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Is Cineworld Group (LSE: CINE) one of the most dangerous shares out there? I sold my holdings in the UK leisure stock just over a year ago. And while Cineworld’s share price rallied at the end of 2020 and the start of 2021, the risks facing the business remain severe.

Latest Covid-19 infection figures in Cineworld’s core markets make for gruesome reading. Soaring cases of the Omicron variant mean infection numbers hit record peaks of 129,471 in the firm’s home UK market on Tuesday. At the same time, cases in Cineworld’s core US marketplace reached new peaks of 512,553.

In this climate the prospect that cinemas will have to close their doors again is very real. But even if Cineworld’s theatres aren’t shuttered, other rules could have a significant impact on the number of people going to the movies.

The requirement for masks to be worn could discourage people from attending in large numbers. Proof of vaccination for people entering all entertainment venues is something else that could smack ticket sales at Cineworld. The latter rule is already in force in some parts of the US.

Debt problems

I divested my Cineworld shares last year as its debts mounted and Covid-19 closed its cinemas. Unhappily both of these problems remain very high risks right now. Much has been made of the company’s net debt mountain in particular, which stood at $8.4bn as of June.

To add to Cineworld’s woes last month, it lost a legal case over its aborted purchase of Canada’s Cineplex cinema house. It’s been ordered to pay a whopping £725m in damages and lost transaction costs. It wouldn’t be a shock to see beleaguered Cineworld slap more debt on the pile or raise cash by tapping shareholders to keep its head above water.

Cineworld’s share price: worth the gamble?

Cineworld’s share price plunged to its cheapest since November 2020 following mid-December’s ruling around 27p. And while it’s recovered some ground to 32p, I wouldn’t be shocked to see it plunge again.

Things aren’t all bad for Cineworld, however. Bubbly box office sales in recent months show that the cinema has lost none of its allure despite the ongoing pandemic. Marvel’s latest superhero flick Spider-Man: No Way Home generated a jaw-dropping $260.1m in the US and Canada in its opening weekend earlier this month. That’s the second-biggest opening weekend in cinema history and follows a string of other highly successful theatre releases in 2021.

Cineworld’s share price looks mega-cheap right now. The penny stock trades on a P/E ratio of just 8.9 times for 2022. It packs a meaty 4.8% dividend yield for the new year, too. But despite these attractive numbers I won’t be buying in: Cineworld’s shares are cheap for a reason. I wouldn’t be surprised to see Cineworld’s share price fall all the way to 0p. So I’d much rather buy other cheap UK shares for my portfolio 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.

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Like many investors, I have been grateful for the passive income I received in 2021. Much of that came in the shape of payouts from dividend shares. Some of the passive income ideas for 2022 I plan to use are also dividend shares. Here are five I would consider buying for my portfolio.

Tobacco focus: Imperial Brands

With a portfolio of tobacco brands including Lambert & Butler and Gauloises, Imperial Brands (LSE: IMB) is able to appeal to customers in a wide variety of markets. It can target smokers willing to pay a premium for their puffs, as well as more price-conscious purchasers. That all translates into sizeable cash flows that can help support the company’s dividend.

Currently, Imperial shares yield 8.6%. So if I put in £1,000 now, I’d expect to get around £86 of passive income in 2022. Indeed, Imperial’s next payout is scheduled for this week, although I’d be too late to receive that if I bought the shares today. But with another one due just three months from now, buying Imperial today could hopefully boost my passive income streams from the first quarter of 2022 onwards.

But there are risks with Imperial Brands. Primary among these is the company’s large exposure to the cigarette business. Falling consumer demand in many markets and tighter government regulation could hurt both revenues and profits in years to come.

Iconic insurer: Direct Line

Another company with a juicy dividend yield is insurer Direct Line (LSE: DLG). Its shares are currently yielding 8%.

The company has a well-known brand, which helps it attract and retain customers. I see that as a positive asset for the business, as it could help it control its costs over the long term if it reduces customer acquisition expense. On top of that, I like the company’s focus on fairly stable areas such as motor and home insurance. While cost competition can sometimes damage profit margins in this market, demand is fairly consistent. From year to year, payout costs shouldn’t vary dramatically, unlike in some parts of the insurance market. That should be good for the company’s economics.

