 30 June. This was up from £2.3bn for the same period in 2021. For now, at least, the bank appears to be in a strong position and my income favourite at the moment.

Andrew Woods has no position in NatWest.

Endeavour Mining

What it does: The company owns and operates gold mines across Africa. It makes money by selling the gold it extracts.

By Stephen Wright. Shares in Endeavour Mining (LSE:EDV) just hit a price that I find it impossible to ignore them at. That’s why they’re my top British income stock for October.

As a gold mining company, Endeavour’s profitability is tied closely to the price of gold. The higher the gold price, the more money the business makes.

Recently, the price of gold has been coming down, falling from $1,756 per ounce to $1,643 per ounce. And the stock I’m looking at has fallen from £18.09 per share to £15.83.

To me, this looks like a good opportunity to buy shares. Over time, I expect the price of gold to increase and I expect all gold mining companies to benefit.

The reason for focusing on Endeavour specifically, though, is that it has lower costs than its competitors. This gives it an advantage that I think is extremely difficult to replicate.

Stephen Wright does not own shares in Endeavour Mining.

United Utilities Group 

What it does: United Utilities supplies water and wastewater services to 7m households in the North West of England.

By Royston Wild. I think buying classic defensive shares could be a good idea as stock market volatility picks up. One I’m thinking of snapping up in October is United Utilities Group (LSE: UU). 

The outlook for the UK economy is plagued with danger as inflation soars and interest rates rocket. But our essential need for water means that revenues at suppliers like this remain rock-solid.

As a consequence, businesses like United Utilities have the financial clout and the confidence to raise dividends at all times. Indeed, for the years to March 2023 and 2024 City analysts are expecting total payouts of 45.57p and 49.42p per share respectively. 

These are up from last year’s full dividend of 43.5p per share. And they provide healthy yields of 4% and 4.4%.  

I also like United Utilities because a lack of industry competition provides revenues with additional security. Though bear in mind that changes to water UK regulations could have an impact on future earnings.

Royston Wild does not own shares in United Utilities. 

Glencore

What it does: Glencore is the world’s largest commodity trader, known for trading metals that include the likes of zinc, copper, lead, and nickel.

By John Choong. Bucking the trend of the FTSE 100, Glencore (LSE: GLEN) has outperformed the wider index by more than 20%, at the time of writing. Pair that with a decent dividend yield of just under 5%, and the commodity giant certainly looks like a lucrative income stock to buy for my portfolio.

In its latest half-year results, Glencore smashed it out of the park by posting top line and bottom line growth of 43% and 820% respectively. While the outlook for metals is a rather uncertain one given the economic conditions surrounding a global recession, management believes that the reopening of China in the second half of the year could boost its income stream, and dividend as a result, while helping to hedge against declining metal prices.

Nevertheless, it’s worth noting that the miner’s dividend isn’t well covered by current earnings and cash on its balance sheet. So any substantial decline in metal prices and overall demand could significantly hamper the dividend payout. 

John Choong has no position in Glencore.

Smith & Nephew

What it does: Smith & Nephew is a medical technology company that specialises in hip and knee implants and advanced wound management.

By Edward Sheldon, CFA. Smith & Nephew (LSE: SN) shares have fallen in recent months due to challenges associated with supply chains, inflation, and China, and I think the share price fall has created an attractive buying opportunity for long-term investors like myself.

In the near term, the challenges I’ve mentioned above could persist. However, eventually, I expect them to moderate as the world returns to normal after the pandemic. And when they do, sentiment towards the healthcare stock should improve. It’s worth noting that, in many countries, there are large backlogs for joint replacement surgery.

Meanwhile, the long-term growth story here remains attractive. By 2030, one in six people globally will be 60 or over. This is likely to create strong demand for joint replacements.

With the stock currently sporting a P/E ratio that is not much higher than the average FTSE 100 P/E, and offering a dividend yield of about 3%, I think it’s a good time to be buying here.

