As a UK-based investor, I spend a lot of time searching for UK shares to buy. But my other favoured market is the US. There’s no doubt that the market offers me huge opportunities to invest in exciting growth shares. It has a dominant technology sector in particular, with companies such as Apple, Microsoft and Amazon. But in my search for income and cheap stocks recently, it’s been the UK market that has stood out.

So, is it a great time for me to buy UK shares? Let’s take a closer look.

Sky-high dividend yields

The best place to look for dividend stocks is the FTSE 100, in my view. It contains many companies that pay considerable dividends. Some even offer double-digit yields as I write today.

For example, Rio Tinto has a dividend yield of almost 14%. It’s a mining company with considerable exposure to iron ore. The price of this commodity rocketed last year, which meant Rio Tinto has been able to pay super-high dividends. However, it’s expected to fall in 2022, but the forecast is still for a yield of 8.3%. Dividends can always fluctuate, or worse, get cut if businesses underperform. Nevertheless, I view the prospects for Rio Tinto favourably due to the essential minerals it produces for electrification and decarbonisation efforts.

I find it useful to compare the FTSE 100 dividend yield to other markets too. In this regard, the FTSE 100 has achieved a 12-month yield of 3.8%. By comparison, the S&P 500, the US equivalent large-cap index, has a 12-month yield of 1.3%.

Therefore, even if I bought the iShares Core FTSE 100 ETF instead of single stocks (which is more risky), I could still pick up a respectable dividend yield. 

Cheap UK shares

Focusing on the FTSE 100 again, and the forward price-to-earnings (P/E) of this index is a lowly 12. For additional reference, it hasn’t been this cheap since way back in 2012. The S&P 500 is rated on a much higher forward P/E of 21.

There are some cheap stocks in the FTSE 100 as well. Lloyds is currently valued on a P/E of 6.5, and may stand to benefit if interest rates rise. ITV also looks cheap on a P/E of 7.7 if it’s successful in its pivot towards on-demand viewing.

I do have to take into account growth estimates for UK shares though. As it stands, City analysts are forecasting earnings growth for the FTSE 100 of only 4% in 2022. This isn’t too exciting if I’m looking for growth shares. I still think I can find growth stocks if I dig a bit deeper into the FTSE 100 index though. 

Is it a great time to buy UK shares?

As an investor, I always have to look at the risks ahead. By their very nature, I’ll never know for certain what all these risks might be. A good example of this was in February 2020 just before the stock market crashed due to Covid.

However, I see an abundance of opportunities in the UK market today for a long-term investor like myself. I’d snap up some of the cheap, high-dividend-yielding stocks on offer.

Dan Appleby owns shares of Rio Tinto and ITV. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Amazon, Apple, ITV, Lloyds Banking Group, and Microsoft. 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.

It’s a good idea to take a bit more care before taking the plunge buying penny stocks. They can often be frightful stocks to own for those who worry about share price volatility.

A great many low-cost stocks like these can also be considered less financially robust than larger-cap companies. This can significantly limit profits growth and even threaten a firm’s existence if trading conditions suddenly worsen.

However, these characteristics don’t apply to all penny stocks. But as a long-term investor, the prospect of temporary share price choppiness isn’t enough to put me off. Some quick research will allow me to avoid shares with weak balance sheets as well.

Here are three dirt-cheap penny stocks with big dividends I’m considering buying today.

Looking good

Lookers’ profit forecasts in 2022 could take a significant whack if chip shortages continue to damage new car production. But from a long-term perspective, I think the car dealership has a lot going for it. Worsening fears over the climate emergency means sales of electric vehicles (EVs) looks set for strong and sustained growth.

Don’t forget too that the government is set to phase out sales of new petrol and diesel cars in 2030. This could exacerbate interest in EVs towards the end of the decade. Today, Lookers trades on a forward P/E ratio of 7 times and boasts a chunky 4.2% dividend yield.

