Picked carefully, penny stocks can prove incredibly profitable. One of the biggest challenges, however, is knowing when the smart money has already been made. Today, I’m asking whether this is the case for three of last year’s big winners. 

Lookers

A penny stock that did particularly well in 2021 was car dealership Lookers (LSE: LOOK). Its shares climbed 66% as demand for new and used vehicles from cashed-up drivers outstripped supply. Back in September, the small-cap revealed record first-half numbers. Underlying pre-tax profit rocketing to £50.3m over the six months to 30 June, compared to a loss of £36.5m in 2020. 

So what’s the outlook for Lookers? Well, there doesn’t look to be any sign of vehicle demand falling just yet. Used-car prices in December were up 28% on the previous year. A P/E of six also seems very cheap, considering the company’s potential to benefit from the growing popularity of electric vehicles.

Then again, there’s also an argument for saying there will come a point when people simply won’t pay inflated prices and demand will moderate. Margins in this line of work are normally very slim too. 

On balance, I think Lookers could still do well next year and I’d still consider taking a small position today. But will it rise another 66%? I doubt it. 

e-Therapeutics

e-Therapeutics (LSE: ETX) is another penny stock that’s been in scintillating form this year, rising 157%. Contrast this with the FTSE 100‘s 12% gain and it’s not hard to see why small companies appeal to retail investors. 

As impressive as this performance is however, there are a few things that make me cautious. While its technology is clearly useful — allowing scientists to computationally test potential therapeutic interventions and drugs — e-Therapeutics remains unprofitable. That could prove problematic in the event of a major market sell-off. Investors tend to dump ‘jam tomorrow’ businesses first.

Regardless of whether or not a crash happens in 2022, a second thing worth noting is that less than half the company’s shares are actively traded. This illiquidity means it won’t take many transactions to cause violent shifts down as well as up. The former could happen even if e-Therapeutics is in something of a sweet spot, thanks to the pandemic. 

Considering the above, I think there are potentially better opportunities in the market this year and I wouldn’t be a buyer of the stock now.

88 Energy

Alaska-focused, Australia-based oil and gas company 88 Energy (LSE: 88E) is a final penny stock that did superbly in 2021, rising 167%. There are multiple reasons for this, including the company’s efforts to improve its balance sheet (through the sale of tax credits) and the gradual increase in the price of crude oil.

Unfortunately, a lack of profits once again leaves me cold. Befitting a company in this space, it’s also worth pointing out that 88 Energy shares have been volatile. The very same shares have traded for a little as 0.41p and as much as 4.7p over the last 12 months. They currently change hands for 1.41p a pop. As such, I can’t see this penny stock appealing to anyone other than speculative investors. 

While the shares may continue to rally further in 2022 (most likely to do with drilling activity surrounding its Merlin-2 well), I’m content to watch with interest from the sidelines. As far as my own portfolio is concerned, it’s too hot to handle. 

Paul Summers 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.

Shares in UK-listed cybersecurity firm Darktrace (LSE:DARK) have had a terrible run. Only a few months ago, the stock was trading near 1,000p. Today however, the share price is near 400p.

So what’s behind this massive share price fall? And is this a growth stock I should buy for 2022?

Why Darktrace’s share price has crashed

In my view, there are several reasons why Darktrace’s share price has fallen. A negative report from broker Peel Hunt back in late October has certainly been one driver. Analysts at the investment bank initiated coverage of the stock with a ‘sell’ rating and a 473p price target. The market didn’t like this.

Insider selling also appears to have been a factor. When I last covered Darktrace shares, I noted the company’s fifth-largest shareholder, Vitruvian Partners, had just sold 11m shares at a price of 580p per share. Well, there has been more insider selling since then.

Indeed, my research shows that between 8-10 November, board member Vanessa Colomar sold nearly 1.5m shares at prices of between 622p and 639p per share. It’s worth noting that Colomar is the partner and co-founder of Invoke Capital. The other co-founder of Invoke is Mike Lynch, who is also the co-founder of Darktrace.

I also think valuation has been a key factor behind the share price weakness. Recently, we’ve seen a big shift out of expensive hyper-growth technology stocks and into other, more reasonably-valued areas of the market.

This has coincided with the US Federal Reserve’s moves to withdraw its stimulus. Back in September, Darktrace had a very high valuation (the price-to-sales ratio was in the 30s). So it has suffered from this market shift.

