Income stocks from finance

The first company I like is Ninety One (LSE:N91). The asset manager has a range of funds, but the focus is mostly on stocks with global exposure. Given the fact that the company has multiple funds, the share price doesn’t track the price of just one fund. It trades based on the firm’s overall business performance.

Over the past year, the share price has fallen by 12%. This has helped to boost the dividend yield to 7.44%. Most of this fall has occurred over the past month, following the release of the full-year results in May.

The results actually highlighted a record year for the company, with earnings and assets under management being the highest ever. However, the slump in the stock was due to concerns around the outlook. It noted “worsening conditions”, which has clearly spooked some investors.

I accept that 2022 is going to be a lot harder for the company to deliver profitable fund returns. This is a risk if I want to buy the stock. Yet at the same time, the asset manager has provided strong returns previously with a good track record. Therefore, I’m happy to look beyond the short term and focus on the long-term income potential.

An old star making a comeback

The second stock I’d buy for income is Kingfisher (LSE:KGF). Over the past year, the share price is down by 31%. This has been a slow grind lower, as the popular pandemic pick has followed the same trajectory as other lockdown stars.

However, I like the company despite the pandemic boost wearing off. We’ve got a cost-of-living crisis right now that doesn’t look like it’ll dissipate anytime soon. Therefore, I expect a lot of people to revert back to DIY projects in order to save money.

Given the B&Q and Screwfix brands that Kingfisher own, I think it could be well positioned to take advantage of this move.

The dividend yield for this income stock is currently at 5.06%. It’s not as high as my other pick, but I think this could be a great pick for income going forward. If sales pick up in the second half of this year, higher profits should result in a large dividend per share next year.

In Q1 results, the company noted that it was managing “inflationary and supply chain pressures”. This is a concern for me, as I anticipate that this could cause management a headache in being able to get goods delivered on time and at an acceptable price.

British stocks

The first corporation is the defence group BAE Systems (LSE: BA). What I like about this business is that it’s a relatively defensive enterprise. It’s the biggest defence contractor for the UK government, which gives it a large, stable customer.

At the same time, BAE owns a broad portfolio of intellectual property, which gives it a competitive advantage against other defence contractors around the world. 

I think these defensive qualities suggest the business will be able to produce a high level of profit year after year. This should support its dividend.

At the time of writing, the stock supports a dividend yield of 4.6% and trades at a price-to-earnings (P/E) multiple of 11. Based on these metrics, I’d buy the equity for my portfolio today. 

As a defence contractor, there’s a multitude of risks facing BAE. These include the potential for actions against the company if it has supplied weapons to sanctioned organisations. It may also suffer in a trade war between the UK and other nations. 

High-yield investment 

Another company I’d buy for my portfolio of British income stocks is asset management group Ninety One (LSE: N91). At the time of writing, this stock supports a dividend yield of 5.7%. 

The company’s benefited from rising stock markets. According to its latest trading update, last year, the group registered an increase in assets under management of 27% to £131bn. Thanks to this growth, pre-tax profit increased 3% to £204.1m and adjusted operating profit increased 9% to £206.2m.

I think this profit growth should support the company’s dividend yield. Moreover, if the economic recovery continues to drive stock markets higher, Ninety One’s assets under management, and profits, may continue to grow. Based on this outlook, I’d buy the stock today. 

On the other side of the equation, if stock markets suddenly lurch lower, Ninety One’s assets under management could decline. This may lead to reduced profitability and, in the worst-case scenario, a dividend cut. 

Income champion

The final high-yield company I would buy for my portfolio of British stocks is the FTSE 100 income champion National Grid (LSE: NG).

National Grid owns and operates the electricity infrastructure across England which, in my opinion, is a massive defensive advantage. Replicating this network would be nearly impossible. Therefore, the company has a virtual monopoly. 

Unfortunately, it can’t charge whatever it wants for consumers and suppliers to use this network. It’s heavily regulated. This means National Grid’s profitability is limited. And if regulators decide to take a hard line with the business, the dividend could come under pressure. 

Still, compared to many other British stocks, the company has an incredibly stable income stream which shouldn’t disappear anytime soon.

At present, the stock offers a forecast dividend yield of 5.5%, which is significantly above the market average. It also trades at a forward P/E of 15.6, which is a bit on the pricey side. Nonetheless, it’s a price I’m willing to pay for a company with such an established monopoly.