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Beating inflation is a solid investment goal for 2022, with costs having risen 5.4% in the year to December. But I wouldn’t let a one-off economic shock derail a good long-term investment strategy. And my FTSE 100 dividend-based approach aims to beat rising prices anyway. So current conditions help me focus on that.

What will I add to my ISA in 2022? I want decent and well-covered dividends, coupled with modest valuations to help me avoid anything looking overheated. These are the stocks I’m looking at.

It’s hard to ignore British American Tobacco. Estimates suggest a dividend yield of more than 6% in 2022. British American has been progressive, upping the 2021 dividend by 2.5%. With the attractive yield, it looks like a good hedge against inflation to me.

If the bottom should fall out of the smoking market and vaping volumes not compensate sufficiently, that might send BATS shares down. But I see no real sign of that happening worldwide. Forecast cover is around 1.5 times, which I think is good enough. And a P/E of under 10 suggests sufficient safety to me. If I didn’t have ethical qualms, I’d have snapped up BATS shares years ago.

Natural resources vs inflation

Shell is also among the FTSE 100 6% forecasts. I’ve often considered Shell and BP, and I do see them as possible inflation busters in 2022. But with no real idea what a future carbon-neutral valuation might look like, I’m keeping away.

Thinking about natural resources, I’m once again drawn to mining giant Rio Tinto. Shareholders have enjoyed better than 6% yields for the past three years, and analysts have something similar on the cards for 2022. The downside is that the commodities business tends to be cyclical, and Rio has already enjoyed several years of rising earnings. So an economic squeeze might hurt.

Dividend cover should be a little less than 1.5 times, which is perhaps a bit thin. But a trailing P/E of 9.5 might be enough valuation safety for me. I might finally buy Rio Tinto in 2022. Alternatively, Glencore offers a smaller predicted yield, but stronger cover by earnings.

Chronic shortage

I also have my eye on Taylor Wimpey to add to my holding in Persimmon. The yield has been depressed for a couple of years. But a healthy 2021 interim suggested better dividends are on the way back. The share price dipped in January, and we’re now looking at a 6% fall over the past 12 months. Full-year results won’t be with us until 3 March. But the company’s full-year trading update spoke of a “significant improvement in operating margin“.

Economic risks do threaten the whole sector in 2022, and there’s a real risk of a weak year. But I can see our chronic housing shortage giving shareholders a helping hand to beat long-term inflation.

FTSE 100 holdings

I’m going to finish with an investment trust that’s in the FTSE 250. But it holds a lot of FTSE 100 stocks, so I reckon it counts. It’s City of London Investment Trust, with a 4.9% dividend yield in 2021. It’s raised its dividend every year for 55 years in a row.

The 2021 uplift was only 0.5%, mind. And that highlights a dependency on the UK economy which might squeeze 2022 gains. But I see the yield itself as an attractive inflation buffer. And there are plenty more investment companies with lengthy dividend gains to choose from.

Alan Oscroft owns City of London Inv Trust and Persimmon. The Motley Fool UK has recommended British American Tobacco. 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.

Warren Buffett has a history of investing in high-quality growth stocks. Whenever he evaluates an investment, he is looking for a company with a standout competitive advantage and a long runway for growth ahead. NIO (NYSE: NIO) shares exhibit these qualities. 

Warren Buffett qualities 

I do not think it is too outlandish to suggest Buffett could acquire a stake in the Chinese electric vehicle (EV) manufacturer. Indeed, he already owns a position in BYD, another Chinese enterprise that manufactures EVs. The company’s badge is emblazoned on double-decker buses in London. 

When Buffett bought his position in the stock, he said he was impressed by the company’s innovative nature. NIO is also trying to innovate in the EV space. The corporation has pioneered an interchangeable battery pack system. This allows users to swap out drained batteries for new ones at specific locations. Rather than waiting for batteries to charge, consumers can carry on with their journey. 

Buffett was also attracted to BYD for the corporation’s growth prospects. I think NIO’s growth potential is similar, if not greater, than that of its peer. 

The company is currently producing around 300,000 units per year. Meanwhile, the Chinese EV market may grow at an annual rate of 31% until 2026. It was worth $98bn in 2019. I see no reason why the enterprise cannot grow at a similar, or faster, rate than the rest of the market in the years ahead as production capacity grows, along with consumer awareness of the brand. 

These are the reasons why I think Buffett might buy the shares. However, there is also a selection of reasons why he might avoid the stock. 

The risks of NIO shares

The company’s public listing depends on the Variable Interest Entity (VIE) structure, a grey legal area. It is neither legal or illegal under Chinese law. This adds an element of risk into the equation with NIO shares. 

