These conditions can cause markets to be more volatile than usual. It can even result in a crash, which occurs when a major exchange falls at least 10% in a single trading day.

On the surface, a stock market crash might seem bad news, but it’s important to remember markets are cyclical and will always move up and down. That’s why I’m viewing this as an opportunity for me to add stocks to my portfolio at a lower price. 

I’m interested in adding defensive stocks to my portfolio and shares in companies that can capitalise on high energy prices. 

Let’s take a look at two of these stocks. 

On the defensive 

Defensive stocks are well-established companies in industries such as consumer staples that provide consistent earnings and stable returns, regardless of economic conditions. 

One company I think fits this description is Unilever (LSE:ULVR). Its extensive portfolio of brands and global business means that it has a regular customer base of millions of people. Regardless of economic conditions, demand for the likes of household cleaning products and personal hygiene items will continue to be consistent.

The stock has performed well recently and is up 16% in the last six months. 

It is logical to assume that some consumers may swap branded goods for cheaper alternatives as the cost-of-living rises. This switch may impact Unilever’s growth in the short term. 

Nonetheless, brand loyalty for Unilever’s products such as Marmite, Persil and Dove is strong. I believe that consumers will stick with these much-loved brands or, even if they make the switch briefly, will return to purchasing these items in the long run. 

Moving forward with renewables 

The second stock I think will perform well in the current economic climate is Greencoat UK Wind (LSE:UKW). Greencoat operates 45 wind farms across the country that generate clean electricity for UK households. 

In the past year, the stock is up over 12%. In the same time period, the FTSE 250 is down 26%.

The company announced in its half-year results that it generated net cash of £328m and is issuing a dividend of 3.86p a share. These strong results are likely a result of increasing demand for renewable energy sources given the sky-high gas prices. 

It’s important to note that maintaining wind turbines is not a cheap business. As we become more prone to extreme weather events, Greencoat could see costs increase as it tries to keep current turbines working. 

I still think Greencoat is in a strong position to capitalise on the shift from fossil fuels to renewables. The rising and sustainable dividend makes it a good income stock for my portfolio.

Worries over the UK as an investment destination might be growing. But I feel the rapid sale of many stocks is driven by emotion rather than sound investing strategy. This leaves an opportunity for level-headed investors to nip in and grab a bargain.

Here are two FTSE 250 stocks I think are brilliant buys after falling today.

10.2% dividend yield!

Housebuilders like Vistry Group (LSE: VTY) are sinking as markets ponder the prospect of emergency action by the Bank of England. Some economists believe an interest rate hike of 1% later this week is imminent to shore up the plummeting pound.

The risks to Vistry et al might be rising. However, I believe the threat from a rising interest rate is now priced in. This FTSE 250 index stock now trades on a mega-low price-to-earnings (P/E) ratio of 4.8 times for 2022. Its dividend yield meanwhile has leapt to an enormous 10.5%.

Poor housebuilding activity in recent decades has created a huge shortage of available homes. And this means that, even as interest rates rise, property prices also keep on rising. Rightmove said today that average asking prices rose 8.7% in September annually, up from 8.2% in August.

It’s my opinion that the Stamp Duty cuts announced last week by Kwasi Kwarteng could also boost home sales, even as interest rates rise. Tim Bannister, director of property science at Rightmove, has even said that “Friday’s announcement is likely to stimulate some more demand” in the housing market.

A top renewable energy stock

Spreading risk aversion on the London Stock Exchange has even pulled defensive stocks like Greencoat UK Wind (LSE: UKW) lower.

This FTSE 250 share has been trading on rock-bottom P/E ratios in spite of recent price gains. And today’s decline has pushed its earnings multiple to a mere 3.1 times. With its dividend yield also rising to 4.9%, I think Greencoat’s a top value stock to buy.

Even as the UK economy toils, Greencoat — which is invested in 45 wind farms across the country — can expect revenues from its electricity-generating assets to remain stable. I believe the business is actually a solid long-term buy as demand for low-carbon energy goes from strength to strength.

The cost of keeping wind turbines in working order is high. The future costs to Greencoat could rise sharply as extreme weather events become more common too. But all things considered I think the rewards of owning the share outweigh the risks. And especially so at the current share price.

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

NextEnergy Solar Fund  

What it does: NextEnergy Solar Fund has invested in more than 100 solar power assets spanning the UK and Italy.

By Royston Wild. Renewable energy stock NextEnergy Solar Fund (LSE: NESF) hasn’t been listed on the London Stock Exchange for a considerable period of time. 

But since its IPO in 2014 it’s shown the hallmarks of a true Dividend Aristocrat. It’s lifted shareholder payments each year since then. Last year it raised the full-year reward 2% year-on-year to 7.16p per share. 

I think it’s a great stock to buy for reliable dividend growth. Electricity is of course an essential commodity today, so demand for power sourced from NextEnergy’s assets should remain strong at all points of the economic cycle. This gives added strength for a business seeking to increase dividends over the long term. 