Should I buy Darktrace shares for 2022?

I’m quite bullish on the prospects for the cybersecurity industry as a whole. Cybercrime is a massive problem globally and the problem is only going to get worse in the years ahead. According to Cyber Security Ventures, cybercrime is set to cost the world $10.5trn by 2025, up from $6trn in 2021.

This means there are likely to be opportunities for long-term investors in the space in the years ahead. However, I’m not sure Darktrace shares are the best way to play this theme.

Even after the recent share price fall, the stock isn’t cheap. At present, analysts expect Darktrace to generate revenue of $391m for the year ending 30 June. That means the forward-looking price-to-sales ratio is currently about 10.1.

That’s not outrageous for a high-growth cybersecurity firm. However, it doesn’t leave a huge margin of safety. If growth in 2022 is disappointing, we could see some volatility here.

Another issue for me is that the company is not expected to be profitable in the near term. For this financial year, analysts expect the group to post a net loss of $24.2m. Unprofitable companies tend to be higher-risk investments.

I also have a few concerns over the insider selling. Insiders tend to know more about their companies. The fact that they have been offloading stock suggests a belief there’s limited share price upside in the near term.

But it’s worth pointing out that Darktrace is growing rapidly at the moment (41% revenue growth last year). And management appears to be confident about the future.

However, all things considered, I think there are better ways to play the cybersecurity boom.

Edward Sheldon 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.

Over the past year, interest in cryptocurrency has really exploded. This can be seen from the rally in key coins, such as Bitcoin. The crypto market-cap surpassed $3trn earlier this year. Yet some traditional stock investors might feel uncomfortable buying coins directly. Therefore, here are three ways I can buy stocks that give me exposure to crypto.

Getting involved in the crypto exchanges

The first way is by investing in a crypto marketplace, such as Coinbase. Since going public back in the spring, Coinbase has provided access for stock investors like myself to get a piece of the crypto action. It operates as an online exchange platform, allowing people to buy and sell crypto much in the same way as a traditional stock exchange. 

If I believe crypto is going to continue to grow in years to come, then Coinbase shares should rally as well. Higher trading volumes on the platform, more coins listed, more products offered etc etc, will all be positive for the business. 

I need to be aware that Coinbase shares will also mirror company-specific issues, such as potential tussles with regulators. But, for the most part, I think if crypto does well, I see Coinbase as a top stock that should benefit.

High volatility with miners

Secondly, I could invest in a crypto mining company like Argo Blockchain. In my opinion, this is as direct as I can go while still buying a listed stock. 

Argo generates revenue from the value of the Bitcoin and other coins it mines. So if the price of Bitcoin rallies, then the value of the mined coin will be higher. This will increase profits for the company. It’s a similar way for a commodity miner. If gold prices spike, the share price for a gold miner usually rallies as well. 

Therefore, I see Argo (or other alternatives) as top stocks in this regard. Clearly, the sensitivity of the share price to crypto movements is high. This can be seen as a risk, or a positive thing, depending on where I think crypto prices will head in the future!

Using established top stocks

Finally, I buy companies that are working with different cryptocurrencies. For example, Meta (the rebranded Facebook), is making its own digital currency known. Other companies are exploring the possibility of either making a coin, or partnering with an existing one.

I think this is a nice way of using an established top stock to get exposure to crypto. Meta has other core operations (like social media) that generates revenue. If the new currency does well then, great. But ultimately, the share price shouldn’t be as volatile as something like a crypto miner. 

The risk is that the share price for these top stocks are unlikely to be that correlated to Bitcoin or other coins. Unless the good news is associated with their specific coin, I don’t see a large amount of upside.

Overall, I think crypto will continue to grow in size in coming years. Therefore, I’m considering all three options (and stocks) as worthy investments at the moment.

Jon Smith has no position in any share mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. 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.

The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Gas is in high demand at this time of year – and so are shares in British Gas owner Centrica (LSE: CNA). The Centrica share price hit an end-of-year high in last week’s trading. It was over 50% higher than a it had been year before.

Despite that, the shares sit well below their historic highs. Even after last week’s increase, Centrica shares are changing hands for less than a third of what they cost five years ago. So, is this an opportunity to add more Centrica shares to my ISA?

Why the Centrica share price is rising

First, I think it is helpful to consider the reasons behind the share price increase that started in early August.

The obvious one has been the increase in gas prices during the period. Given how central gas is to Centrica’s business, that could be good for its performance. For example, it may be able to generate higher profits from its existing residential and business gas customer base.

