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Interest rates have remained low throughout 2021. Even with the potential for rates to increase in coming months, it’s likely to only be by 0.15% or similar. Therefore, in 2022 it’s going to be still important for me to try and make my money work hard elsewhere. One way I can do this is via top dividend shares. The income yield that I pick up from these stocks can help me to have a return on my initial capital. Here are some stocks I like.

Some dividend shares from finance

If I had a pot of money to invest in dividend shares, I’d aim to split it up via a selection of stocks. This allows me to reduce my risk from just holding one company. It also allows me to mix up the yields. I can target some high yielding stocks but offset some of this risk by also choosing some more conservative options. When I average out the yields, I should be able to get a nice blend.

For some conservative options, I’d look to buy finance firms Brewin Dolphin and TP ICAP. Both have similar yields of around 4.3% at the moment. Although they both operate in the finance sector, the companies are quite different. Brewin Dolphin is an investment manager that primarily makes money from providing wealth management advice and by growing the assets held under management.

TP ICAP is a financial broker for banks and other institutions. It helps to facilitate large trades as a middleman, taking a small cut as commission. I like both companies because both should do well if we see the stock market become volatile. Also, these companies shouldn’t be particularly negatively impacted from higher interest rates, which is another plus.

In terms of risks, both these subsectors of finance are very competitive. Both wealth management and brokering have numerous companies competing for the same business. Either of these top dividend shares could lose market share easily if they take their foot off the gas.

Higher yields, but higher risks

When looking for some higher yields, the metal and mining space offers me plenty of options. In fact, the three highest dividend yields in the FTSE 100 at the moment are all from this area. All offer yields of 10% and above. However, these do come with high risks, hence why I’d use other stocks to try and diversify.

For example, Rio Tinto can be classified as a top dividend share with a yield of 10.92%. It’s been paying out generous amounts from the profits made recently. In half-year results, profit after tax rose 271% from the previous period to $12.3bn.

One risk here is that the commodity prices can pull the share price lower. Falling iron ore prices have hurt the Rio Tinto share price, which is down 13% over one year. This helps to boost the dividend yield, but arguably this isn’t a sustainable way of doing it.

Overall, I’m considering buying the top dividend shares mentioned now. By mixing up the types of stocks I go for, I should be able to diversify my risk but keep an attractive overall dividend yield.

Jon Smith and The Motley Fool UK have 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.

On the lookout for the best stocks to buy now for my portfolio, I believe Sage Group (LSE:SGE) is one such pick. Here’s why.

UK tech stock

Sage Group is one of the UK’s largest listed tech firms. It specialises in accounting and payroll software for small to mid-sized businesses. A recent shift in strategy to migrate its products to the cloud software-as-a-service (SaaS) subscription model seems to be working.

As I write, shares in Sage are trading for 820p, which is a 43% return since this time last year when the shares were trading for 573p. At current levels, the Sage share price has only recently surpassed pre-crash levels.

Why I like Sage shares

Tech stocks have become more defensive since the pandemic began and the market crashed. Defensive stocks refers to stocks with resilient and predictable earnings despite worsening market conditions. Typical defensive stocks used to be healthcare, utilities, and transport. The pandemic has changed this. The reliance on technology for day-to-day operations of businesses has increased and I believe it will continue to do so. Sage’s products are key components for the running of any type of business. Despite macroeconomic pressures on small to medium-sized businesses, the need for accounting and payroll services will always be a requirement.

Sage has a good track record of performance as well as impressive recently reported results. I understand that past performance is not a guarantee of the future but I use it as a gauge nevertheless. Sage has generated consistent growth and profitability has been excellent too. Coming up to date, audited results for the year ending September 2021 were released last month. The shift towards SaaS seems to be paying off. Sage reported organic recurring revenue growth of 5.4%, driven by growth in its Sage Business Cloud division of 19%. Furthermore, annualised recurring revenue increased by 8%. Cash generation was strong, supplementing a robust, cash-rich balance sheet.

At current levels, Sage looks cheap to me. It sports a price-to-earnings ratio of just 30. I think this is cheap for a tech stock with such a good track record of performance and growth year-on-year.

Risks involved

Despite believing Sage is one of the best stocks to buy, I know that it still comes with risks. Competition among tech stocks is intense and I must take this into account. For example, Xero is a new entrant into Sage’s marketplace that could eat away at Sage’s burgeoning market share with its own offering and hamper Sage’s performance.

Overall, I view Sage as a quality company with defensive attributes and a good track record. Recently, analysts noted they expect the share price to rise to the 900p level, which means its recent upward trajectory could continue. It is worth noting that forecasts can change and aren’t something to rely on. 

It also pays a dividend that will make me a passive income, although dividends aren’t guaranteed. Furthermore, it has a good balance sheet to ward off any issues if they were to arise. I would add the shares to my portfolio at current levels.