Topp of the world

Topps Tiles meanwhile deals on a bargain-basement P/E ratio of 10.8 times for this financial year. It carries a 4.8% dividend yield as well. I’d buy it because the British housing market should remain strong and so will wall and flooring product demand from homebuilders. Moreover, I’m tipping sales to keep rising amid a healthy repair, maintenance and improvement (RMI) market.

Topps Tiles’ latest financials showed sales up 1% in the 13 weeks to 1 January. This was despite the blockbuster comparatives a year earlier. Revenues were also up a mammoth 21% from the same 2019 period. I’d buy this penny stock even though runaway inflation could hit consumer confidence hard and, by extension, tile sales.

5.6% dividend yields

Speaking of inflation, I believe grabbing a slice of the gold market’s a good idea as costs soar. I’d do this by buying a UK bullion-producing stock rather than the metal (or a metal-backed financial instrument) as this way I can receive dividends while riding an increasing commodity price. Pan African Resources and its 5.6% dividend yield have caught my attention today.

There’s no guarantee that gold prices will rise, of course. Central bank interest rate hikes and a related rise in the US dollar could put paid to that. But the rate at which global inflation is booming — and importantly well beyond many broker forecasts too — suggests that profits at gold diggers like Pan African Resources could surprise to the upside. This penny stock trades on a forward P/E ratio of 5.5 times 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.

I’m thinking of buying these FTSE 100 stocks today. Here’s why I think they could make me plenty of cash by the end of the decade.

A FTSE 100 stock I plan to keep

It’s possible that Asia-focused stocks like Prudential (LSE: PRU) could take a hit if China’s economy continues to cool sharply. The latest news on this front wasn’t exactly reassuring. Chinese GDP skidded to 4% in the fourth quarter of 2021, versus 4.9% three months earlier. A continuation of this deterioration has the potential to deliver a considerable shockwave across all of its emerging markets.

I own Prudential stock. But as a shareholder, I’m not wringing my hands with concern. As a long-term investor I’m prepared to endure a little near-term turbulence as I think this FTSE 100 share will deliver mighty earnings growth in the years ahead. Prudential has one of the strongest names in the financial services business and I’m expecting it to thrive as personal wealth levels in Asia increase.

Researchers at Mordor Intelligence recently commented that “the Asia-Pacific region holds the key to the future of the insurance industry”. They cite the impact of fast economic growth, rising incomes, and the fact the region houses one-third of the global population, as reasons why demand for such financial services products could leap.

Prudential’s new business profit soared 25% in the first half of 2021, its most recent financial update showed. Low penetration in its life insurance markets — combined with those soaring income levels among its far-flung customers — makes me believe company earnings should rise strongly all the way through to 2030.

Another UK share set for big profits?

The amount we’re all spending on pets has ballooned over the past decade. And by all indications, the amount we fork out on our four-legged friends looks set to continue surging. This is why I’d buy Dechra Pharmaceuticals (LSE: DPH) today. This new FTSE 100 entrant manufactures the drugs that keep animals happy and healthy.

Sales at Dechra rose 10% in the six months to December, latest financials showed, beating City forecasts. The company’s strong performance reflects the rapidly-expanding market in which it operates as well as the effectiveness of its acquisition-based growth strategy.

Last week, Dechra bought the worldwide rights to canine cancer battler Laverdia to keep its programme going too. This follows the six acquisitions it made between July to December.

Drugs development is extremely risky business and problems can be common. This can result in significant lost revenues and a massive upsurge in cost. Still, it’s my opinion that Dechra’s immense sales opportunities more than offset this risk. Analysts at Global Market Insights think the worldwide animal drugs industry will be worth $46bn by 2027. That’s up considerably from the $32.2bn it was worth in 2020.

Dechra has around 5,700 registered products which it sells across the globe. And it’s a number that’s set to keep growing as additional acquisitions come down the pipe.

Royston Wild owns Prudential. The Motley Fool UK has recommended Prudential. 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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The electric vehicle market has become very popular over the past year. Personally, I can feel the growing consensus of people that are open to owning an electric car. Interestingly, in December, more electric cars were sold than diesel cars in Europe. It was the first time this has happened. One popular electric vehicle manufacturer is NIO (NYSE:NIO). So should I buy the stock to capitalize on this growing market?