Yet I think rising gas prices are a mixed blessing for Centrica. It has a trading business that could see larger losses if the energy market is highly volatile. If residential customers sees its prices as expensive, they could go elsewhere. It has already been shedding customers for quite a few years.

But I see the main reason driving the share price rise as increased investor confidence in the company after a long period of underperformance. The past several years have seen it streamline its operations, unload some businesses and focus on its core operations. With the right asset mix and management focus, hopefully it will be able to move away from its track record of big swings in results. I think that optimism is reflected in the rising share price.

What will happen next?

I reckon Centrica has an attractive set of assets. In the past year it has slashed its debt close to zero. Even after the share price rise, the company’s market capitalisation is only £4.2bn. If it can convert its large installed user base into sustainable profits that price could still undervalue it.

But I remain wary. Centrica has a long history of disappointing shareholders, including me. Dividends remain suspended. Current management has made some missteps in my view, such as its handling of labour relations. That suggests to me there is the possibility of further poor judgement in future.

Meanwhile, risks remain for the company, including continued volatility in energy markets. While that could turn out well for Centrica’s profits, it could also turn out badly. Until the preliminary results are published in February, it will be hard to get a real sense of how the business has been performing recently.

My next move

My Centrica position still shows a loss even after the share price rise. I am holding it for now in the hope of further price appreciation. But I won’t be adding any more Centrica to my ISA. Until I see evidence of a sustained, structural improvement in its business performance, I remain wary of Centrica’s proven ability to deliver unwelcome surprises to shareholders.

Christopher Ruane owns shares in Centrica. 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 am more often a macro investor than not. This means that my FTSE 100 investment decisions are made from a top-down perspective, keeping in mind developments in the economy and economic policies. Based on these, I am now considering the best and worst stocks for me to buy this year. 

FTSE 100 oil biggies look good

The first of the best stocks are the giant oil companies, and no points for guessing why. These stocks rose because of a huge increase in oil prices last year, as we stepped into recovery. My sense is that these stocks could also continue to benefit in the year ahead. If the pandemic keeps moderating as we saw in 2021, they could continue to rally. Besides this, they are also dividend stocks, which I like. There is even more merit to them in my view and they are about my best-performing investments for this year.

Of course, with oil stocks there is always the possibility of a crash if we go back into lockdowns around the world. Also, there is no guarantee that they will transition easily into clean energy companies, so they are risky bets for the long-term even if they are good buys for the foreseeable future.

Banks could make gains

The second group of strong stocks is the banks, which have really languished in the pandemic. They saw some recovery last year, but I think we could really see their rise this year. Banks could benefit from the recovery as cyclical stocks. Moreover, they could also benefit from a higher-interest-rate environment, since this gives them greater discretion to increase their own lending rates. Their dividends could also improve along with their financials. Yet, their share prices are still relatively low. This makes them quite attractive to me. But they are attractive only as long as we are expecting a recovery. If Omicron or any other coronavirus variant creates havoc again, the economy could well go south and that would affect banks adversely. 

Avoiding real estate

I would, however, avoid exposure to real estate stocks. The property market did surprisingly well in 2020 and during 2021 due to supportive government policies and the fact that UK households saved a lot during the lockdowns, allowing them to buy big assets. However, such policies are now being withdrawn and we are no longer in lockdown, which could impact future savings.

As a result, I think that in the foreseeable future, these stocks’ performances might be impacted. I do believe that there is some chance that the sector could stay buoyed, though. If the recovery is strong, savings could well stay elevated and house buying could continue on a fast clip because of this. I am not entirely sure if it will play out like this, however, so I am more likely to avoid the sector than not. 

In general though, I think that 2022 will give a lot of opportunity to buy quality FTSE 100 stocks, possibly even at low prices. I am looking forward to investing during this year. 

Manika Premsingh 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.

The FTSE 100 enjoyed a strong end to 2021 as fears over the Omicron variant receded. Britain’s blue-chip share index even closed above 7,400 points for the first time since February 2020 in the final trading days. Over the course of the year, the Footsie rose around 15% in value.

It’s too early to claim we are now set for plain sailing as the Covid-19 crisis rolls on. But I plan to continue buying FTSE 100 shares, despite this ongoing threat. Here are two I’d buy today to hold for the long haul.