I think NextEnergy’s focus on green energy gives it the edge over other electricity-producers, too. This is a highly lucrative industry as the transition away from fossil fuels heats up. Though remember that it’s also one where corporate profits can suffer during cloudy weather when energy generation can slump.

Today, this renewable energy income stock carries a 6.4% forward dividend yield.  

Royston Wild does not own shares in NextEnergy Solar Fund. 

Central Asia Metals

What it does: Central Asia Metals is an AIM-listed copper, zinc and lead production and exploration company, with operations in Kazakhstan and North Macedonia

By Paul Summers. With UK inflation poised to hit a staggering 18% next year as energy prices soar (again), I’m attracted to the dividends on offer from miner Central Asia Metals (LSE: CAML). A yield of 8.2% at the time of writing won’t be enough to offset the pain ahead but it certainly isn’t to be sniffed at. What’s more, this payout looks set to be covered twice by profit according to analysts.

Naturally, nothing is a given. Metal prices are notoriously volatile, making the near-term earnings outlook distinctly foggy for any company operating in this space. Nevertheless, the likely huge demand for copper going forward as the renewable energy revolution steps up a gear could prove a boon to this AIM-listed firm.

The income stock also appears very reasonably priced compared to sector peers, at just six times earnings. 

Paul Summers has no position in Central Asia Metals

Lloyds Banking Group

What it does: Lloyds is one of the UK’s largest financial services providers and currently the largest mortgage lender in the country.

By Dylan Hood. On the whole, rising interest rates are bad news for stock markets. However, one sector that tends to be robust during these times are banks. This is because as rates rise, they can charge more on their loans to customers. Although Lloyds (LSE:LLOY) shares are down 11% year to date, I think they could be a solid buy for my portfolio.

Firstly, they have a comfortable 4.8% dividend yield. This is comfortably above the FTSE 100 average yield of 3.9%. With inflation on the rise, reaching 10.1% in July, passive income is a great shield for my portfolio. In addition to this, currently trading at 44p, Lloyds shares have a cheap looking 7.3 price to earnings ratio. This is well below competitors HSBC and NatWest who both trade on P/E ratios of just under 10.

So, with a low valuation, meaty dividend, and favourable lending outlook, I think Lloyds shares could be a great buy for my portfolio for September.

Dylan Hood does not own shares in Lloyds

St. James’s Place

What it does: St. James’s Place is a leading provider of financial planning and wealth management services in the UK.

By Edward Sheldon, CFA. My top income stock for September is St. James’s Place (LSE: STJ). It’s forecast to pay out a dividend of 55p per share for 2022, which equates to a yield of nearly 5% at present.

One reason I’m bullish on St. James’s Place right now is that the financial environment is rather complex. High inflation, rising interest rates, stock market volatility, and falling bond prices all present challenges for those looking to save and invest for their future. This should play into the wealth manager’s hands. In this environment, its advisers can add value for clients, and help them stay on track.

Another reason is that the company is raising its dividend. For the first half of 2022, the company declared a payout of 15.59p per share, up 35% year on year.

It’s worth pointing out that if global stock markets continue to fall, the company’s profits could take a hit.

With the stock currently well below its 52-week highs, however, I think a lot of this risk is already priced in.

Edward Sheldon has no position in St. James’s Place.

Greencoat UK Wind

What it does: Greencoat owns a collection of wind farms scattered across the UK, generating clean electricity to power the nation’s homes.

By Zaven Boyrazian. With gas prices sending energy bills through the roof, alternative renewable energy solutions are rising in demand. Today only around 29% of electricity generated in the UK originates from renewable energy sources. But that’s considerably higher than 5% in 2012.

This continued shift away from fossil fuels has created lucrative opportunities for companies like Greencoat UK Wind (LSE:UKW). The business owns a portfolio of on- and off-shore wind farms that generate clean electricity.

Being a wind energy business, its revenue stream and earnings can be quite lumpy. Not to mention the regulatory energy price caps eliminate any form of pricing power.

But with operating margins well above 90%, any reduction in price caps is unlikely to compromise this business, I feel. And with most of the proceeds returned to shareholders in an inflation-adjusted dividend, Greencoat looks like an excellent income stock to own in my eyes.

Zaven Boyrazian owns shares in Greencoat UK Wind

Legal & General  

What it does: Legal & General is one of the UK’s largest financial and insurance firms with a focus on four key areas. 

By Charlie Keough. My top British income stock for September is Legal & General (LSE: LGEN]. With its share price taking a hit this year, this has pushed the stock’s dividend up to an attractive yield of around 9%.  

What I also like about L&G is the long-term dividend plan it set out back in 2020. This was part of a wider five-year ambitions programme. And within this, it has targeted a cumulative dividend ambition of £5.6bn-£5.9bn by 2024. In its latest update, it highlighted it was on track to achieve this.  

The firm has also managed to grow its cash levels since last year, which gives this dividend programme a platform to build up.  

The business may see investors batten down the hatches in the months ahead. And this will likely dent revenue. 

However, with inflation continuing to rise, I think this source of passive income could prove valuable in the months and years ahead. 