Good value, but risks around China

NIO and Tesla are the two original electric vehicle manufacturers. Tesla traditionally has owned the US market, with NIO larger in Asia due to its Chinese origins. Both companies are present in Europe. The reason why I’m staying away from Tesla for the moment is because I think the stock is overvalued. I wrote about this in more detail here.

Parking Tesla to one side, what value does NIO stock have? To begin with, the share price is down 45% over the past year. So the conversation here isn’t about whether the share price is overvalued!

The main reasons why NIO stock has fallen over the past year is to do with the rising tensions between the US and China. The US listing of NIO has come under scrutiny as part of a broader crackdown by Chinese regulators. We’ve seen examples of companies actually delisting from the US, such as Didi. Given the power that the Chinese government has, I think a lot of investors are cautious about buying NIO stock due to potential complications further down the line.

Fundamental positives for NIO stock

Movements in NIO stock going forward shouldn’t just be based around political concerns. In the long run, the share price should also reflect the growth of the electric market. To some extent this has already been seen. For example, over a two-year period, NIO stock has gone from just under $5 to over $30 now. The fundamental value can been shown here.

In the latest results, NIO proved that it’s performing well. The Q3 figures highlighted that 24,439 vehicles were delivered. This was an increase of 100.2% versus the same quarter last year. It was also a gain of 11.6% from Q2 2021. 

In a similar way, revenue also jumped by 116.6% year-on-year, with a 16.1% increase from previous quarter. Although the company ultimately delivered a loss for the three months, the growth should enable a breakeven point to come soon.

My overall thoughts

From my point of view, I think NIO stock is one of the best ways to profit from the growth in electric vehicles in years to come. I think that the political tensions have caused the share price to fall to levels that don’t accurately reflect the growth of the business. Of course, it’s a high risk play given the presence of the Chinese government. But when I compare the stock to something like Tesla, I think there’s a much better risk versus return on NIO stock. Therefore I’m considering buying shares now.

Jon Smith has no position in any share mentioned. The Motley Fool UK has recommended Tesla. 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.

One FTSE growth stock on my radar right now is Character Group (LSE:CCT). Should I add the shares to my holdings at current levels?

Toy maker

Character Group is a toy, games, and gift ware designer and developer. Character is responsible for much loved children’s characters such as Peppa Pig, Teletubbies, and Postman Pat to name a few.

As I write, Character shares are trading for 620p, compared to this time last year when shares were trading for 425p. This equates to a 45% return over a 12-month period. More recently, the shares have been on an upward trajectory since October after a small dip in share price. The shares are up over 30% since October at current levels.

A FTSE growth option

Character operates in an inelastic market. General economic conditions tend not to affect the toy and games market. With this quality, and the fact it pays a dividend, it could be seen as an attractive option for my portfolio. I think the shares could rise further as 2022 develops.

Next, Character’s performance and growth has been consistent recently and historically. I do understand past performance is not a guarantee of any future performance but I like to use it as a gauge when determining investment viability. Character released its most recent full-year results for the year ending 31 August 2021 in December. Character confirmed revenue, profit, EBITDA, net cash, and dividends increased compared to 2020 levels. Character’s dividend yield currently stands at just under 3%, which is enticing for a FTSE AIM incumbent. Historic performance shows me prior to 2020, Character was able to grow revenue year on year before the pandemic affected performance slightly. 2021 levels have surpassed pre-pandemic performance, which is encouraging.

Finally, Character’s products are being recognised as some of the best in the market. This was highlighted when two of the company’s toys were recognised in the best toys wish list of the year in September. This is a list compiled by the Toy Retailers Association (TRA) each year.

Risks and verdict

Character is not averse from risks that could derail progress. Firstly, competition in the toy and games market is more intense than ever. The market is growing and children are becoming more savvy therefore firms are looking for the next big toy or game to increase performance and boost financials. Secondly, despite operating in an inelastic market, factors such as supply chain issues and rising costs could still affect Character’s bottom line. Any decline in performance could lead to dividend cancellation, as dividends aren’t guaranteed.