Playing the construction boom

The global population is rapidly growing and more and more people are moving into cities. According to the United Nations, around 68% of the world’s people will live in urban areas by 2050, up from 55% today. It predicts too there will be 43 so-called megacities (those with 10m-plus citizens) by 2030. That’s up 10 from current levels.

I’ve decided to cash in on this demographic trend by buying shares in CRH (LSE: CRH). This FTSE 100 share is the biggest building materials supplier in North America and Europe and has exposure to the fast-growing nations of Southeast Asia too. It supplies a broad range of materials from aggregates and concrete to pipes, glass, blocks, and everything in between.

I particularly like CRH because it has a great track record on the acquisition front. And, pleasingly, it has the appetite and the financial firepower to continue building its global empire (it spent around $1.4bn on M&A between January and mid-November). I’d think CRH is a top buy even though profits could suffer in the near term if the economic recovery runs out of steam.

Another FTSE 100 hero of mine

Bank of England interest rates have risen recently and are likely to keep rising to curb runaway inflation. The good news for savers is that this should feed into more attractive savings rates. The bad news is that rampant price rises mean they are unlikely to make spectacular returns on their cash in real terms.

This is why I believe stocks like Hargreaves Lansdown (LSE: HL) remain attractive shares to buy right now. Financial services firms like these provide the platform and the expertise for people to make a decent return on their cash. This is all-more important as concerns over the future of the State Pension increase (news that the pension age could rise quicker than expected has been all over the papers in recent days).

All this explains why Hargreaves Lansdown added 23,000 new clients in the three months to September, taking the total to 1.67m. The FTSE 100 firm added net new business of £1.3bn in the period which, in turn, drove total assets under administration 2% higher from the prior three months, to £138bn. I’d buy the business even though competition in the investment services sector is intense and future sales could consequently disappoint.

Royston Wild owns CRH. The Motley Fool UK has recommended Hargreaves Lansdown. 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.

My quest to find the best cheap UK shares to buy has brought these near-penny stocks to my attention. Here’s why Id buy them today.

A top renewable energy stock

Renewable energy stocks offer plenty of opportunity for UK share investors like me. But I don’t just have the option of buying into firms that generate clean energy like wind or solar farm operators. Stocks making the technology that stores energy is another very good way for me to make money.

This is where Gore Street Energy Storage Fund (LSE: GSF) comes in. This ‘nearly’ penny stock buys and constructs battery storage assets the length and breadth of Britain. We don’t stop using electricity when the wind doesn’t blow and the sun doesn’t shine. As a result, these sort of assets are essential to ensure we are constantly supplied with power. And it’s a sector that’s growing quickly as investment in renewable energy sources shifts through the gears.

A word of warning however, Gore Street has a lot of debt on its books. It therefore could see finance costs rise sharply if interest rates soar.

On cloud nine

Technological advancements and changing life/work balances meant remote working was growing strongly before Covid-19. The onset of the pandemic supercharged the practice of working away from the office. It could remain a big part of life in 2022 too, given the current elevated rate of infections.

All this bodes well for firms like Redcentric (LSE: RCN). This particular UK share provides cloud computing services that enable employees to do their jobs wherever there’s an internet connection. Sales have slipped more recently (down 4.1% year-on-year in the six months to September) but this reflects the blowout comparisons of the same 2020 period.

I’m confident Redcentric will get back on the front foot sooner rather than later, helped by its acquisition of Piksel in September. I think it could deliver strong profits growth, despite the threat posed by US industry giants like Microsoft.

A trip to the Zoo

Zoo Media Group’s (LSE: ZOO) another technology company I’d buy for the new year. This near-penny stock supplies a wide range of services for broadcasters, streaming companies and film studios. These include dubbing and subtitling movies and shows, providing script creation assistance, and localising content such as programme titles, synopses and artwork.

The company’s major partners include the likes of Disney, Netflix and WarnerMedia. And I fully expect demand for its services to keep rising as investment in content booms. Disney, for example, is set to raise spending by $8bn year-on-year in 2022, to $33bn. Fierce competition means that other major players, including Apple, Amazon and ViacomCBS, will surely continue spending heavily as well.

I think Zoo Media could make its shareholders stacks of cash in this climate. I’d buy it even though profits could suffer in the near term if soaring Covid-19 cases forces the film and TV industries to close down again.

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. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon, Apple, 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.

