I think now’s a great time to go shopping for dividend stocks. Even if the economic recovery hits the skids there are still many UK shares I expect to pay out huge dividends over the next 12 months.
Here are three top-quality income stocks I’m considering buying for my portfolio.
Playing the house-price boom
I reckon housing stocks will remain rock-solid shares to own as Britain’s chronic homes shortage rolls on. Okay, interest rates are likely to rise multiple times in 2022 to curb runaway inflation. But I can’t see the Bank of England base rate rising above 1% any time soon. So I expect homebuyer activity to remain strong.
Should you invest £1,000 in Direct Line right now?
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This is why I’d buy Persimmon (LSE: PSN) for my shares portfolio, even as extreme building product shortages threaten to drive up costs. Estate agent Savills recently estimated that average property prices will rise 3.5% year-on-year in 2022. I believe home values will keep rising long beyond next year too, as it’ll take some years for the country to build its way out of the supply crunch. Persimmon carries an eye-popping 8.9% dividend yield for next year.
Another generous dividend stock I’d buy
I’d also buy ContourGlobal (LSE: GLO) given the uncertain outlook for the economy. 2022 could be a tough year in the story of the global recovery as inflation soars, supply chain problems persist, and the public health emergency carries on. But this UK share — which builds and operates power stations — should remain rock-solid given the essential nature of its services.
I don’t just think that ContourGlobal’s a great buy because of its excellent defensive qualities though. I reckon its commitment to focus investment on hydro, wind and solar energy makes it a great renewable energy stock to add to my portfolio.
This is likely to reap huge rewards as lawmakers across the globe demand more and more energy from green sources. I’d buy ContourGlobal despite the ever-present threat of power plant development issues that could hit profits. This UK dividend share sports a giant 7.7% dividend yield for 2022.
8%+ dividend yields!
I believe Direct Line Insurance Group (LSE: DLG) might also be a wise stock for me to buy ahead of what could be a difficult 2022 for the British economy. History shows us that spending on general insurance products tends to remain stable, even when household budgets come under the cosh. Paying out on car insurance products tends to be even stronger too, given that driving with cover is a legal requirement.
This bodes particularly well for Direct Line as it sources around 50% of premiums from its motor arm. The remainder is sourced broadly evenly across its home, rescue and other product lines. Even though it faces intense competition, Direct Line’s excellent brand power helps to greatly offset this.
I think the insurer’s 8.3% dividend yield also makes it a particularly great income stock to buy for next year.