Charlie Keough does not own shares in Legal & General 

Lloyds

What it does: Lloyds is one of Britain’s biggest financial institutions. Its brands include Lloyds itself, Halifax, and Bank of Scotland. It earns the bulk of its revenue from mortgage loans.

By John Choong. According to analysts, inflation is now expected to peak at 18% in January. With interest rates still lagging behind inflation, the Bank of England will have to continue raising rates. Given that Lloyds (LSE: LLOY) earns its income from the difference in the cost of borrowing and lending, I expect its earnings to continue upwards; and with that, its dividends.

Although house prices are expected to decline in the near future, I hold the view that the increase in mortgage rates should offset any decreases in property valuations. Furthermore, with an excellent balance sheet, Lloyds doesn’t need to increase its savings rate to bring in more cash, thus allowing it to increase its profits.

So, with a low price-to-earnings (P/E) ratio of 7, and a price target of £0.64, I think Lloyds shares are an excellent pick as a defensive position for my portfolio. And what’s most lucrative is its dividend yield of 4.8%, which is expected to increase along with its margins.

John Choong has positions in Lloyds.

Persimmon

What it does: Persimmon is a housebuilder focussed on the UK market.

By Christopher Ruane. Some of the yields currently on offer in the London market are hard to get my head around. Take housebuilder Persimmon (LSE: PSN) for example. Its dividend yield is almost 16%. For a FTSE 100 member, that is unusually high.

Clearly many investors doubt that the company can sustain its payout and have pushed the share price down accordingly. Although the housing market still looks fairly strong, there is undoubtedly a risk that higher interest rates and a worsening economy could push down selling prices at some point. Persimmon raised its average selling price in the first half, although volumes slipped. It continues to have a healthily profitable business model.

With its thin cover, the dividend looks vulnerable in a downturn. But even if it was halved, it would still be almost 8%. Recognising the risk, I am tempted to add this income stock to my portfolio.

Christopher Ruane does not own shares in Persimmon.

Forterra

What it does: the company manufactures building products from clay and concrete. These include bricks, blocks, and paving.

By Stephen Wright. I think that Forterra (LSE:FORT) is a really interesting income stock. At current prices, it has a dividend yield of around 4.2%.

The company makes the ubiquitous London Brick, which has been used in around 25% of the UK’s housing. This is significant because it means that Forterra’s products are likely to be used in extension projects on those buildings.

It’s natural to think that bricks are something of a commodity, but this isn’t true. Forterra has shown an ability to increase prices to its customers, which indicates that its products are differentiated from those of its competitors.

I also believe that the stock is cheap. Forterra’s share price implies a price-to-earnings (P/E) ratio of around 10 and the company has more cash than debt. This makes it look to me like a strong business at a good price.

Stephen Wright does not own shares in Forterra.

National Grid

What it does: National Grid is an energy company, operating in the UK and eastern US. It provides both electricity and gas.

By Andrew Woods. The National Grid (LSE:NG) share price has fallen just 3% in the past three months. For the year ended March, the firm paid a dividend of 50.97p per share. At current levels, this constitutes a dividend yield of 4.49%. As such, it’s my income stock for September.

The company reported a 107% rise in pre-tax profit, totalling £3.4bn, for the 12 months to March. Furthermore, its dividend payment was 3.7% greater than in 2021. Much of this was down to higher electricity transmission as energy costs spiralled following the pandemic and the war in Ukraine.

One concern, however, is that profit margins may be tighter in the coming months. This could be due to the higher cost of securing energy sources, like natural gas.

Despite this, the business has operating cash flow of £5.3bn, and this may allow the company to engage in controlled expansion of its operations within the UK and abroad.

Andrew Woods has no position in National Grid.

Vodafone

What it does: Vodafone is a leading European mobile and broadband operator. In Africa, it runs mobile and payment services.

By Roland Head. My top dividend share pick is Vodafone Group (LSE: VOD). This well-known telecoms operator offers a 6.5% dividend yield and an improving outlook.

Vodafone’s latest trading update showed growth in Europe and continued expansion in Africa, where the company now has 186m mobile customers.

Currently, fewer than half of Vodafone’s African customers use mobile data or the group’s M-Pesa mobile money service. However, I expect the number of people using these higher-value services to continue rising, supporting long-term growth.

The main challenge the company faces in Europe is strong competition in mature markets. This has caused growth to slow in recent years.

However, changes are underway to increase network utilisation. Cost savings should also come as Vodafone gradually switches off its 3G services.

In the meantime, profit margins are improving, and cash generation remains good. This should support the dividend. I see Vodafone as a dividend buy in September.

Roland Head does not own shares in Vodafone.

But as Warren Buffett always says: “Be greedy when others are fearful”. With that in mind, I’ve spotted one business that actually looks primed to thrive, even in a recessionary environment. That’s why I recently bought £1,000 worth of shares in my SIPP at the start of August. And it continues to look like a bargain today.

One of the best UK shares to buy now?

