Income stocks form the core of my portfolio. And right now, I’m very thankful for that. Growth stocks certainly haven’t been good to investors over the past 12 months…
But over the last week, pretty much all stocks have taken a hammering!
There’s a number of reasons for this. It started with higher-than-expected US inflation data. Then came negative economic forecasts from the UK and Germany, as well as new Covid-19 restrictions in China.
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After recovering on Wednesday, stocks fell again on Thursday. Natural gas prices were among the causes of this. They rose over 20% amid fears Russia may further cut shipments.
So, here are two big income stocks that have recently fallen.
Vistry Group
Vistry Group (LSE:VTY) stock fell 4% in early trade on Thursday. The firm has been one of the best performing housebuilders over the past year.
In fact, in 2021, it performed far better than it had done prior to the pandemic. The company said completions rose 23.7% to 11,080. And this was reflected in pre-tax profits, which increased to £319.5m, from £98m in 2020 and £174m in 2019.
As a result, it currently has an attractive price-to-earnings ratio of 7.2.
The FTSE-250 developer said in March that the start of the year had been “incredible“. The group highlighted a very strong forward sales position.
The strong performance of the property market during the first half of the year was reiterated by fellow developer Crest Nicholson this month. The firm actually increased its guidance for the year.
Nevertheless, interest rates crept up by 25 basis points on Thursday, taking the base rate to 1.25%. It’s still not massive, but more increases are expected with inflation forecast to continue.
Higher interest rates are likely to lower demand for property. So there could be some short-term pain for housebuilders like Vistry Group.
Currently, Vistry is offering a 6.9% dividend yield. I’ve already bought Vistry shares, but would buy more at the current price.
Abrdn
Abrdn (LSE:ABDN) stock is down 11% over the past five days at the time of writing. That’s not great for investors, but it presents an opportunity for me to buy. The company offers a whopping 9% dividend yield at the current price.
Part of the fall can be traced to a downgrade by Credit Suisse on Wednesday. The bank said valuations in the sector look deeply discounted, but sentiment indicators remain negative. Credit Suisse cut its price target to 180p from 230p.
Despite this downgrade, I’m still pretty positive on the investment manager. Recent performance has been okay, too. Adjusted operating profit also increased to £323m from £219m in FY 2021. Fee-based revenue also increased to £1,515m from £1,425m the year before.
However, the possibilities of a broad downturn in the market and the negative economic forecasts don’t look great for Abrdn. A poor-performing market is lightly to translate into less fee-based revenue and a lower value of assets under management.
I already own Abrdn shares and would buy more at the current price.