Further, the global EV market is highly competitive and is only becoming more so as the sector expands. Therefore, while it is clear that the firm does have potential, it could face a significant challenge to outmanoeuvre the competition in the years ahead.

Buffett may also hesitate to initiate a position in a group that is a direct competitor of an existing holding. He usually picks his favourite company in a sector and sticks with it rather than spreading assets across different businesses. This is not guaranteed, but it is something to consider. 

All in all, while I think NIO shares do have potential, I reckon they might be a bit too adventurous for Buffett. They are also a bit too adventurous for my portfolio. Considering the risks outlined above, I would rather own a more established company with a more prominent global footprint and established production base.

Rupert Hargreaves 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.

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When markets are wobbly, receiving regular dividends from my stocks makes it much easier for me to ignore any short-term share price slumps. This is one reason why my stock market portfolio is designed to deliver a reliable passive income.

The three FTSE 100 stocks I’m going to look at today offer an average dividend yield of 6.7%. That’s well above the lead index average of around 4%. Dividend payouts are never guaranteed, of course, but my research suggests these payouts should be pretty safe in 2022.

A ‘sleeper’ 7% dividend yield

Life insurer Phoenix Group (LSE: PHNX) isn’t a household name. Much of the company’s business comes from buying books of insurance policies from other companies, and running them to completion.

However, Phoenix is also expanding into the retail market, trading under the Standard Life brand. I think this expansion is needed to maintain growth, but I also think it’s the main risk facing shareholders at the moment. Phoenix is expanding away from its specialist niche into a tough market where it must compete with bigger rivals.

The future is always uncertain in investing and Phoenix’s cash-generative business model may not work this well forever. But I’ve followed this company for a number of years and have not been disappointed yet.

City analysts expect Phoenix’s dividend to be covered 1.6 times by earnings in 2022. I think that’s a decent margin of safety. With the stock yielding 7.3% at current levels, I view this as a classic passive income share for my portfolio.

A ‘back-to-the-office’ buy?

As many workers start to head back to the office, I think we’ll see quality office property start to recover in value. I rate FTSE 100 REIT Landsec (LSE: LAND) as one of the top commercial property landlords, thanks to its portfolio of modern, well-located central London offices. Landsec’s portfolio also includes some of the UK’s biggest shopping centres, including Bluewater in Kent.

There’s still some uncertainty about long-term demand for both office and retail space. Both could decline over time, but I think the quality and location of Landsec’s offer means it should perform better than some smaller rivals.

Landsec shares currently trade at a 20% discount to their book value of 1,012p and offer a 4.5% dividend yield. I think this could be an attractive entry point. I’d be happy to buy the shares for my portfolio today.

This sin stock could provide an 8% passive income

My final pick is tobacco group Imperial Brands (LSE: IMB). Naturally this business won’t win any awards for political correctness. But the reality is that it’s very profitable and generates huge amounts of surplus cash each year.

The market doesn’t like tobacco stocks and there are also concerns about the long-term outlook. Global cigarette sales are falling yearly, so Imperial and its rivals must keep fighting for a bigger slice of a shrinking pie.

This situation has left Imperial Brands trading on just seven times forecast earnings, with a well-covered dividend yield of 8.2%. I think this is probably too cheap. I’ve certainly not found many other opportunities recently to lock in an 8% passive income.

I already hold Imperial shares in my portfolio. If I didn’t, they’d be on my list to buy today.

Roland Head owns Imperial Brands. The Motley Fool UK has recommended Imperial Brands and Landsec. 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.

The Royal Mail (LSE: RMG) share price has been a standout performer over the past couple of years. From a low of 124p printed at the beginning of April 2020, the stock pushed to a high of 600p at the beginning of June 2021, a return of 380%.

Unfortunately, over the past year, this performance has deteriorated. Over the past 12 months, the stock has returned just 7%. Year-to-date, the performance is even worse. Even though the year is just a few weeks old, the stock has declined 15%. 

It seems there are a couple of reasons why the shares have slumped. However, I think this could be an opportunity for long-term investors as the stock seems to me to be undervalued at current levels. 

Royal Mail share price headwinds 

Whenever I analyse a stock that has been underperforming, I always try to understand the reasons behind the decline before moving on to the valuation process. 

Royal Mail is currently facing multiple headwinds. The most pressing is the disruption from the pandemic. Around 15,000 (10%) of the group’s staff were off sick or isolating in early January. That would be a considerable challenge for any company, let alone one that delivers parcels and letters daily to customers. 

