Surging inflation is continuing to cause global chaos. In the UK, official figures show that rates have now surpassed 10% and continue to spike to fresh highs. This means stagnant cash is losing value, so I’m searching for dividend stocks that can build a passive income stream to help me counter inflation.

Here are two I’m seriously considering purchasing this month.

Abrdn

The first stock I’m looking at is global investment firm Abrdn (LSE: ABDN). It’s seen over 40% wiped off its value so far this year. In the last 12 months, the Abrdn share price is down around 45%.

Despite this, I still think it could be a solid buy today.

Firstly, its main attraction is its monumental near-10% dividend yield. This isn’t inflation-beating. But it’s not far off. And therefore, this would offer me a good level of protection against rising rates.

Its latest update to shareholders wasn’t the most impressive. However, the moves the firm is making to return value to shareholders also look good to me.

There’s an initial £300m programme, including a £150m share buyback scheme.

The stock may struggle in the months ahead as investors are deterred from making investments. With the energy price cap also recently being raised, this will only magnify the issue.

However, as a source of passive income, I think Abrdn is a great buy. With a near-inflation dividend yield and the business placing an emphasis on improving this, I’d buy Abrdn shares today.

Legal & General

Another stock on my radar for this month is Legal & General (LSE: LGEN). The financial and insurance business is down around 8% over the past year. In 2022, it has plummeted by 18%.

Like Abrdn, the business has struggled as consumers have tightened their belts in the face of the rising cost of living.

However, with its fall comes a huge 9.5% dividend yield.

Legal & General is a well-known FTSE 100 business. By adding the stock to my portfolio, I’m getting a reputable brand for a beaten-down price.

It also recently posted a positive update for the first half of this year. Within the period, operating profit rose 8%, while earnings per share jumped by the same amount.

The business also had an interim dividend of 5.44p, up 5% from the year before. And to add to this, it highlighted its growing contribution toward its five-year ambitions programme. This includes a cumulative dividend ambition of potentially £5.9bn by 2024. And when searching for stocks that can create a stream of passive income for me, this is the sort of thing I want to see.

The business may face a rocky road ahead as some predict inflation could reach well over 15% come next year. And with spending already slowing, I expect to see this intensify as we head into 2023.

However, I’d still buy the stock today. As a strong brand with an impressive dividend plan, I think Legal & General would be a great addition to my portfolio in September.

The post 2 top dividend stocks to buy in September appeared first on The Twelfth Magpie.

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Charlie Keough 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.

It’s no secret that inflation has been wreaking havoc across markets this year. With stagnant cash depreciating, I’m on the lookout for top dividend stocks that can go some way towards hedging me against rising rates. Here are two I’m strongly considering today.

Red hot rates

Before we delve into my picks, let’s start by taking a closer look at what’s been going on so far in 2022.

In the UK, inflation continues to reach new highs and July saw it in double-digits at 10.1%. In its latest update, the Bank of England explained that rates could peak at 13% this year. And more recently, investment bank Citi made the bold prediction inflation could rise to as high as 18% next year. Or as it stated, “entering the stratosphere”.

Citi pinned its forecast largely to gas prices as it revealed the UK’s energy price cap could reach nearly £6,000 come April 2023.

Taylor Wimpey

With this, I’m looking to put my money to work. And my first pick would be homebuilder Taylor Wimpey (LSE: TW). Looking at its share price over the last 12 months isn’t a pretty read as the stock has seen 37% shaved off its price.

However, with this fall comes a meaty 8% dividend yield. This isn’t inflation-beating, but this passive income stream could certainly come in handy in the months ahead.

Despite tough economic conditions, the firm recently released a strong set of half-year results. On the back of a strong set of comparators, it managed to slightly grow its operating profit. And for its full-year outlook, it expects operating profits to be at the “top end of the current market consensus range”.

The biggest issues the company faces are rising material costs and potential supply chain issues. But with these only as short-term concerns, I’d consider buying the stock today.

Abrdn

My second pick would be global investment company Abrdn (LSE: ABDN). Like Taylor Wimpey, the stock’s price has suffered so far in 2022. Over the last year, the Abrdn share price has slid nearly 44%.

It currently offers a whopping 9.8% dividend yield, which is incredibly attractive. And on top of this, it also looks cheap with a price-to-earnings ratio of 5.4.

Despite some subpar figures being reported in its latest update, I still see plenty of positives with Abrdn.

Firstly, it recently completed the initial phase of a £300m shareholder return programme via a £150m share buyback scheme. Its interim dividend of 7.3p is also in line with its dividend policy.

The firm also finds itself in a “strong capital position”, with £600m in regulatory surplus.

Its biggest challenge will be cash-strapped consumers shying away from making investments as further economic troubles loom. And this was highlighted through the dip in fee-based revenue.

Yet despite this, I’d still buy today. Its monumental dividend yield is a major pull for me. And I see real long-term opportunity in a strong FTSE 100 brand that’s taken a beating in recent times.