At the heart of our current economic turmoil are skyrocketing energy bills. And the situation looks like it’s about to get worse as Ofgem, the UK’s energy regulator, prepares to raise price caps by another 80% in October.

How we got into this predicament is a bit of a complicated mess. But in oversimplified terms, it comes after decades of winding down natural gas production in favour of importing it from Russia as we transition to renewables. Unfortunately, this transition hasn’t been fast enough. And since Russia decided to invade Ukraine, the UK, along with the rest of Europe, isn’t exactly keen on importing fossil fuels from Russia anymore.

Following this dire situation, investments in wind power have started to accelerate. And that’s created quite the favourable environment for Greencoat UK Wind (LSE:UKW). The company owns a vast portfolio of wind farms across the country. It generates clean electricity and sells it to the national grid, returning the profits to shareholders in a 4.6% dividend yield.

Being a largely fixed-cost operation, the rise in electricity prices has translated almost entirely into profit. In fact, looking at the latest results, operating margins stand at one of the highest levels I’ve ever seen – 96%!

This extraordinary cash flow has provided immense flexibility for reinvestment and opened the flood gates for larger shareholder payouts. And since managerial policy raises dividends in line with inflation, the passive income stream looks highly attractive in my eyes. That’s why I think these could be some of the best UK shares to buy now.

Taking a step back

As impressive as the group’s latest performance has been, it’s worth remembering that the energy sector is notoriously cyclical. Eventually, energy prices will start to tumble. That will likely cause current profit margins to suffer, pulling down earnings and, in turn, dividends. Needless to say, this eventual scenario will likely drag these UK shares in the wrong direction.

Furthermore, with management paying out such a large portion of cash flows to shareholders, the group has become reliant on debt financing to fuel the acquisitions of new wind farms. The last decade has enjoyed the benefits of near-0% interest rates. But those days look like they’re over.

Consequently, the £950m of long-term debt & equivalents on the balance sheet is less than desirable. Management appears to be aware and is already tackling this issue since this balance is down from £1.1bn in 2020. But it’s something I feel is worth keeping an eye on as the Bank of England raises interest rates.

Regardless, I think surging revenue, insane profit margins, and an inflation-linked dividend make the risks well worth the potential reward.

Although I refrain from investing based on fads, current market trends seem to be rooted in important recent developments. Renewable energy has become supremely important after Europe’s latest power crisis. 

I’ve identified three shares that could supplement the growth of this booming industry right now. These UK shares look primed for growth and could boost my portfolio over the coming years.

All charged up

Greencoat UK Wind (LSE:UKW) and Volex (LSE:VLX) are two shares I’m watching closely right now.

Electricity bills across the country are surging. Just yesterday, the Confederation of British Industry warned policymakers about the impact of this on local businesses. And I think this points to the larger crisis as we’re caught between an expensive transition to green energy while fending off sky-high crude oil prices. 

Greencoat UK Wind’s business model involves investing in wind farms and then selling the generated power back to the grid. This relatively low-risk strategy with 90%+ margins means the company is largely cash positive. In the first half of 2022, it has already generated 2,175GWh of energy with a net cash generation of £328.8m.

This share has risen 22% in the last 12 months. And despite this jump, it’s trading at a price-to-earnings ratio of just 4.6 times. I think this is a very attractive valuation for a firm with strong financials and excellent future prospects. 

The next company on my list is Volex, a manufacturer of fibre-optic, copper and battery wires. The company also operates a range of brands in the electronics space that collectively have a global presence. Its main markets are North America (44% of revenue), Asia (23%) and Europe (33%). 

Volex recently developed an EV division that manufactures components for the booming industry. These include charging cables, charging stations and storage systems. 

In FY22, the company saw revenue growth of 38.6% to US$614.6m. The company expects to generate revenue of $1.2bn by the end of FY27. Thanks to strong recent reports, this share has risen 12.8% in the last six months and is finally showing signs of a bounce-back after falling steadily for months.

Concerns and verdict

While both companies look in relatively strong financial positions, they also come with considerable debt. Given the nature of both businesses, a high percentage of profits are invested back into acquiring assets.

Slowing economies remain a concern for Volex, given its international presence. Its buying power could fall if a recession happens, affecting sales and currency values. Greencoat is currently seeing a premium paid for the energy it sends to the grid. If this stabilises, year-on-year profits could fall, spooking investors.

However, I’m bullish on the European energy sector. I think current changes will prove fruitful in years to come. While traditional oil shares have dominated the energy market, I think a shake-up is under way, which is why I’m considering an investment in these two stocks right now. 

With that in mind, here are two British stocks that, in my opinion, offer attractive passive income prospects.

What if UK dividend shares offered inflation-adjusted returns?

One of the primary catalysts behind the ongoing stock market correction was the spike in inflation, especially in regard to energy bills. But what if there was a way to profit from the surging electricity bills? That’s where Greencoat UK Wind (LSE:UKW) comes into the picture.