As a result of this disruption, costs have jumped. Between April and December of last year, the firm has had to fork out £340m on overtime and temporary staffing solutions. And even this spending has not prevented significant delivery delays. 

The group is also facing growing competition from rivals. This has always been a change, but it seems as if the competition is intensifying. To try and deal with this challenge, the group recently outlined plans to cut 700 more management jobs. These cuts will incur a one-off charge of £70m but can deliver annualised savings of £40m. 

Company valuation

Considering these headwinds, I can see why investors have been taking profits. Still, I think it is a mistake to concentrate on the company’s challenges without analysing the opportunities. 

As demand for delivery services booms, thanks to the growing e-commerce market, Royal Mail’s profits are expected to continue to grow for the next two years. Based on City projections, shares in the corporation are trading at a 2023 price-to-earnings (P/E) multiple of 7.2.

That looks relatively cheap compared to this company’s growth potential. I think it also undervalues the business’s competitive advantages. Royal Mail is one of the most recognisable brands in the country, and its countrywide delivery network is virtually unrivalled. 

I think these advantages deserve a premium evaluation. How much of a premium? Well, European peer Deutsche Post shares are selling at a forward P/E of 12.4. I do not think it is too unrealistic to say that the Royal Mail share price could command a similar multiple.

On this basis, I believe the stock could be undervalued by as much as 72%. Although this is the most optimistic scenario, and there is no guarantee the stock will rise 72% from current levels, I would buy the shares for my portfolio today, considering this valuation discount. A potential dividend yield of more than 5% also looks attractive. 

Rupert Hargreaves 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.

I have been looking for FTSE 100 dividend shares to buy for my portfolio. I think the UK’s leading blue-chip index is stuffed full of high-quality income shares. Some of these are currently selling at discounted valuations considering their potential.  

Here are my two favourite income stocks I would acquire for my portfolio right now. 

Dividend shares to buy for growth

The first company on my list is wealth management group Schroders (LSE: SDRC). This is one of the City’s most storied and established wealth managers. And now the organisation is trying to take on the world. 

The FTSE 100 corporation is trying to expand across international markets with a combination of acquisitions and organic growth. The company’s well-known brand and its strong balance sheet are both helping to support this strategy. 

Assets under management have expanded from around £300bn in 2016 to more than £717bn today. I think this growth is the strongest indicator of the company’s expansion potential. 

Unfortunately, there is no guarantee this group will continue. Competition for client assets is incredibly competitive in the wealth management sector. Additional regulations could also hit the company’s profit margins. And as assets managed by the enterprise have expanded, so have management fees.

But overall earnings per share have risen from 179p in 2016 to 226p today. And as income has expanded, so has the firm’s dividend. The per share payout has grown at around 7% per annum since 2016. At the time of writing, the stock supports a dividend yield of 5.5%. 

As the business expands, I think the payout will grow further. Considering this potential, I would buy the FTSE 100 company for my portfolio. 

FTSE 100 champion

The second blue-chip dividend stock I would buy is Segro (LSE: SGRO). Some investors might avoid this company because, at first glance, it does not look as if it is a dividend champion. Indeed, at the time of writing, the shares support a dividend yield of 1.9%. 

However, what I am interested in is the firm’s growth potential. Segro owns and develops warehouse facilities, which retailers and fulfilment companies lease. The market for these assets is currently exploding as online retail grabs an ever-larger share of the overall retail market. 

As one of the largest operators in the sector in the UK, the enterprise has the scale and resources to capitalise on this market growth. But it is not the only business chasing this market. Money is flooding into constructing warehouse facilities across the country. If this leads to a situation where the market is oversupplied, Segro’s outlook could begin to deteriorate. This is the most considerable risk to the company’s growth. 

I would buy the FTSE 100 stock for my portfolio today despite this risk. As its portfolio has grown, management has increased the dividend rapidly. It has risen from 13p in 2016 to 20p today. Although past performance should never be used as a guide to future potential, considering the company’s growth potential, I believe it will remain a dividend growth champion. 

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Schroders (Non-Voting). 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.

I’m searching for the best FTSE 100 stocks to buy today. Could these big-cap stocks be too good for me to miss?

Copper colossus

Buying commodities stocks seems to offer increasing near-term risk as China’s economy cools. In its latest forecasts, the IMF slashed its GDP growth forecasts for the raw-materials-hungry economy to 4.8% from 5.6% previously.  Things could get much grimmer too if the Asian country’s real estate sector collapses.

