With inflation now at an eye-watering 9.4%, dividend stocks are looking more attractive by the day as a way of protecting my wealth. With this in mind, here are three FTSE income stocks I’d feel comfortable buying before they report in August.
Legal & General
Top-tier insurer and investment manager Legal & General (LSE: LGEN) remains a great option for income, in my opinion. Barring the frankly dodgy year that was 2020, the FTSE 100 company has a great history of regularly increasing the amount of cash it returns to its owners. And I can’t see that changing when it reports half-year numbers on 9 August.
Earlier this month, CEO Sir Nigel Wilson said the company’s year-to-date performance had been “in line with expectations“. He went on to add that Legal’s exposure to inflation was “minimal“. That suggests to me that the huge 7.6% dividend yield is safe for now.
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Naturally, L&G can do all the right things and still see its share price dragged down by wider macro concerns. So there’s most definitely still risk here. However, an ageing UK population needing to save for retirement should be a huge tailwind going forward.
With a price-to-earnings (P/E) ratio of eight, the business looks very well priced to me.
Taylor Wimpey
At face value, housebuilders continue to look like a great source of dividends for investors. The £4bn-cap Taylor Wimpey (LSE: TW) is just one example. As things stand, analysts have the business yielding a monster 8%.
Like Legal & General, this income stock isn’t expensive to acquire either. I can pick up a slice of the company for just six times forecast earnings.
So what’s the catch? Well, there’s always the potential for the housing market to temporarily cool as a result of a (nailed-on?) recession impacting buyer affordability. This could feasibly disrupt Taylor Wimpey’s earnings and, consequently, its ability to pay out cash to its investors.
Even so, I can’t help but think a lot of this is factored in. Taylor Wimpey shares have fallen almost a third in value already in 2022.
So long as I spread my money around other income stocks, I’d be happy buying before the end of this month.
Plus 500
For that extra bit of diversification just mentioned, online trading platform Plus 500 (LSE: PLUS) also appeals.
In sharp contrast to Taylor Wimpey, Plus’s share price has been in good form recently. I doubt few investors will complain about a 16% rise in the company’s value, considering the carnage seen elsewhere.
Despite this positive momentum, the shares are still available for seven times earnings. That’s an appealing price relative to the UK market as a whole. Then again, it’s pretty average for companies in this line of work. One reason for this is that trading platforms are subject to ongoing scrutiny by regulators and sudden changes in legislation can hit earnings hard.
Still, a near-5% dividend yield, as I type, should be covered almost three times by expected profit. And while a return to the crazy days of lockdown-fuelled trading looks unlikely, cashed-up Plus 500 stands to benefit from more traders taking positions as the hope of an economic recovery gathers pace.
Half-year numbers are due on 15 August.