The company owns a portfolio of onshore and offshore wind farms scattered across the UK. The business model is simple:

1. Acquire a stake in a wind farm
2. Let it generate clean electricity
3. Sell that electricity to the national grid through a long list of corporate clients

The proceeds are then distributed to shareholders through an impressive 4.6% dividend yield that management automatically increases in line with the retail price index – a proxy for inflation.

With fixed operational costs, the rise in electricity prices has translated into almost pure profit. So it’s not surprising that in the last six months underlying earnings exploded from £128m in 2021 to £566m at a 97% profit margin!

These elevated prices obviously won’t last forever. And when regulators inevitably reduce the price caps, they could stay that way for a prolonged period as they have done in the past. Needless to say, that wouldn’t be good news for the shares of this UK dividend group.

Regardless, I feel it’s a risk worth taking. The skyrocketing earnings grant management a lot of flexibility to improve the balance sheet’s strength and reinvest for long-term growth. And that’s why I recently added some shares to my income portfolio.

Earning a passive income through royalties

The mining sector is not short on UK dividend shares offering impressive payouts. But one from my portfolio that continues to be my favourite in this space is Anglo Pacific Group (LSE:APF). It’s a royalties business that funds mining companies to establish a new extraction site in exchange for some of the dug-up materials.

Historically, the bottom line has primarily been driven by its coal assets. And that’s still true today. However, management has long since been reducing its dependence on the material by diversifying its product portfolio. Lately, it’s been hyper-focused on adding more cobalt, nickel, and copper projects to help meet the demand for electric vehicle batteries and renewable energy technologies.

Mining is a cyclical industry. And while Anglo Pacific may not be doing any drilling, it’s just as susceptible to fluctuating commodity prices. We’ve already begun to see some raw materials drop on fears of a recession. And one of its most lucrative coal mines is coming to the end of its life within the decade.

Those risks can’t be ignored. But management seems to have a sound strategy for replacing the eventual revenue loss. And with global cobalt supply highly restricted, I believe these UK dividend shares offer an attractive long-term source of income at a 4.5% yield. That’s why I’m considering topping up my current holdings.

UK renewable energy shares

With oil prices going through the roof, renewable energy stocks don’t seem to be at the front of investors’ minds anymore. And while plenty of shares were overhyped in the past, Greencoat UK Wind (LSE:UKW) seems to be an exception.

The group owns a network of 43 on- and off-shore wind farms with a generating capacity of 1.42 gigawatts. That’s roughly enough to power just over one million homes. And with its asset portfolio already established, the group is immensely profitable. In fact, operating margins at the end of 2021 stood at a staggering 93%! And yet, this might be just the tip of the iceberg.

Being a largely fixed-cost operation, Greencoat’s margins are ultimately tied to the direction of regulatory price caps on electricity. When regulators push the limit down, it directly harms the company’s bottom line. But with these price limits recently lifted, profits are expected to follow. At least, that’s the impression I’m getting from management, who have already announced their intention to raise dividends by 7.5% this year, sending the yield even higher.

The question then becomes, can this be sustained? In my opinion, yes. As part of the British government’s Green Industrial Revolution, £20bn is being invested into expanding the country’s wind power infrastructure over the next decade. That undoubtedly creates new long-term opportunities for the firm and, in turn, my passive income portfolio. That’s why I think Greencoat UK Wind could be one of the best UK shares for me to buy now.

Threats to the dividend yield

Sadly, nothing is risk-free, not even government-backed renewable energy infrastructure. This immense market opportunity hasn’t gone unnoticed. And even some of the oil giants are making moves. BP, in particular, is aiming to generate up to 20 gigawatts of clean electricity by 2025.

As more competition enters the space, the supply of electricity will obviously increase. And if the growth rate of power generation starts to exceed the increase in demand, prices will begin to drop. That’s terrific news for consumers, not so much for Greencoat. As I said earlier, this UK share’s profitability and subsequently passive income providing capabilities are ultimately tied with electrical prices – something beyond management’s control.

This could potentially jeopardise the dividend yield in the long run. However, establishing a new infrastructure takes a long time, even for industry titans with vast amounts of resources. Therefore, the risk of market saturation shouldn’t occur overnight and is far easier to keep tabs on. That’s why I feel this is a risk worth taking for my portfolio.

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

BT

What it does: BT is a multinational telecommunications provider, operating in over 180 countries across the globe.  

By Dylan Hood. Inflation is creeping up across the globe, and as such, many high-growth stocks are starting to fall back from their lofty valuations. Value stocks like BT (LSE:BT-A) are performing well, as they have the power to control their pricing power in line with inflation. BT also has an abundance of well-established infrastructure, which means its fixed costs won’t increase much as prices start to rise.

In addition to this, BT has a healthy dividend yield of just below 4%. This is above the FTSE 100 average of 3.6%, and I expect this dividend to consistently remain high in the coming months. This is due to the strong consumer base that BT already has, and the new projects it has in the pipeline to drastically upgrade its network.

Dylan Hood does not own shares in BT.

Reckitt

What it does: Reckitt is a leading consumer goods company that is focused on health and hygiene products.

By Edward Sheldon, CFA. There are several reasons I’ve chosen Reckitt (LSE: RKT) as my top income stock for June.

