Stocks providing me with passive income form the core part of my portfolio. These are companies that provide shareholders with dividends each year — although it worth remembering that dividends are by no means guaranteed.
And today, I’m looking at two passive income stocks that are currently trading at discounts after the recent stock market correction. While my portfolio has decreased in value since Liz Truss came into office — more than $500bn have been wiped off UK stocks — I also see this as an opportunity to buy more of the stocks I believe in.
So, here are two passive income stocks I’m buying more of after the stock market correction.
Should you invest £1,000 in Aviva right now?
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Hargreaves Lansdown
Hargreaves Lansdown (LSE:HL) shares have taken a battering recently, and there are some concerns it could get worse as clients prioritise paying bill rather than investing. The company announces interim numbers on 19 October.
However, I’m optimistic that people will want to have their cash working hard amid rampant inflation. In the first half of the year, the firm demonstrated impressive capacity to continue growing despite a tough operating environment.
When other financial services companies saw net outflows of customers and cash, Hargreaves Lansdown didn’t. The firm recorded £5.5bn of net new business, alongside a 92,000 increase in active clients and revenue of £583m during H1.
The pace of growth has slowed since the pandemic, but that’s understandable as we’re not all locked in our homes for days on end. As many as 1 in 10 people started investing during the pandemic.
Looking at the long run, for me, Hargreaves stands to benefit as more and more investors look to take charge of their investments. And this is why I’m buying more shares as the stock falls to around 850p. The firm is down 38% over the past year and now has a tasty 4.8% dividend yield.
Aviva
Aviva (LSE:AV) shares are down 12% over the past week — confidence in the new government’s mini-budget clearly isn’t high. But the stock is fairly flat, up 2%, over the course of the past year.
In August, Aviva said it had witnessed “continuing momentum” in the six months to 30 June. The firm reported growth in both operating profits and own funds generation during the first half.
And there is cause for future positivity. RBC recently lifted its price target on Aviva to 510p from 420p, citing strong capital generation and a positive reinvestment strategy.
The business is also much leaner than it used to be just a few years ago. Aviva, under Amanda Blanc, made £7.5bn by selling off eight non-core businesses, including those in France and Italy. The group now focuses on core markets in the UK — where it serves some 18 million customers — Ireland, and Canada.
I do have some concerns about the impact of the mini-budget on the UK economy and therefore insurers, but Blanc was among those calling for reform of the financial sector — after all, she knows her business better than me.
Aviva has always had an attractive dividend yield, but right now it stands at 7.8%. And that’s very attractive to me.
