Investing in dividend stocks: 5 shares with BIG yields to buy!

I think investing in stocks is a great idea following recent market volatility. I can pick up some of the top income shares here at dirt-cheap prices.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A retired couple review their investing portfolio

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m thinking about investing in the best dividend stocks. Here are five top UK income shares (in no particular order) on my shopping list right now.

Centamin

Buying gold stocks remains a good idea in my book as prices rocket and economists raise their inflation forecasts.

Should you invest £1,000 in Carlsberg Britvic right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Carlsberg Britvic made the list?

See the 6 stocks

This week, Bank of England (BoE) policymaker Michael Saunders was the latest to warn of the strain. He said: “Inflation pressures would probably be greater and more persistent” than the BoE expects, if further rate rises are not forthcoming.

This comes just days after the BoE said consumer price inflation would hit 10% in 2022.

The big question is if the BoE (like other central banks) will be able to hike rates as aggressively in the months to come as global growth grinds to a halt. I’m not so sure they will.

As I said, buying gold mining stocks could be a good idea amid this high prospect of low growth and high inflation (or ‘stagflation’). And Egypt-focussed Centamin (LSE: CEY) is one on my radar, thanks to its 5.3% dividend yield.

I must remember though, that resurgent safe-haven buying of the US dollar could harm Centamin’s profits. A rising greenback essentially makes it more expensive to buy gold, hitting metal demand from investors.

Glenveagh Properties

Created with Highcharts 11.4.3Glenveagh Properties Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Ireland’s shortage of new housing is vast. Even as interest rates rise, homes demand continues to outpace supply, supporting strong trading for the country’s homebuilders.

Glenveagh Properties (LSE: GLV) is a case in point. In late April’s trading update, the business said it continues to witness “strong demand” for its homes. Revenues rose 105% at Glenveagh back in 2021, thanks to higher completions (up 64%) and climbing property prices.

Pleasingly, Glenveagh’s boosting production to make the most of these fertile trading conditions too. It is on track to deliver 1,400 suburban homes in 2022, up from the 1,150 completions it sealed last year.

However, I am concerned about the impact of rising raw material and labour cost on Glenveagh’s bottom line. But as of today, the business continues to bat back against these pressures. It said last month that “the underlying strength of the market and [our] attractive product offering” means house price inflation continues to outpace cost rises.

Today, Glenveagh carries a mighty 6.5% dividend yield. I expect dividends here to impress long beyond 2022 as well.

Banco Santander

Created with Highcharts 11.4.3Banco Santander PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Investing in economically-sensitive shares like banks is risky business today as global growth cools.

However, some financial industry stocks are so cheap that I think they represent attractive value. Banco Santander (LSE: BNC) is one such stock that has caught my attention with its excellent all-round value.

For 2022, Santander trades on a forward price-to-earnings (P/E) ratio of around 5.1 times. The banking giant also carries a mighty 6.9% dividend yield.

As a long-term investor, Santander has plenty of appeal for me. This is because the company has significant exposure to Latin America. And it’s stepping up investment there to capitalise on soaring demand for financial products.

In December, it announced plans to spend $6bn on digital transformation there between 2022 and 2024. It said the investment would “expand operations and further improve customer service” in the region.

Rising personal incomes are supercharging demand for loans, bank accounts and similar services. Yet product penetration here remains low, giving Santander colossal sales opportunities. Researchers at McKinsey & Company have said they expect Latin America “to remain the growth leader in banking” and for banking penetration rates to keep climbing.

Antofagasta

Created with Highcharts 11.4.3Antofagasta Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

FTSE 100 mining stock Antofagasta (LSE: ANTO) is another stock I’d buy for its big dividends today. The yield here for 2022 sits at a tasty 5.5%.

Unlike Centamin — whose share price could rise strongly in the near term alongside gold prices — Antofagasta is in danger of slipping as stagflation sets in. Copper is an economically-sensitive commodity and prices could slip sharply, pulling Antofagasta’s profits down in the process.

Particularly concerning are signs of economic strain in China. Fresh Covid-19 lockdowns are hitting the country hard and latest data showed exports hit two-year lows. Worringly for Antofagasta, China accounts for half of all copper demand.

However, I’m someone who invests in stocks based on their long-term outlook. And I think Antofagasta is looking good as the green revolution clicks through the gears.

Soaring demand for electric vehicles (and associated infrastructure) and renewable energy technology look set to supercharge copper consumption this decade. Antofagasta can also expect demand for its metal to light up as global construction rates soar and sales of consumer electronics boom.

Goldman Sachs thinks copper demand will soar 600% between now and 2030.

Royal Mail

Royal Mail’s (LSE: RMG) share price has fallen heavily during the course of 2022. This has pushed the dividend yield up to a robust 7%.

I think this makes the FTSE 100 firm a screaming buy. That’s even though there are risks facing Royal Mail in the near term and beyond. E-commerce sales have fallen sharply from Covid-19 levels, hitting parcels traffic at the courier. Conditions could remain tough too as the cost of living crisis hits consumer spending.

There’s also the problem of high restructuring costs as Royal Mail adjusts to the digital shopping era. The threat of industrial action is also never far away.

But it’s my opinion that Royal Mail still remains a top buy today. I think traders and investors have been quite short-sighted in selling the stock so heavily. E-commerce in the UK is set for strong and sustained growth following this post-pandemic adjustment.

Analysts at Worldpay think the British e-commerce market will grow 26% between 2021 and 2025 to $260bn. Demand for Royal Mail’s services should rebound strongly, in my opinion.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Close up of manual worker's equipment at construction site without people.
Investing Articles

A success story: this small-cap UK stock is up 126%… but can it go further?

There haven’t been that many small-cap UK stock success stories over the past few years, but this one is doing…

Read more »

Close-up as a woman counts out modern British banknotes.
Investing Articles

Here’s how Tesco shares stack up against my 5-point passive income checks

Tesco shares have provided generations with some solid income over the years. But nothing should ever be assumed in this…

Read more »

US Tariffs street sign
Investing Articles

2 ‘tariff-resistant’ UK shares to consider buying

As the Court of International Trade creates the latest round of tariff uncertainty in the US, Stephen Wright is looking…

Read more »

Close-up of a woman holding modern polymer ten, twenty and fifty pound notes.
Investing Articles

Could buying £5k of Tesla stock help someone earn a second income?

Our writer discusses ways an investor could target a three-figure annual second income with a spare £5k by buying shares.…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is this former darling FTSE 250 trust set for a massive comeback?

This FTSE 250 investment trust spanked the market for years, but has fallen on tougher times in recent times. Should…

Read more »

Illustration of flames over a black background
Investing Articles

This former penny stock’s on fire – time for me to double down?

It's not often that Harvey Jones takes a punt on a penny stock. Maybe he should do it more often,…

Read more »

Jumbo jet preparing to take off on a runway at sunset
Investing Articles

Is it time for investors to consider easyJet after a dip in its share price on mixed H1 2025 results?

EasyJet’s share price has dipped 5% following its recent results, so could this be a good time to consider the…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Here’s why Nvidia stock’s up 30% over 1 month!

Dr James Fox explores Nvidia stock’s resurgence over the past month after it announced another strong set of results, pushing…

Read more »