One thing that is interesting about Direct Line, though, is its price. Despite the juicy yield, the Direct Line share price has lost 11% over the past year, as of the time of writing this article earlier today. I wonder if that reflects growing concern about the impact new rules around insurance renewal prices could have on the profits of companies such as Direct Line? If the rules squeeze insurance pricing as feared, they could lead to lower profits.

Financial services powerhouse: M&G

Another company I would choose in financial services, although a different part of the sector to Direct Line, is asset manager M&G (LSE: MNG).

The company’s yield of 9.1% is among the highest available right now from any FTSE 100 stock. The company has also said it plans to maintain or raise its dividend in future. That is not guaranteed, but if it happens, then buying M&G for my portfolio today could mean I lock in almost a double-digit yield.

I think the company’s business area is attractive. Huge amounts of money get invested by clients, so it is a big market. Given the size of the funds involved, even a modest commission in percentage terms can translate to sizeable revenues and profits. One risk is any slide in investment performance. If M&G funds don’t perform well, customers could move funds elsewhere, hurting revenues and profits.

Consumer goods giant: Unilever

It hasn’t been a great year for consumer goods company Unilever (LSE: ULVR). Its shares have drifted down 10% over the past 12 months.

That could be good news for me as a yield hunter though. A lower share price equates to a higher dividend yield, especially as the owner of Dove and Marmite has continued to raise its dividend. Currently, Unilever shares yield 3.7%. The basic characteristics of the business lend themselves well to large cash generation. Unilever sells products used by several billion customers each day. The company’s premium brands give it pricing power. This means that even in economic downturns, Unilever ought to be able to keep sales revenues substantial and maintain attractive profit margins.

One risk to profit margins currently, which the company highlighted this year, is ingredient cost inflation. This has been rampant and if Unilever can’t pass it on to consumers in the form of higher prices, profit margins could suffer.

But I see the recent weak performance of Unilever shares as an opportunity to add a blue-chip company to my portfolio at an attractive price. On top of that, the yield could help boost my passive income streams.

Investment trust: Income and Growth VCT

When looking at some 10%+ yielders last month, one of the names I considered was the venture capital trust Income and Growth (LSE: IGV). Since then, the trust has declared a 4p interim dividend, which is due to be paid next week.

That will take the trust’s dividend payments for the year so far to 9p. That’s almost 10% of the current Income and Growth share price – and there could still be further dividends declared this year.

I am not surprised, as the company has a track record of making successful investments in small companies that allow it to reward its own shareholders with juicy dividends. But this approach entails risks too. Such companies tend to be illiquid, so the timing and size of the trust’s income can be volatile. That also means dividends can move around a lot. Last year, for example, the payout of 14p was well over double the 6p paid in the previous year. Still, with those sorts of dividends, IGV is among the top passive income ideas for 2022 I would consider for my portfolio.

Christopher Ruane owns shares in Imperial Brands. The Motley Fool UK has recommended Imperial Brands and Unilever. 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.

There is little doubt about the fact that travel stocks have been the worst impacted of all shares because of the pandemic. And the recent arrival of the Omicron variant derailed whatever progress they had made in 2021 once again. One such stock is the FTSE 100 British Airways owner International Consolidated Airlines Group (LSE: IAG). Earlier this month, the stock touched its lowest level of 126p in the year. 

The IAG share price inches up

However, things have started to look up a little since then. At the last close, it was up 16% from these low levels. It is still significantly lower than the highs of over 200p seen earlier this year, but I think that there is some room for optimism here. In general, I think the stock market mood has been a little more buoyant recently as there has been no lockdown during the festive season with none planned at least until the New Year in England. The FTSE 100 index is in touching distance of 7,500 as I write on Wednesday. And a rising tide could well lift all boats, as they say.

Positives roll in for the FTSE 100 stock

There is more positive news too. British Airways is starting short-haul flights from London’s Gatwick Airport from March 2022 onwards. It will start with just three aircraft for the operation, but this will be ramped up to 18 by May. Such flights were stopped as the pandemic started and have not been resumed since. The fact that they are starting now, I would imagine, is a reflection of increasing normalisation of flying conditions. 