Edward Sheldon owns shares in Smith & Nephew.

BAE Systems

What it does: BAE Systems is a defense, aerospace and security company.

By Paul Summers. Finding a high-yielding income stock isn’t hard right now. Then again, I think it still pays to be cautious. With a recession already here/on the way, many companies may reduce their cash returns or cut them completely. That’s why my pick is BAE Systems (LSE: BA).

Prompted by the invasion of Ukraine, its shares have been in fine form in 2022. This has reduced the yield to a pretty pedestrian 3.2%. Even so, payouts are likely to be covered twice by expected profit. This arguably makes the £25bn cap a relatively safe play for income hunters.  

At almost 16 times earnings, the shares trade at a premium to their five-year average. Hence, there might be some profit-taking on the horizon. However, I think this is a risk worth taking. BAE boasts a superb record when it comes to consistently increasing its annual payouts. 

Paul Summers has no position in BAE Systems

One good idea in uncertain times is to see what other investors are buying. I’m personally looking at how share pickers using Hargreaves Lansdown’s platform have been investing in recent days.

Here are two of the most popular stocks that Hargreaves Lansdown investors have bought in the past week. I think they are great buys for those following Warren Buffett’s investing strategy.

Glencore

Hunting for value is a key part of the Berkshire Hathaway chief’s investing strategy. He doesn’t focus on low price-to-earnings (P/E) ratios or book value, but rather on what he coins a stock’s “intrinsic value”.

This can be assessed in a variety of ways. But it seems that Hargreaves Lansdown investors are heavily buying ultra-cheap Glencore (LSE: GLEN) shares. The FTSE 100 miner is the second most frequently traded stock purchased in the past seven days, accounting for 1.35% of all buy orders.

Glencore’s share price has leapt 25% in 2022 even as worries over global growth — and by extension demand for commodities — have exploded. This is even though this has the potential to take a big bite out of mining sector earnings.

It seems that investors continue to think Glencore is trading below value. And I’m inclined to agree with them. The company owns a portfolio of world-class mines producing copper, cobalt, and a range of other raw materials, demand for which could soar as the move to renewable energy and electric cars takes off.

Warren Buffett might not care for P/E ratios. But the rock-bottom reading of 3.6 times that Glencore’s share price currently commands merits attention in my opinion. The miner also carries an enormous 10.7% dividend yield today.

Vodafone Group

Buffett recently liquidated his entire holdings in Verizon Communications. But don’t assume that the ‘Oracle of Omaha’ has suddenly taken a bearish position in the telecoms space. After all, Berkshire Hathaway continues to hold shares in both T-Mobile and Liberty Global.

I’m certainly optimistic about the fortunes of FTSE 100-quoted Vodafone Group (LSE: VOD). And so are many investors who trade through Hargreaves Lansdown. Vodafone was the 10th most frequently traded stock in the past week, accounting for 0.79% of all buys.

There are two big threats to telecoms companies like this. The industry in which they operate is highly competitive. And their operations are highly capital-intensive, which can in turn damage profits and shareholder returns.

But on balance I think Vodafone is a great share to buy for the future. Telecoms demand is set to keep growing strongly as the digital revolution carries on. It’s why this particular company is spending fortunes on 5G and broadband rollout in its markets.

I also like Vodafone’s huge exposure to Africa. It has more than 270m customers on the continent, where it operates in both the fast-growing telecoms and mobile money sectors.

Glencore shares accounted for 3.17% of the total value of buy orders placed through Hargreaves Lansdown.

Should I join the rush and buy Glencore for my own portfolio? Or am I better off giving the mining stock a miss as the global economy cools?

A dirt-cheap UK share

As a value investor, I can see why Glencore shares are so appealing right now. The business offers terrific bang for an investor’s buck in terms of both earnings growth and income.

First off, City analysts think the business will generate earnings per share (EPS) of 129p per share in 2022. This leaves Glencore’s share price at 489p, with a forward price-to-earnings (P/E) ratio of just 3.9 times.