Overall I am bullish towards Character Group shares right now. I believe they could see excellent growth in the year ahead and beyond and I would add shares to my holdings at current levels. Character is an FTSE AIM stock that pays a consistent dividend with an enticing yield and has well respected and recognised products. I think the shares look cheap right now too with a price-to-earnings ratio of just 11.

Jabran Khan 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 find a convenient way for me to invest in the stock market is through a Stocks and Shares ISA. Drip feeding some money into an ISA regularly in 2022 could allow me to build up an investment pot. I would be able to use that to invest in a variety of shares.

If I allocated a spare £100 a month in 2022 to doing that, here is the approach I would take.

Clarify my objectives

First, I would decide exactly what I wanted to achieve. For example, I may want to focus on passive income. £100 a month adds up to £1,200 a year. So if I invested it in shares with an average dividend yield of 5% I could hope to earn around £60 of passive income in a year.

Or I may decide that I wanted to tuck the monthly £100 away and try to grow the value of the ISA over time by targeting share price growth. In that case, I may weight my balance towards growth rather than income shares.

What I decide depends on my own situation and aims. But getting clear about it would help inform my own investment strategy. Whether I opted for growth, income, or a combination of both, I would reduce my risk by diversifying across different companies and business sectors. With £100 a month I could comfortably diversify across four different companies in a year, investing £300 in each.

Choosing the shares

It would also be worthwhile for me to think about whether I wanted to choose shares myself. An alternative would be for me to invest my ISA money in funds whose managers choose which shares to buy. They may do that based on their own criteria, or by mirroring a well-known index like the FTSE 100.

Investing in a fund could help me diversify quickly. But it may also add costs in the form of the fund management fees.

Two income shares I would consider

If I wanted to pick my own shares, for income two of my first choices would be British American Tobacco and Diversified Energy, which yield 6.9% and 10.5%, respectively.

I like British American Tobacco for the strong cash flows from its iconic brands like Lucky Strikes. One risk is the company’s debt pile. Servicing that as interest rates rise could reduce the money available to pay dividends.

Diversified Energy operates over 60,000 natural gas and oil wells. With energy prices currently high I think profits could be substantial, although if prices fall in future that could hurt earnings.

Two growth shares for my Stocks and Shares ISA

For growth, two shares I would buy in a Stocks and Shares ISA would be JD Sports and S4 Capital.

I like the sports retailer because its proven formula of selling famous brands at keen prices is highly profitable. Last week it upgraded profit forecasts for the coming year and I see substantial growth opportunities in overseas markets like the US. Some of those markets have strong competitors, though, which could hurt profitability.

After a recent share price fall I see a buying opportunity for my Stocks and Shares ISA in S4 Capital. The digital ad agency holding group expects to double revenues and profits organically in a three-year period. Acquisitions could add further growth, though rapid growth could also add central costs that may eat into profit margins.

Christopher Ruane owns shares in British American Tobacco, Diversified Energy, JD Sports and S4 Capital. 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.

At the start of each calendar year I am on the lookout for FTSE stocks that could bolster my portfolio in the year ahead and beyond. Focusrite (LSE:TUNE) is one stock I believe could double my money in 2022. Here’s why.

Sweet music

Focusrite is a designer and manufacturer of audio equipment and software. More specifically, it professes to be one of the best in the world at making audio interfaces. An audio interface is key to ensuring music is recorded well ready for distribution. Prior to this, Focusrite used to also make music consoles before technology evolved.

As I write, Focusrite shares are trading for 1,460p per share. At this time last year, shares were trading for 976p, which equates to a 49% return.

Why I like Focusrite

The music industry took a major hit when the pandemic began back in 2020. With restrictions in force, many events, gigs, and concerts of all shapes and sizes were cancelled or rescheduled. With the vaccine roll out and pandemic easing from its peak, demand for music and audio equipment is rising once more. In addition to this, Focusrite also possesses a home studio product range that mitigated the impact of the pandemic.