The first is that the company offers a healthy yield. At present, analysts expect Reckitt to pay out 176p per share in dividends for 2022. That puts the yield at near 3%.

The second reason I like Reckitt is that the company is relatively recession-proof. Its products, which include Nurofen painkillers, Dettol wipes, and Strepsils lozenges, tend to be purchased by consumers no matter what’s happening in the global economy. This is a valuable attribute in the current economic environment, to my mind.  

Finally, City analysts are currently upgrading their earnings estimates here. This broker activity should support the share price.

Of course, there are risks to consider. One is the company’s valuation, which is higher than the average FTSE 100 valuation. Another in inflation. All things considered though, I see a lot of appeal in this income stock right now.

Edward Sheldon owns shares in Reckitt.

Greencoat UK Wind

What it does: Greencoat UK Wind is the UK’s largest pureplay investment fund specialising in renewable wind power infrastructure.

By  Zaven Boyrazian. With oil prices shooting through the roof, the renewable energy sector has lost a lot of attention. Yet while there is plenty of struggling, unprofitable operations in this industry, Greencoat UK Wind (LSE:UKW) is the exception.

The real-estate investment trust invests in on- and off-shore wind farms scattered across the UK, allowing investors to own part of this infrastructure. All of the clean electricity generated is sold wholesale to the country’s largest energy companies, including Centrica and SSE. And the proceeds are returned to shareholders through an impressive 4.9% dividend yield.

With skyrocketing energy prices, the firm looks primed to generate copious amounts of passive income for the rest of 2022. While the regulatory price caps on energy eliminate pricing power, the group’s 86% net profit margins can easily absorb any adverse regulatory adjustments.

That’s why I believe this could be one of the best additions to my income portfolio today.

Zaven Boyrazian does not own shares in Greencoat UK Wind, Centrica or SSE.

Taylor Wimpey

What it does: A residential developer, operating from 23 regional businesses across the UK

By Paul Summers: As a rule of thumb, the higher the dividend, the more suspicious one needs to be about whether it will get paid. Even so, I’m struggling to ignore the potential income on offer from one of the UK’s biggest housebuilders: Taylor Wimpey (LSE: TW).

Right now, the FTSE 100 member yields 7.4% based on analyst projections. That’s among the highest in the index. Positively, Taylor Wimpey’s record of growing payouts is also pretty stellar. 

One concern is that the housing market could slow as interest rate rises begin to bite. Then again, I’d say a lot of this is already baked in the share price. Having tumbled over 25% in value in 2022 so far, Taylor Wimpey’s shares trade at less than seven times forecast earnings.

The need for me to remain diversified is as relevant as ever but I’d say the risk/reward trade-off looks attractive here.

Paul Summers does not own shares in Taylor Wimpey.

Severn Trent

What it does: Severn Trent predominantly provides water and waste services to 4.6m customers under the businesses Severn Trent Water and Hafren Dyfrdwy.

By Andrew Mackie: 2022 proved to be a year of recovery for Severn Trent (LSE:SVT). Its regulated water business saw turnover jump 6.5% to £1.8bn driven primarily by patterns of usage amongst business customers returning to normal.

In the present backdrop of high inflation and slowing economic growth, I am always on the look-out for businesses that can provide a steady stream of earnings growth and dividend returns. Severn Trent definitely ticks the boxes in this respect. It has a progressive dividend policy, which will grow by at least CPIH (consumer price index together with housing costs).

Two major risks are 1) a large, and growing, net debt position with 27% index-linked and 2) increasing operating costs particularly in energy and chemicals. However, on the latter point, the business has a natural economic hedge given that it generates 50% of its total power consumption in-house.

With the share price exhibiting some weakness as of late, I see this as an attractive entry point to a purely defensive play.

Andrew Mackie does not own shares in Severn Trent.

Rio Tinto

What it does: Rio Tinto explores, mines, and processes mineral resources worldwide. The firm offers aluminium, copper, and gold among other metals in its large portfolio.

By John Choong Having had a volatile first quarter, Rio Tinto (LSE: RIO) — the second biggest iron ore manufacturer in the world — is riding the wave of rising iron ore prices yet again, as it’s up 20% this year.

After the firm reported record-breaking numbers in its last financial year, it declared an extraordinary dividend of £3.07 per share, with a special dividend of £0.46 as well. While these numbers are unlikely to continue in the next dividend declaration, I believe that the Rio Tinto share price still has plenty of growth in the medium term.

With China being its largest customer, Rio’s top line undoubtedly suffered when China imposed a number of city-wide lockdowns, stifling manufacturing growth. However, China just announced a further easing of curbs in Shanghai and Beijing recently. This should positively impact PMI figures and bring much needed relief to Rio’s order books. As such, I expect its share price to continue growing with high dividend payments to continue.

John Choong has no position in Rio Tinto

IG Group Holdings

What it does: IG Group operates technology, platforms, products and exchanges for traders and investors worldwide.