Also, one short-term positive is that IAG’s proposed takeover of Spain’s Air Europa has apparently hit a dead end. The acquisition was finalised in November 2019, just before the pandemic. Then the value of the deal was reduced during the global health crisis. It has fallen through after it came under scrutiny by the regulatory authorities. While the acquisition could have benefited the stock in the medium-to-long term, in the short term, typically the acquirer’s share price takes a dip when an acquisition goes through. Considering that the IAG share price has already dropped a lot this year, it might just be a good thing for it for now. 

My assessment

Of course even with all these developments, there are a lot of hoops for IAG stock to jump through before it can return to its pre-pandemic health. The trickiest hoop is perhaps getting passenger numbers to pre-pandemic levels. Before that happens, it cannot hope to start returning to healthy financial performance, in my view. 

Still, I see merit to the stock. For that reason, I bought the stock some time ago. It is risky, for sure, but I maintain that over time the IAG stock price could rise and I am planning to buy more of it now. 

Manika Premsingh owns shares of International Consolidated Airlines Group. 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 aiming to invest my way to a million with stocks and shares. It’s an ambitious target because I didn’t start with £997,000!

However, I’m hoping the power of compounding will enable me to turn an initial sum measured in thousands into the magic million over time. And to help me, I’ve got a secret weapon — read on for more about that.

How urgency can work against investors

But, of course, nothing is certain or guaranteed. Part of the deal with all stocks and shares is they come with risks as well as opportunities. Behind every stock is a real business. And any number of operational challenges could arrive to derail my efforts to compound the value of my investments.

On top of that, studies have shown that most private investors and fund managers fail to outperform the general market indices, such as the FTSE 100. And many, sadly, end up with a long-term portfolio performance that falls short of the overall stock market. Some even lose money rather than build wealth.

But I think it’s helpful to try to understand why so many investors underperform. And perhaps one of the factors is some people often try to get rich too quickly from stocks and shares.

A raging urgency often leads to poor decisions. For example, I’ve heard of investors putting their entire portfolios into just one or two stock names. And whereas such concentration has the potential to build wealth fast, it also increases the risks. So if one underlying business gets in trouble, or suffers a setback, it’s possible the ensuing stock slump could wipe out wealth, or reduce it to peanuts.

Another problem driven by a sense of urgency can be over-trading. Sometimes investors jump in and out of stocks hoping for quick gains. It can be a time-consuming and expensive to approach investing like that. It’s possible to generate lots of trading costs and end up in short-term losers as well as winners. And, overall, the results could be disappointing.

Yet another misstep can be picking ultra-speculative stocks. Sometimes, profitless, all-or-nothing businesses can shoot to the moon. But it’s more likely that most will not and many end up taking an investor’s wealth away rather than adding to it.

A proven strategy

However, my secret weapon could be the potential solution for most of those problems. And the weapon is to use a different approach in my quest for a million from stocks and shares.

My plan involves targeting the shares of high-quality businesses, holding them for the long term and allowing the underlying operational progress of each company to drive compounding in my portfolio. I’m also diversifying between several stocks.

Such an approach has served other investors well before me. For example, Warren Buffett and, in the UK, Lord John Lee. Both have used the approach as their own secret weapons to make millions from stocks and shares. And Lee fleshed out the details of his strategy in his book How to Make a Million — Slowly.

Even with my secret weapon and Lord Lee’s book, a positive investment outcome could remain elusive for me. Nevertheless, I’m using the approach to invest in my quest for million in 2022 and beyond.

Kevin Godbold 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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One of the cheering things about 2021 for shareholders in Lloyds (LSE: LLOY) — like myself — was the restoration of the company’s dividend. But while the dividend has been brought back, it is still much lower than it had been before the start of the pandemic. So, do I think the dividend in 2022 could be bigger than it was this year?

The Lloyds dividend is back – but smaller

This year the bank announced that it had restarted its dividend. In line with other UK banks, this was because a previous dividend ban by the bank’s regulator had been lifted.

But the restored dividend was smaller than the old one had been. The latest dividend the bank paid, its interim one in September, was only around 60% of the same payout a couple of years previously. So the size of the dividends this year took some of the shine off them being restarted.

Progressive dividend policy

The bank has what is known as a progressive dividend policy. In other words, it aims to increase its dividend each year.