The post 2 top dividend stocks to help fight double-digit inflation! appeared first on The Twelfth Magpie.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Charlie Keough 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.

Here, I’m going to highlight five powerful investment themes I’ll be betting on in 2021 and beyond. I believe they all have the potential to power my portfolio higher.

Online shopping

One investment theme I’m very bullish on for 2021 and beyond is the growth of online shopping. E-commerce boomed in 2020, due to lockdowns. Looking ahead however, the online shopping industry is forecast to get much bigger. According to Grand View Research, the market is set to grow at an annualised rate of about 8% between now and 2027.

To capitalise, I’ve bought shares in retailers Amazon, ASOS, and Boohoo. I’ve also bought shares in warehouse company Tritax Big Box, logistics company Clipper, and packaging specialist DS Smith. This gives me broad exposure to the industry.

Digital payments

Linked to online shopping is the growth of digital payments. As we buy more online, we’re using cash less and paying for goods and services digitally. Looking ahead, there’s a huge growth runway here. Today, 80% of the world’s transactions are still in cash.

My two main plays here are Mastercard and PayPal. Both are leaders in the digital payments space. I also own Apple which has Apple Pay.

Video gaming

Video gaming has come a long way in recent years. Not so long ago, it was a niche hobby. Now, it’s one of the world’s most dominant forms of entertainment. Going forward, gaming is likely to get a lot bigger. Driven by advances in technology, growth in mobile gaming, and the growth of e-sports, the industry is expected to grow by around 13% per year between now and 2027.

My main investment for this theme is Keywords Studios. It’s a fast-growing company that offers technical services to game developers. I also have a position in Microsoft. It owns Xbox and now offers subscription gaming services.

Cloud

Cloud computing is another area of technology I expect to continue growing in 2021. Nearly all technologies we use today are underpinned by cloud technology. Between now and 2025, the industry is expected to grow at around 18% per year. To capitalise, I’ve built up positions in Amazon, Microsoft, Alphabet, Sage, and Okta.

Gig economy

Finally, there’s the ‘gig economy’. This could be the theme I’m the most excited about. In the past, the gig economy was associated with low-skilled jobs, such as delivery work. Today however, it’s a different story. Thanks to advances in technology, one in three professionals are now quitting the nine-to-five lifestyle and actively choosing to freelance. Overall, this market – which is set to be worth nearly $500bn by 2023 – is growing at three times the rate of the traditional employment market.

In order to capitalise on this exciting theme, I’ve built up a sizeable position in Upwork. It operates one of the world’s largest freelance employment platforms. This stock performed well for me last year, rising from $12 to $40. Yet the market-cap is still small at under $5bn. I think the growth potential here is enormous. 

The post 5 ‘monster’ investment themes I’m betting on in 2021 appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in Amazon, Boohoo, ASOS, Upwork, DS Smith, Clipper Logistics, Tritax Big Box, Mastercard, Alphabet, PayPal, Keywords Studios, Sage, Okta, Microsoft, and Apple.  John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, Apple, Mastercard, Microsoft, and PayPal Holdings. The Motley Fool UK has recommended ASOS, boohoo group, Clipper Logistics, DS Smith, Keywords Studios, Sage Group, and Tritax Big Box REIT and recommends the following options: long January 2022 $1920 calls on Amazon, short January 2022 $1940 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. 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.

Just over a decade ago, the FTSE 100 was dominated by banking, mining, oil, telecoms and tobacco. These sectors still make up a significant chunk of the index. But their relative size has gradually reduced over time. The decline started with the banks suffering big losses during the financial crisis and continued with the oil price collapse of the last few years.

FTSE 100 reshuffle

In my opinion, the days of these sectors dominating the FTSE 100 will end in the years ahead. In order to achieve the best investment returns, I think I need to look to new sectors that are growing quickly. Primarily, I think that means I need to focus on companies using technology in novel ways. Historically, the UK index hasn’t benefited from tech companies in the same way that US indices have. But I think that will change. Increasingly, digital technology is at the heart of innovation, and I expect that to feed through to the UK main market in time.

This means it’s all about thinking ahead. What are the up and coming technologies? What kind of impact are they going to have? If I want to invest successfully over the long term, then I need to be thinking about these questions now. I need to be able to spot the individual companies that are going to take advantage of these opportunities. I also need to be able to assess whether their share prices represent good value.

This is where the difficulty lies. For that reason, I’d buy an industry-focused fund or trust, over individual stocks.

Where I’d invest for the long term

But which industries would I look at? There are a few key areas that stand out to me. First of all, I’m interested in companies that are able to add value in the shift to cleaner energy. That means companies involved in the production, storage and distribution of clean energy. I also see a continued focus on large-scale infrastructure modernisation that will make travel easier and safer. 