By Kevin Godbold. In March 2022, IG Group Holdings (LSE: IGG) released an upbeat third-quarter revenue report. Client numbers rose just over 30% year on year to an all-time high against a “challenging” comparative period that included the ‘meme stock’ craze.

IG thrives on market volatility, which helps to attract clients and encourages them to trade. Meanwhile, near 716p, the share price is around 18% lower than a year ago. The stock market could be discounting the possibility of lower earnings ahead. But I reckon the healthy customer base will likely drive IG’s profits through many periods of market volatility in coming months and years.

IG operates in a sector with regulatory risks. But the stock looks good value to me, and the business has strong multi-year cash flow and dividend records. Although analysts’ estimates can change, the forward-looking dividend yield is just over 7% for the trading year to May 2023.

Kevin Godbold owns shares in IG Group Holdings.

B&M European Value Retail

What it does: B&M European Value Retail runs discount variety retail stores in the UK and France. The group’s brands are B&M, Heron and Babou.

By Roland Head. Shares in B&M European Value Retail (LSE: BME) have fallen by 40% so far this year. The slump has come as investors have priced in a post-pandemic slowdown in sales growth.

I think this sell-off has gone too far. This business has always been much more profitable than regular supermarkets and enjoys strong cash generation.

Despite these attractions, B&M shares are currently trading on just nine times trailing earnings, with a 4.3% dividend yield.

There are some risks, of course. B&M has expanded rapidly, and CEO Simon Arora is now planning to retire.

Mr Arora has led the business with his brother Bobby since acquiring it in 2004. There’s no guarantee that B&M’s next CEO, current finance boss Alex Russo, can maintain this success.

Personally, I think B&M’s proven business model will stand the test of time. I think the shares look like a good income buy today.

Roland Head does not own shares in B&M European Value Retail.

BAE Systems

What it does: BAE Systems is an aerospace and arms manufacturer that operates all around the world and is the largest defence contractor in Europe.

By Andrew Woods. Over the past two years, BAE Systems (LSE:BA.) has had dividend yields of 7.7% and 4.6%. This equated to payments of 37.5p and 25.1p in 2020 and 2021, respectively. With a significant order book following escalations in global conflict, it is conceivable that the 2022 dividend could be greater.

The company has not been immune from problems caused by the pandemic, however. It has faced supply chain issues for the raw materials used in its products, like steel. Despite this, the firm did not change its full-year guidance and expects sales to increase by between 2% and 4%.

The war in Ukraine has also prompted a rethink in many countries on the size of defence budgets. If governments choose to increase defence spending, this could be good news for BAE Systems. As the seventh-largest defence contractor in the world, it is likely that many nations will turn to the company for supplies of weapons and aircraft. 

Andrew Woods does not own shares in BAE Systems.

Aviva 

What it does: Aviva is a multiline insurer focused on core markets in the UK, Ireland and Canada. 

By G A Chester. I was hugely impressed by Amanda Blanc when she joined Aviva (LSE: AV) as chief executive two years ago. Her first presentation was assured and waffle-free. She set out the company’s strengths and weaknesses, and a clear, no-nonsense strategy for delivering value for shareholders. 

She’s done exactly what she said. Businesses in disparate geographies have been sold. A big chunk of the proceeds have been returned to shareholders. And the group is now focused on its core markets in the UK, Ireland and Canada where it has strong leadership positions. 

The board has set a clear dividend policy. Distributions of around £870m (31p a share) for 2022 and £915m (32.5p) a share for 2023, followed by annual low-to-mid single digit growth. 

Dividends are never guaranteed, but Blanc at the helm and a share price in the 430p region, yields of 7.2% this year, rising to 7.6% next year, make Aviva my top income stock for June. 

G A Chester does not own shares in Aviva

Legal & General

What it does: Legal & General is an insurance, pensions and financial services provider.  It is focussed on the UK market.

By Christopher Ruane. The financial services powerhouse Legal & General (LSE:LGEN) has a number of things going for it. Long term, I think demand for financial services should be robust. The large sums involved mean that the potential profits are big. Legal & General’s long-established track record and iconic logo help it bring in new customers and hang onto existing ones.

That has translated into an impressive dividend record. Dividends are not guaranteed and the company faces risks, such as a change to UK insurance renewal pricing rules hurting sales volumes or profit margins.

But the dividend is comfortably covered and the company has set out its aim of increasing it in coming years. Although that cannot be guaranteed, the progressive dividend policy could mean growing passive income in coming years. With a 6.9% yield, I see it as an attractive income pick for my portfolio.

Christopher Ruane does not own shares in Legal & General.

It’s human nature to feel like you’re suffering more than others are. But that’s simply because you’re experiencing your feelings all the time, and not constantly seeing or hearing the impact on everyone else.

However, it’s important to recognise that we’re all in this together. And here at The Motley Fool, we pride ourselves on our transparency (it’s why we disclose positions in any company mentioned, even those we just mention in passing!). So today I thought some of our readers may benefit from hearing my own tale.