As an older investor (I’m nearly 54), I’m always seeking extra passive income. This unearned income is money I make without effort, even while sleeping. Indeed, as billionaire investment guru Warren Buffett wisely remarked: “If you don’t find a way to make money while you sleep, you will work until you die.”

But in today’s world of near-zero interest rates, it’s way harder to earn passive income than, say, 15 years ago. Thus, to boost my income, I don’t invest in low-yielding bonds or keep too much cash on deposit. Instead, I invest in UK shares that pay high dividends. Dividends are cash distributions paid by companies to shareholders, usually half-yearly or quarterly. However, share dividends are not guaranteed. They can be cut or cancelled during stressful times, as happened widely in 2020. When we eventually retire, my wife and I will use our share dividends to top up our monthly pensions.

Passive income from high-yielding shares

Currently, the UK’s FTSE 100 index offers a dividend yield of 4% a year. But some shares within the index produce much higher passive income. Yet the higher the dividend yield, the riskier it may be (all else being equal). In my experience, dividend yields above 10% a year usually don’t last. Either share prices rise or payouts get cut until dividend yields come down.

Earlier today, I found these 10 FTSE 100 stocks offering a current dividend yield above 6% a year.

So should I buy them? First, I’d never construct a portfolio consisting solely of these 10 high-dividend stocks. To avoid concentration risk, I’d spread my money across at least 25 different stocks. Otherwise, one bad result might batter my portfolio’s overall value. Second, this mini-portfolio of 10 stocks is heavily skewed towards just three sectors. Four constituents are mining companies and two are tobacco stocks, while another two are financial firms. Thus, there jst isn’t enough variety among these 10 shares to build a solid, reliable stream of passive income from dividends.

That said, I wouldn’t worry too much if I put say, 1% or 2% of my portfolio’s value into each of these 10 stocks (10% to 20% in total). After all, the average dividend yield across all 10 is almost 8.8% a year, which certainly appeals to me. Indeed, £1,000 invested in each stock (£10,000 in total) would produce a passive income of around £876 a year. Nice.

Which of these 10 dividend stocks would I buy?

When I worry about the next stock-market crash, I get more attracted to what I call ‘BBC shares’. These are stocks in Big, Beautiful and Cautious companies, usually members of the FTSE 100. In previous stock-market crashes, I found that my large-cap value stocks paying generous dividends fared much better than the wider market. And even when share prices went down, my dividends mostly kept rolling in during market meltdowns.

First, for mega-cap dividends plus exposure to a global recovery in 2022-23, I’d buy Rio Tinto stock at the current 4,883.89p. But I’d expect mining shares to be volatile in 2022-23, as they were in 2021. Second, for extra passive income, I’d also buy British American Tobacco at 2,726p. Cigarette manufacturers have been dividend dynamos for decades — although BAT carries £40.5bn of net debt on its balance sheet!

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco, Imperial Brands, and Vodafone. 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.

Happy New Year! Last year turned out to be pretty good for UK investors. In 2021, the FTSE 100 index rose by 14.3%, its best annual performance since 2016. However, across the Atlantic, the US S&P 500 soared by 26.9% to record its third consecutive year of double-digit returns. Both figures exclude dividends, which add around 4% to the Footsie’s gain. As you’d expect, some FTSE 100 shares did really well, while others did terribly. Here are the index’s biggest winners and losers last year.

The FTSE 100 in 2021

Of 101 stocks in the FTSE 100 in 2021 (one company is dual-listed), 74 rose in value. The highest gain was 70.3%, while the lowest increase was a mere 0.3%. Across all 74 winners, the average gain was 23%. That’s 8.7 percentage points above the wider index’s return. At the other end of the scale lie 27 losing shares. The biggest loss among these FTSE 100 laggards was 27.2%, while the smallest decline was a tiny 0.1%. Across all 27 losers, the average loss was 11.4%.

The Footsie’s five biggest winners

In 2021, 49 FTSE 100 stocks beat the index. Of these, 29 shares gained in value by 25%+. Here are the index’s five biggest winners.

All five superstar shares returned above 50% in 2021 (excluding dividends), with the average gain across all five being 57.7%. The highest return came from equipment-rental company Ashtead Group, whose US business is going great. In second place is Glencore, whose shares and earnings were boosted by soaring commodity prices. Taking third place in the FTSE 100 is Croda International, which makes a wide range of speciality chemicals for industry, personal care, and healthcare.