But as a long-term investor, I’m seriously considering snapping up Antofagasta (LSE: ANTO) shares. As one of the world’s biggest copper producers it’s well-placed to exploit soaring demand for the red metal over the next decade. In a report last summer Australia’s Department of Industry, Science, Energy and Resources predicted that global copper demand will soar 31% by 2030.

Soaring sales of copper-loaded consumer electronics will push commodity demand off the scale. So will growing demand for electric vehicles and huge renewable energy investment as concerns over climate change intensify. Antofagasta can also look towards huge infrastructure investment across the world to boost demand for its product as well.

Gold gains

If the outlook for Chinese (and indeed global) growth starts to look too shaky though, I might go shopping for Polymetal International (LSE: POLY) instead. As a major gold producer it’ll be well-placed to exploit soaring demand for safe-haven assets if economic conditions steadily worsen. I’m already expecting this FTSE 100 commodities producer to thrive as rocketing inflation boosts investor interest in hard currency gold.

The prices Polymetal gets for its product might also rise if geopolitical tensions also continue to rise. Indeed, gold just hit two-month highs, near $1,850 per ounce, as tensions between Russia and the West over Ukraine escalated.

I think there’s plenty of scope for further gold price gains that could push Polymetal’s share price higher. Though bear in mind that there are many factors that dictate bullion values. Sharper-than-expected central bank rate hikes and a strong US dollar are a couple of phenomena that could in fact pull gold prices lower.

Turbulence ahead?

Market appetite for some travel stocks like International Consolidated Airlines (LSE: IAG) has picked up in recent sessions. This is because the British government’s decision to scrap Covid-19 tests for incoming travellers seems to have boosted holiday bookings already. Package holiday operator Jet2 saw bookings leap 30% week-on-week when these rule changes were announced.

It stands to reason then that IAG might also see ticket sales across British Airways, Iberia and other brands soar in the weeks ahead. However, it’s too early to claim the cloud of Covid-19 has lifted for such stocks. Infection rates continue to climb steeply in parts of Europe. Meanwhile, lawmakers in China have reintroduced some restrictions due to new coronavirus cases there.

The threat of wider travel restrictions remains a severe one for companies like IAG then. The prospect is particularly dangerous for IAG too given the enormous amount of debt it carries (€12.4bn as of September). I’d rather buy other less risky FTSE 100 shares today.

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.

A stock market crash is generally thought of as a double-digit drop in a share index within a short amount of time, like a couple of days. Share prices have plummeted recently and unless things improve soon, a 2022 stock market crash could be imminent. With this in mind, I’m again revisiting gold as a hedge against any potential sharp declines.

Gold as downside protection

Gold can provide protection against a sudden market downturn. The price of this precious metal is largely seen as negatively correlated with stock prices. Often when the market collapses, investors flock to the asset as a safe haven.

It’s by no means a perfect investment as it does not generate any dividends, unlike high-yielding shares. This means investors are solely dependent on price appreciation for return. However, if the stock market crashes, I hope my gold holdings might increase in price. Even if the rest of my portfolio loses value.

Options for investing

There are several options for investing in this asset. For example, it can be bought from the Royal Mint or other precious metal brokers, but physical storage can be costly.

In my opinion, one of the easiest ways is through a gold exchange traded commodity(ETC). This is a fund tracking the spot price of gold, but that trades like a stock and can be bought and sold through most online brokers.

There are lots of gold ETCs available, but the one I’m holding is iShares Physical Gold ETC (LSE:SGLN), which tracks the gold spot price. It’s been going since 2011, is large in size (over £9bn) and has a low ongoing charge of 0.15%.

Outlook

In 2021, while the Footsie had its best performance in five years, this fund declined by around 4%. Being completely dependent on price rises for return means that would have made the ETC a poor investment last year.

That said, year-to-date it’s up almost 2% and I want to dig into this a bit more. At the start of the year as markets rose, the fund dipped. However, towards the middle of the month as stocks started their decline, iShares Physical Gold ETC started to rally.

At the time of writing, the flagship US index the S&P 500 is down almost 10% year-to-date. The tech-heavy Nasdaq is firmly in correction territory with a reduction of over 13% during the course of the year. Closer to home, the FTSE 100 has completely changed direction from a strong start to the year, to almost a 3% decline. With tensions between Russia and Ukraine mounting and the Federal Reserve meeting this week to announce plans for US rate rises, a sudden drop in share prices could be imminent.

Though nothing in investing is certain, I hope that iShares Physical Gold ETC will act as a kind of insurance policy against a 2022 stock market crash. For this reason, I remain comfortable allocating a small portion of my holdings to it.

Niki Jerath owns shares in iShares Physical Gold ETC. 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.