To give some perspective, FTSE 100 miner Rio Tinto trades on a higher (although still modest) ratio of 5.8 times. And the FTSE index average sits at a comparatively enormous 14.4 times.

And, as I say, Glencore shares also provide a lot to excite income investors. Today, the company’s dividend yield for 2022 sits at an enormous 9.7%. This is far ahead of the Footsie 3.9% average and not far off Rio Tinto’s 10.7%.

The risks

So why is Glencore’s share price so cheap? Well, mining company profits are highly sensitive to broader economic conditions. Therefore, UK investors remain highly worried about future commodities demand as the world flirts with recession.

Last week, the World Bank warned of rising recession risks in 2023 as central banks hike rates. It added that the global economy is in its steepest slowdown following a post-recession recovery since 1970.

Huge potential

But it’s my opinion that the dire economic backdrop is more than baked into Glencore’s rock-bottom P/E ratio. It’s why I’m thinking of buying it today, and why I also invested in Rio Tinto back in June.

I take a long-term view when it comes to buying shares. And I believe Glencore’s share price could soar from current levels as commodities demand shoots through the roof.

This will be mainly on the back of energy transition, though factors like rapid urbanisation in emerging markets and soaring consumer electronics demand will also help.

Take copper, for example, a material which Glencore is a major producer of. Analysts at S&P Global think demand for refined metal “will nearly double by 2035 and continue to grow thereafter” as off-take from electric vehicle, power infrastructure and renewable generation companies explodes.

Glencore both produces and trades a variety of other commodities that will be essential for the energy revolution too. This wide exposure provides me as an investor with added peace of mind. Profits at the firm aren’t dependent upon strong supply-and-demand dynamics in one or two markets.

The bottom line

I think there’s a lot to like about commodities giant Glencore. And at current prices I think it’s one of the best FTSE 100 bargains out there for me.

Higher interest rates

First, banking giant HSBC (LSE:HSBA) has seen its shares climb 5% in the last three months. At the time of writing, they’re trading at 535p.

The firm has been benefiting from a climate of rising interest rates. With inflation exceeding 10%, central banks have been increasing rates in order to bring it under control. 

Interest rates are currently set at 1.75% in the UK. They generally determine how much banks can charge for borrowing services and how much customers will earn for depositing cash in savings accounts. 

Higher rates are generally good news for banks like HSBC, because they may be able to charge more when providing loans and mortgages. 

However, more expensive borrowing may deter customers from taking on any more debt, as they may also be finding difficulties dealing with other issues, like the energy crisis. 

Despite this, investment bank Berenberg increased its price target for HSBC from 560p to 625p, citing improvements in both revenue and costs during the three months to 30 June.

It’s also in a good state of financial health, with a cash balance of $1.09trn, and total debt of $615.84bn. 

Surging energy costs

Second, mining firm Glencore’s (LSE:GLEN) share price has fallen 15% in the past three months. It currently trades at 472p.

It posted bumper pre-tax profits of $7.3bn in 2021, mainly because of higher commodity prices and increased demand for coal and liquified natural gas (LNG).

Furthermore, for the six months to 30 June, adjusted core earnings amounted to $18.9bn, up 119% year on year. 

The business is also embarking on a $3bn share buyback scheme, together with a special distribution of $1.45bn. Although I would be buying the shares in Glencore for growth, it’s good to know that I could also derive income from my investment.

However, there are threats on the horizon. Cost and wage inflation is starting to eat into balance sheets. This may only get worse before it gets better. Commodity prices, especially in base metals, are also much lower than last year.

Despite this, there’s still heightened demand for coal and LNG, products that many of Glencore’s competitors previously decided to move away from.

Overall, both of these firms present interesting opportunities for growth over the long term. While both face threats, like inflation, they are also in strong financial positions. As such, I’ll be adding these businesses to my portfolio in the near future.