Fourth of the five is British engineer Meggitt, which specialises in the aerospace, defence, and energy sectors. Currently, Meggitt is the target of a £6.3bn takeover offer by US rival Parker Hannifin, which explains why its shares have soared this year. Fifth and last is Segro, a FTSE 100 real estate investment trust and the largest industrial property company in Europe. Segro has benefited from a rebound in property valuations after 2020’s collapse.

The Footsie’s five biggest losers

Now I’ll review the laggards. Of the FTSE 100’s 27 losers in 2021, 15 stocks suffered double-digit declines. Here are the Footsie’s five biggest losers for last year.

As you can see, price declines at these five losers range from 21.4% to 27.2%, with the average loss being 23.7%. The list includes two overseas miners, Fresnillo and Polymetal International, whose shares were hit as prices of precious metals slipped later in the year. Meanwhile, Flutter Entertainment‘s stock has dived since September after it withdrew from several markets and profits took a hit from punter-friendly sporting results.

London Stock Exchange Group, operator of stock exchanges and provider of markets data, has struggled in 2021. This followed its mega-acquisition of financial data and analytics platform Refinitiv. In last place is online supermarket Ocado Group, whose go-go growth shares have crashed by 41.9% since peaking at 2,886p on 27 January 2021.

Finally, I don’t own any of these 10 stocks, so would I buy any? Yes, I’d buy just one today and it’s one of the losers — LSEG. Though it’s had a tough 12 months, this group operates in a niche market with a wide competitive moat. Hence, it might well rebound this year, especially if stock markets keep booming in 2022!

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International, Fresnillo, and Ocado Group. 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.

When I started investing, I found it difficult to generate a diversified income when I only had enough cash to buy a few shares. I found that buying investment trusts was a great solution to this problem.

39 years of dividend growth

Merchants Trust (LSE: MRCH) offers a 4.9% dividend yield and has increased its dividend for 39 consecutive years. The trust typically invests in large FTSE 100 companies which pay regular dividends. Top holdings at the end of November included GlaxoSmithKline, British American Tobacco and National Grid.

This conservative strategy isn’t likely to win any medals for rapid growth. But Merchants’ managers are able to boost their returns by using debt to buy shares. This has worked well recently — Merchants Trust’s share price rose by more than 20% in 2021, compared to less than 15% for the FTSE 100.

Using debt adds risk, as it can increase losses during a market crash. Another risk I can see is that GlaxoSmithKline, the trust’s largest holding, is planning to cut its payout next year.

However, Merchants Trust has experienced managers and a long track record. I’d be happy to park some of my cash in this trust in 2022.

Solar-powered dividends

My next pick is renewable energy stock Foresight Solar Fund (LSE: FSFL). Despite its name, Foresight is also an investment trust.

Foresight listed on the London Stock Exchange in 2013, making it one of the older renewable stocks on the market. As its name suggests, it generates the majority of its income from investments in solar power assets. These have a total capacity of over 1GW.

The UK is obviously not the most attractive location for solar power, but Foresight isn’t limited to its home market. The trust also has solar assets in Australia and Spain and is expanding into battery storage.

Foresight shares currently offer a tempting 6.9% dividend yield. The main risk I can see is that, in the future, government subsidies for solar power will gradually be withdrawn. This could leave the trust more exposed to uncertain wholesale electricity prices, putting pressure on the dividend.

For now, Foresight’s 6.9% payout looks safe to me. I’m thinking about adding some to my portfolio this year.

This investment trust offers a defensive 5% income

Supermarkets are one of the most defensive businesses in the world, in my view. Whatever else is happening in life, we’ll always need to do regular food shopping.

One investment trust that’s delivered a steady performance in recent years is Supermarket Income REIT (LSE: SUPR). This real estate investment trust specialises in buying supermarket properties and leasing them back to operators such as Tesco and Sainsbury’s.

Leases on big supermarkets are generally long, with clearly-defined payments. For example, it recently acquired a Tesco supermarket with 17 years remaining on its current lease. This means the trust has good visibility of future cash flow — useful for dividends.

A risk I can see here is that the market for supermarket property is quite strong at the moment. Prices are quite high. If interest rates rise, or property prices fall, then I think Supermarket Income REIT’s dividends could come under pressure.

However, the current situation still looks comfortable to me. With a forecast dividend yield of 5% in 2022, I am considering Supermarket Income for my portfolio.

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco, Foresight Solar Fund Limited, GlaxoSmithKline, and Tesco. 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.