Jabran Khan has no position in any shares mentioned. The Motley Fool UK has recommended Sage 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 news about the Omicron variant first broke a couple of weeks back, the FTSE 100 opened down 3% on the day. It was clear that the market was shaken in the immediate term. Now we’re getting more information about the variant, but things are still uncertain. Even with the risks ahead, not all stocks might perform badly. Here’s one top stock I’m considering buying, and one that I’d stay away from.

Getting exposure to gold

The top stock that I think could do well if Covid-19 worries stay over the winter is Polymetal International (LSE:POLY). Given that the share price is down 22% over the past year, this might be surprising. However, I’m looking at the stock from the exposure it has to gold.

Polymetal is a top-10 global gold producer, with mines in Russia and Kazakhstan. Therefore, some of the share price movement is correlated to what happens to the gold price. After all, if the price of gold rallies 10%, then the asset mined by Polymetal will achieve a higher selling price. This acts to boost revenues.

Over the past year, the gold price is down 3.44%, acting as a drag for Polymetal. Yet if we see Omicron risks increase, I think the gold price should rally as investors look for a safe haven. As a result, this should help to uplift Polymetal shares. 

A risk here is that if the variant becomes very serious, mines could be closed, restricting any work potential. Also, Polymetal is a global company that transports and operates in countries around the world. Travel and supply chain disruption could hinder the business.

Are airlines top stocks right now?

A company that I wouldn’t refer to as a top stock right now is International Consolidated Airlines Group (LSE:IAG). The share price is down 11% over the past year, although this doesn’t tell the full story. Over two years, a drop of 61% has been seen, as the full hit of the pandemic from the start of 2021 is noted.

I wrote about the stock last week, flagging the fall in the short term due to concerns around Omicron. During the week commencing 22 November, it was the worst performing stock in the FTSE 100 index. This was when the news first gathered pace about the variant.

I think that if Omicron risks remain (or increase) then IAG shares could come under further pressure. The slippery slope is that governments are imposing travel restrictions at the moment. This generates lower demand for air travel. Thus, airlines under the IAG umbrella will likely have lower flying hours. Ultimately, this should translate to lower revenue.

I could be wrong, and IAG shares might find a bottom soon. Having been beaten up over the past two years, there’s logically a point where the share price can’t fall any lower, given that it’s not bankrupt. So buying it an a cheap level could offer high rewards in the future.

Overall, concerns around the stock market doesn’t mean there aren’t top stocks that could still do well. I’m considering buying shares in Polymetal, but steering clear of IAG.

Jon Smith and The Motley Fool UK have 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 biggest FTSE 100 gainer in yesterday’s trading was property developer Berkeley Group Holdings (LSE: BKG), whose share price rose by almost 5%. I have to admit, I have not talked about the company in a while, because others in the segment looked so much more promising. But yesterday’s increase had me sit up and take notice. 

Berkeley Group Holdings posts good results

So I dug deeper. The increase followed a good set of results. For the six months ending 31 October 2021, the company reported a 36% increase in revenue compared to the same six months in 2020. Its earnings showed strong growth too. Pre-tax profits were up by 26%, while earnings per share (EPS) rose by almost 35%. Even though the company’s revenues have not grown consistently, on a sequential basis, its net profits have risen every six months for the last year and a half, which is pretty impressive to me.

And its future looks good too. Berkeley Group has increased its earnings guidance for the next three years! It also says that by then its volumes will have increased by 50% from pre-pandemic levels. I think this could continue to add to its share price, which is still some 13% below its pre-pandemic levels. In the past year as well, the stock has made limited gains of only 9% or so. Of course the gains can vary from day to day, based on where the markets were at a year ago. And in this case, there has been a particularly high degree of fluctuation in stock price. Hopefully, though, it could stabilise a bit more now. 

Higher expected dividend yield for the FTSE 100 stock

The company could also pay better dividends now. So far its dividend yield has been negligible at 0.2%. This in turn could increase the attractiveness of the stock, which has so far been relatively limited. 

What is holding it back?

I reckon that one reason why Berkeley Group’s share price was not going anywhere recently, despite its good results, was its price-to-earnings (P/E) ratio of around 12 times. Now, this is not high. In fact, it is much lower than the current FTSE 100 P/E of 17.5 times. But, it is comparable to other big property developers.

For instance, Barratt Developments and Persimmon each have a P/E of 11.5 times. At the same time, their share price movements have been far more predicable. They rose during the pandemic in 2020 on account of stimulus measures for the housing market. And they have been less certain in 2021 as supportive policies are rolled back and the recovery still remains relatively muted. And both stocks also have much better dividend yields, notably Persimmon, which is at 8.2%. In other words, they seem to have more going for them than Berkeley Group. 

However, I think the clarity of outlook for the company is noteworthy for me. And I reckon it was so for other investors too, which is why its share price rose so much yesterday. 

What I’d do

Based on this and a potential improvement in its dividend yield in the coming months, I think this stock could outperform its peers, if not other FTSE 100 shares in 2022. I am keeping a close watch on further developments. It could just be among the stocks I buy early next 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.