But, as any football fan knows, just because the manager says he will aim to improve performance next year, that doesn’t mean it will actually happen. For a company to increase its dividend prudently, its business performance also needs to get better over time.

But Lloyds had managed to increase its dividend each year in the years running up to the pandemic. If the business performance improves, I think it could increase the dividend this year and in subsequent ones, if it chooses to do so. 

How big could the Lloyds dividend 2022 be?

The initial size of the restored dividend suggests that the payout may take some time to reach even its pre-pandemic level again.

Set against that, the bank has been stockpiling cash it could use to make a one-off special payment, or boost the size of its ordinary dividend. This can be seen looking at what is known as the CET1 ratio, a measure of balance sheet strength. The company targets a CET1 ratio of 12.5% and a 1% buffer. At the end of September, it reported that its CET1 ratio sat at 17.2%. That suggests that it has substantial excess liquidity. It could choose to use that to pay out higher dividends. But there is no guarantee it will do so. For example, the bank might use the funds for an alternative business purpose such as an acquisition. Or it could simply decide to maintain a CET1 ratio in excess of its target.

In theory, the 2022 Lloyds dividend could be markedly higher than 2021 and closer to the pre-pandemic payout. This could be funded either from the CET1 ratio, or an improved business performance. 

Dividend risks

But the bank has not specifically indicated so far that it plans to grow its dividend dramatically.

One risk to the dividend is a declining business environment. If the housing market cools, bigger mortgage defaults could hurt Lloyds’ profits. That could dent its ability to pay a dividend.

I’m hoping for a much higher Lloyds dividend in 2022 than in 2021. But the company has not given specific guidance on which I can base that hope. I continue to hold Lloyds shares in my portfolio, but will treat any big dividend increase in 2022 simply as a welcome bonus.

Christopher Ruane owns shares in Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking 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.

Cathie Wood is one of the most prominent investors in the US and last year her flagship fund, ARK Innovation, delivered a 170% return. Nonetheless, things in 2021 have been far less pretty for her fund, as many investors have stayed away from tech stocks, due to lofty valuations and the risks of inflation. Nonetheless, while there are certainly risks to investing in some US growth stocks, I think that Teladoc (NYSE: TDOC) is severely undervalued. Here’s why.

Cathie Wood has been buying the dip

Teladoc is the largest telehealth provider in the world. But after reaching highs of nearly $300 at the start of February this year, it has now dropped back to under $100. This has made Teladoc one of the worst performing tech stocks and it has even dipped below pre-pandemic prices. Nonetheless, as the stock has dipped, Cathie Wood has continued to buy. She currently owns 11% of Teladoc shares.

One reason may be due to optimism that, after rising in popularity during the pandemic, telehealth is set to grow over the next few years. In fact, consultancy firm McKinsey & Company estimates that the US virtual care market could reach $250bn. As Teladoc is the current market leader, this is a very good sign.

Further, it has continued to report decent results. This includes expected full-year revenues of over $2bn, around a 100% rise from last year. In the recent third-quarter results, it also reported over 80% year-on-year revenue growth, despite fears that previous growth had been a one-off due to the pandemic. As such, this demonstrates to me that the recent dip in the share price has been overdone.

What are the risks?

Yet despite the company performing well, there are still some issues. For example, it continues to post large losses, and this year it expects an EBITDA loss of around $17m. With tech stocks, while I don’t mind operating losses, I like to see positive EBITDA as this shows a clear route to net profitability. Therefore, this is a key risk for the shares that must be considered.

Furthermore, there is also the risk of inflation, which is no longer being described as temporary. Inflation is particularly damaging for growth stocks because it lowers the value of future cash flows. This is where these growth stocks obtain a large amount of their valuation. If interest rates rise in the US, which is expected next year, it will also make it more expensive to borrow.

What am I doing about this tech stock?

I already own Teladoc shares, and I’m still optimistic for the long term. Indeed, I feel that the company is sacrificing short-term profitability to capitalise on long-term growth potential in an innovative sector. The company’s extremely large revenue growth offers me hope that this strategy is working. Therefore, despite the risks that face the company, Teladoc looks far too cheap in my opinion. I may buy some more, as I hope for a large rebound next year.

Stuart Blair owns shares in Teladoc Health. The Motley Fool UK has recommended Teladoc Health. 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.