Focusrite’s released full-year results for 2021 in November which helped support my belief it could be a fruitful FTSE stock to add to my holdings for the long term. It confirmed revenue increased by 34% compared to 2020 levels. Gross margin increased by 2.4% and this helped boost operating profit by a mammoth 353% compared to 2020 levels. Net cash also increased boosting a healthy balance sheet. The cherry on top was a dividend of 5.2p per share too.

Focusrite’s increased demand, full-year results, and current pandemic outlook have led analysts to estimate 2022 revenue will surpass 2021 revenue by at least 2%. If this were achieved, I believe Focusrite shares could double my money in 2022. Over the past five years, shares have returned just short of 600%, so a 100% return is feasible in my opinion.

FTSE stocks have risks

Focusrite’s current momentum could be derailed by the ongoing pandemic. Despite vaccine roll out and pent up demand helping boost financials and performance, any new variant of the virus could lead to restrictions and cancellations of events. This could hamper momentum and projected growth. In addition to this, competition in the music equipment industry is intense. All firms out there will be attempting to recover from pandemic woes and this could also affect any progress for Focusrite.

At current levels I would add Focusrite shares to my holdings. It is a FTSE stock with a track record of growth and recent results are encouraging. Analysts also seem to back the stock to grow with recent projections. Focusrite is on an upward trajectory, is being boosted by pent up demand, and pays a dividend. I believe I could double my money in 2022 if I add the shares to my holdings now.

Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Focusrite. 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.

Today I’m searching for the best UK dividend stocks to buy. I think the following two could help me make big returns for years to come.

In top health

I consider Primary Health Properties’ (LSE: PHP) to be an very-safe place to park my money. The healthcare facilities like GP surgeries that it lets out remain in high demand whatever the weather. Estate agency Savills says that some 307m doctor appointments are booked every year. In fact I expect the need for its services to rapidly rise as Britain’s population booms and demand for medical care increases.

At the same time the number of doctor surgeries is falling due to closures and mergers. And this is pushing rents at the likes of Primary Health Properties steadily higher. Savills notes that the number GP bases dropped a shocking 13% between 2013 and 2020. I like Primary Health’s plan to boost earnings through steady expansion, though I’m cautious that problems on this front (like overpaying for an asset) could hit shareholder returns.

Primary Health Properties’ ultra-defensive operations have given it the strength and the confidence to raise dividends every year for almost a quarter of a century. City analysts are expecting another meaty hike in 2022, too, resulting in a decent 4.5% dividend yield.

A great e-commerce stock

Urban Logistics REIT (LSE: SHED) is another property stock I’m considering adding to my portfolio. It’s similar to another couple of stocks I already own today in Tritax Big Box REIT and Clipper Logistics. This business owns close to 100 warehouse and distribution properties and is watching demand for its assets balloon as e-commerce grows. I think its 4.2% forward dividend yield makes it a top dividend stock to buy right now.

Like Primary Health Properties, Urban Logistics operates in a market where supply is limited and rents are leaping. And I like that the healthcare specialist is committed to acquisitions to maximise its revenues opportunities. The firm raised £250m via an equity raise just a month ago to fuel its expansion programme. And it’s already forked out £28.2m of this to snap up four new assets in Leicester, Sheffield, Northampton, and Dundee.

Urban Logistics is a specialist in ‘last mile’ logistics and as I say it stands to gain significantly from the online shopping craze. Latest data from Adobe showed Brits spent £94bn online in the first 10 months of 2021, up 12% year-on-year. Knight Frank estimates that around 1.4m square feet of warehousing space is required for every £1bn worth of e-commerce sales.

Like any stock, Urban Logistics isn’t without risk of course. Some of its tenants in other sectors could suffer if broader economic conditions worsen. And this could have an impact on rent collection. Still, it’s my opinion that the exceptional long-term opportunities created by the online shopping boom makes this property stock too good to for me to miss adding to my portfolio.

Royston Wild owns Clipper Logistics and Tritax Big Box REIT. The Motley Fool UK has recommended Clipper Logistics, Primary Health Properties, and Tritax Big Box REIT. 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.