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The Aviva (LSE:AV) share price has risen over the past 12 months. At current levels, would Aviva shares be a good addition to my portfolio? Let’s take a closer look at why the shares are on the up and if I should add some to my holdings.

Aviva shares rising

Aviva is the UK’s largest insurance firm and serves over 15.5m customers. Insurance is a staple for consumers and businesses alike and shouldn’t be affected even in times of economic uncertainty.

As I write, Aviva shares are trading for 394p, whereas a year ago shares were trading for 323p. This is a 21% return over a 12-month period. It is worth noting that at current levels the share price is almost identical to pre-crash levels.

I believe the share price has been rising due to positive trading, as well as the effects of a new strategy to streamline operations and more emphasis on rewarding investors.

The bull case

Aviva announced last year that it was to undergo a transformation whereby it would look to offload certain businesses within the group. This would allow it to focus on core territories such as the UK, Canada, and Ireland. It has been working hard to successfully do this and in the past two months alone has confirmed sale of its Italian and Polish businesses. The reasoning behind this was to offload businesses that perhaps weren’t yielding the best performance and profitability. If this strategy pays off, the core territories mentioned should yield more profit, which could lead to better investor returns.

In addition to this, Aviva also confirmed it will use the proceeds from the sale of its businesses to pay down debt, invest in core territories operations but perhaps more tellingly, reward shareholders. It committed to return £4bn to investors by the end of 2022, which included a share buyback scheme. This will have definitely boosted Aviva shares recently.

Performance has been positive recently too. A Q3 update released last month made for good reading. Aviva reported good progress in all its divisions, but Savings and Retirements and General Insurance had risen most compared to the same period last year, which stood out to me. Growth and efficiency targets were on track for its full-year guidance. Of the £750m share buyback scheme mentioned, £450m has been completed by this point, which was confirmed in the report. 

Risks and my verdict

Aviva’s current transformation is complex. Selling businesses as well as rewarding investors with proceeds and paying down debt is easier said than done. Any negative news could affect performance and payouts. Furthermore, current macroeconomic issues such as rising inflation and currency headwinds linked to the pandemic and Brexit could affect this strategy as well as performance and payouts. 

Overall I like Aviva shares for my portfolio and would happily buy the shares at current levels. Aviva has a clear strategy in place to streamline operations and is committed to rewarding investors. It currently has a dividend yield of close to 4% which would make me a nice passive income. This is higher than the FTSE 100 average of 3%. At current levels, the Aviva share price looks like a bargain too.

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.

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FTSE 250 incumbent Moonpig (LSE:MOON) has seen its share price drop in the past six months. At current levels, is there an opportunity for me to pick up cheap shares for my portfolio? Let’s take a look.

Greeting cards giant

Moonpig is an internet-based greeting cards, gifts, and flower business. The rise in tech has seen the greeting cards market move online where consumers can pick, personalise, and directly send a greeting card, a gift, or flowers, to a loved one.

As I write, shares in Moonpig are trading for 380p, whereas six months ago shares were trading for 21% higher at 487p. Moonpig shares are down 7% over a 12-month period overall as they were trading for 410p this time last year.

I believe Moonpig’s share price has been detrimentally affected by recent performance linked to macroeconomic issues and pressures.

Bearish attitude

There are a few factors that are putting me off Moonpig shares right now. Firstly, performance has dropped from 2021 levels, which is worrying. The FTSE 250 incumbent released an interim report today for the six months ended 31 October. It showed that revenue and profit were 8.5% and 30.6% less than the same period last year. There were some positives which pointed towards a higher customer base and a new record for attached gifting levels. This is when a consumer attaches a gift to a card when making a purchase. Furthermore, debt levels did decrease too.

Debt is a major concern for me. Moonpig shares only debuted on the London Stock Exchange in February and the share price has been quite volatile since then. Debt levels are quite high and Moonpig points towards “technical reasons” which usually means technology-related cost and infrastructure needed to run an online-only business.

Competition in the online greeting sector is getting intense. Other major players in the market are vying for the same customer base. Funky Pigeon is one such competitor.

The rise in cases and the new Omicron variant will worry consumers as, after all, greeting cards are a discretionary or luxury expense. If cases rise and restrictions come into force, consumers may be worried about their pockets and steer clear of non-essential spending.

Finally, rising inflation and costs are a worry for all businesses and Moonpig is not exempt. Rising costs can affect margins and investor returns and if these costs are passed on to its customers, the same customers could look for cheaper alternatives. 

A stock I’m avoiding

At current levels and the current state of play, I would not buy Moonpig shares. Despite its cheapened share price, for me the negatives outweigh any positives the firm does possess. It is worth noting that some of the issues could be short term. These include Covid-19 implications and rising inflation. I believe 2021 performance was over-inflated due to the pandemic. This led to people keeping in touch using technology. I personally used online greeting cards when I wasn’t able to see my friends and loved ones while in lockdown. I will keep an eye on developments.

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.