A bit of background

It’s first worth mentioning that I follow the Foolish investing line of only buying shares with money that I’m unlikely to need in the next three to five years. That’s a core component of long-term investing. In fact, our CEO Tom Gardner said it best recently:

And at the beginning of 2022, my wife and I decided that it was time to ‘upsize’, and sell our flat in order to buy a house. (N.B. investing — Foolishly — was the only reason we were able to buy our home in the first place!)

So I worked out which shares I was happy selling to bridge the gap — which largely comprised stocks I bought close to 10 years ago, had risen substantially in value, and crucially were no longer marked as Buys in a TMF UK service — and those I wanted to keep in my Stocks and Shares ISA.

A bumpy landing

I concede that in one respect I was lucky, since I happened to sell some of my holdings at high levels before the invasion of Ukraine occurred, with markets plummeting thereafter.

But, of course, the vast majority of the shares I kept fell quite drastically. As did those held by the vast majority of investors.

It also didn’t help that I have bought into a variety of US tech stocks over the years. For example, in September, I bought shares in Atlassian. My investment in the software firm is now down almost 50%.

My fourth largest holding (by book cost) is in e-commerce company Shopify, now down 70% over the last 12 months, and showing a -24% fall in my portfolio.

All in all, the total value of my Stocks and Shares ISA is in the red by a percentage of -22.74 as I write.

The grass is always greener…

While that (paper) loss isn’t ideal, of course, I’m not worried. In fact, I’d go as far as to say that I’m optimistic!

That’s because I’m not investing to ‘get rich quick’. No, I buy shares and plan to hold them for the long term. With no future Big Life Event planned in the next three to five years for me and my wife, I can afford to see today’s market volatility as a positive.

There are many, many quality companies out there — both listed in the US and UK — that are currently beaten-down and undervalued. I believe that my Stocks and Shares ISA will creep out of the red if I follow three principles:

1. maintaining my belief in the underlying businesses of my holdings;
2. topping up positions in my favourite shares; and
3. identifying new buying opportunities

For instance, I’m contemplating adding to my Greencoat UK Wind shares, up 13% in my portfolio right now. I’m also interested in some of the Footsie’s income stocks that have proven themselves to be consistent dividend-payers through thick and thin. And I’m definitely, definitely not selling anything marked as a Buy or Hold in a Motley Fool UK service!

In summary, if anyone reading this can be reassured by just one thing, it’s hopefully this: that we at The Motley Fool are still investing alongside you. Indeed, I’ve recently heard from colleagues that they’re more excited to buy shares than they have been in many years (and these Fools love buying stocks!)

Happy hunting!

With that said, what are some of the best income stocks for my portfolio today? Let’s explore my favourites.

Becoming a renewable energy baron

When investing in dividend stocks, I’m drawn to the companies I believe will remain relevant for at least the next 10 years. And I think it’s fair to say that electricity will still be in demand a decade from now.

Most of the electrical grid is powered by gas turbines in the UK. Yet renewables are starting to become a more significant contributor. And that makes Greencoat UK Wind (LSE:UKW) rather promising, in my opinion. This business owns a vast network of on- and off-shore wind farms generating clean electricity.

It’s not a risk-free investment, of course. Being a real estate investment trust, most of the profits are returned to shareholders generating a 4.7% yield today. But that means there’s little capital left for reinvestment and, consequently, management has loaded up on debt over the years. With interest rates rising, profit margins will undoubtedly get squeezed, potentially compromising the passive income stream.

Having said that, net profit margins currently stand at a massive 86%. Therefore, I think Greencoat can absorb this increased pressure without much trouble. And that’s why it’s number one on my list today.

Generating passive income from e-commerce

The rise in popularity of online shopping continues to trend upward, even with the pandemic no longer keeping brick & mortar stores shut. But e-commerce is creating a big problem regarding logistics that Warehouse REIT (LSE:WHR) is trying to solve.

The business owns and leases a network of warehouses across the UK, predominantly to large online retailers like Amazon. With demand for well-positioned facilities on the rise and the supply quickly running out, Warehouse REIT has consistently increased rent, boosting dividends to a 4% yield today.

It’s far from the only player in the space. And the rising level of competition is making the acquisition of new prime locations more challenging. However, with an occupancy rate of 93.5% and average lease duration steadily rising over time, I think Warehouse REIT could be a fine addition to my passive income portfolio.

Digging for 21st-century metals

As the world slowly transitions to eliminate carbon, technologies like renewable energy and electric vehicles (EVs) are rapidly being adopted. But it’s creating a supply problem for battery metals such as cobalt, copper, and vanadium. This has proven to be quite advantageous for Anglo Pacific Group (LSE:APF). The mining royalties business has an equity interest in 15 sites worldwide, eight of which are actively producing.

Commodities are indeed notoriously cyclical. And that’s a pattern which is unlikely to change anytime soon. As such, the bottom line has been wobbly over the years, leading to an equally wobbly dividend.

However, despite this risk, I don’t see demand for battery metals disappearing anytime soon, especially now that more EV manufacturers are entering the picture. Hence why this stock is on my passive income investment list today.