Inflation is soaring and returns on traditional savings accounts remains dire. But I’m not getting depressed by this double whammy. By buying high-yielding dividend stocks I still have an opportunity to make a positive return on my hard-earned cash.
Here are what I consider to be three of the best dividend stocks to buy right now. Each carries a dividend yield that tops the current rate of inflation in the UK (5.4%). I’d happily spend £500 on each of them this February.
ContourGlobal (7.6% dividend yield)
I think ContourGlobal could be one of the best dividend stocks to buy as rocketing inflation endangers the economic recovery. This is because the electricity the FTSE 250 stock produces from its power stations remains broadly unchanged, regardless of broader conditions.
My main concern with buying ContourGlobal is the prospect of project delays that could hit profits and, consequently, dividends. But my fears are soothed by the company’s strong track record on this front. I think ContourGlobal could prove to be a great long-term buy. Certainly as global energy demand steadily rises, driving the need for new power plants, and in particular low-carbon power. ContourGlobal has put renewable energy front and centre of its growth strategy.
Persimmon (9.9% dividend yield)
Housebuilders like Persimmon remain highly-attractive shares, in my book. Recent data from Nationwide showed house prices in the UK soared at their fastest rate for 17 years in January amid buoyant homebuyer demand. With the government failing to get to grips with the country’s homes shortage, it looks like property prices will remain strong for some years to come too.
In this landscape I expect profits — and consequently dividends — at FTSE 100-quoted Persimmon to continue marching northwards. I am aware, though that construction and labour costs pose a danger to future shareholder returns if they keep rising at current rates.
Polymetal International (10.7% dividend yield)
Gold prices struck two-month peaks above $1,840 per ounce in January as inflation-related fears rocketed market confidence. They’ve fallen back since then amid fears of severe central bank rate hikes. But as inflation continues to soar past economist forecasts — and patchy economic data in parts of the globe casts a doubt over aggressive interest rate rises in 2022 — I think having exposure to the precious metal remains a good idea.
Polymetal International is one FTSE 100 share which I’m considering buying today. The revenues the mining stock make would naturally rise if gold prices leapt again. But soaring inflation isn’t the only reason why bullion prices could soar in the near future. A full-scale conflict in Ukraine, more trouble for China’s real estate sector, and bad news concerning the pandemic could all lift gold prices again.
I think Polymetal could prove a great addition, even though unexpected production problems could have a big impact on costs and sales. In the current economic and political climate, I think it could be one of the best dividend stocks for me to buy.
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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.