Away from energy and infrastructure, I’m drawn to digitisation, artificial intelligence and big data. I’m particularly interested in applications that will aid business operations and communications, as well as consumer technologies targeted at the average person on the street. Robotics have already been deployed in large-scale production, but in time I expect this to filter down to every level of business. And as the world becomes increasingly digital, cyber security should grow in importance. 

Meanwhile, this year has shown just how crucial large pharmaceutical companies are going to be in protecting us in the future. The winners of tomorrow all have one thing in common. They’re all investing heavily in research and development today. R&D is the foundation for innovation. And innovation is a precursor to long-run profitability. I think that’s something I need to bear in mind when assessing the value of a stock.

The post Investing for the long term? Here’s what I’d do appeared first on The Twelfth Magpie.

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Thomas 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.

However, what seems to go unnoticed, is just how well Smith has constructed the Fundsmith portfolio to take advantage of a number of powerful trends that are likely to have a huge impact on the world in the years ahead. Having analysed the holdings, here are four dominant trends I believe the global equity fund is well placed to capitalise on.

Rising wealth in the emerging markets

The first trend that I think Fundsmith should benefit from is rising wealth across the world’s emerging markets. As disposable incomes in developing countries increase, consumers are likely to desire products that will improve the quality of their lives. They are also likely to ‘trade up’ to well-known brands.

Source: Prudential 

In this respect, Fundsmith looks very well placed to capitalise. Holdings that could benefit include consumer goods champion Unilever, alcoholic drinks maker Diageo, soft drink legend PepsiCo, and cosmetics giants L’Oréal and Estée Lauder – all of which have exposure to the emerging markets.

The world’s ageing population

Fundsmith also looks well placed to profit from the world’s ageing population. As people age, their demand for healthcare products and services tends to rise. This means the healthcare sector should do well in the years ahead.

Source: World Health Organisation

Here, the fund has exposure to a number of leading companies such as Coloplast, which makes healthcare products related to ostomy, continence, and wound care, Stryker, which specialises in joint replacement implants, as well as Johnson & Johnson and Reckitt Benckiser, which both own a number of well-known healthcare brands.

The diabetes ‘epidemic’

Taking the healthcare theme one step further, it’s worth noting that Fundsmith also has exposure to a number of top diabetes stocks including Novo Nordisk and Becton Dickinson and Co.

This is a smart move by Smith, as the prevalence of diabetes is growing at an alarming rate. Since 1980, the number of people with diabetes globally has nearly quadrupled to over 420m, and experts predict that by 2045, more than 600m people could be affected by the disease due to the ageing population and increasingly unhealthy lifestyles. Looking at this forecast, demand for diabetes treatment is likely to increase.

A more digital world

Finally, Fundsmith looks very well positioned to benefit from an increasingly digital world. Not only does the fund hold one of the world’s biggest players in artificial intelligence in Microsoft (which recently won a $10bn cloud contract with the Pentagon) but it also holds one of the major players in the digital payments space, PayPal. In addition, it holds Spanish IT specialist Amadeus, which provides technology solutions to the travel industry, as well as Sage and Intuit, which provide cloud-based accounting solutions to businesses.

Overall, from a thematic investing point of view, I think Fundsmith looks very attractive. Of course, my analysis is based on its current holdings. These could change in the future. However, given that Smith is a long-term investor, I expect the fund manager to hold on to many of the stocks I’ve mentioned above for a while.

The post 4 powerful trends I believe Fundsmith could benefit from in the years ahead appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
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• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Edward Sheldon owns shares in Unilever, Diageo, Sage, Reckitt Benckiser, and Microsoft and has a position in the Fundsmith Equity fund. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Microsoft, PayPal Holdings, and Unilever. The Motley Fool UK has recommended Diageo, Johnson & Johnson, and Sage Group and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2020 $97 calls on PayPal Holdings, and short January 2021 $115 calls on 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.

The world’s ageing population

The world’s ageing population is a theme that is hard to ignore – virtually every country in the world is experiencing growth in both the number and proportion of older people in their populations. According to the UN, by 2030, there will be roughly 1.4bn people aged 60 and over worldwide, up from 900m in 2015.

An ageing population has implications for many industries. Healthcare is one industry, in particular, that should benefit significantly. Wealth management and travel are other industries that could benefit. Stocks that I believe could do well as a result of the world’s ageing population include joint replacement specialist Smith & Nephew, wealth manager St. James’s Place, and leisure specialist InterContinental Hotels Group.

Disruptive technology

Disruptive technology has had a big impact on the world over the last decade and I expect this trend to continue throughout the 2020s. Right now, we’re in the midst of a technology revolution (often called the fourth industrial revolution) and I believe it has a long way to go. This is probably the theme I’m most bullish on.

Sub-sectors of this theme that I like include financial technology (FinTech), robotics and automation, and artificial intelligence. Over the next 10 years, I think these technologies are likely to have an extraordinary impact on the world. For exposure, I’d look at funds that have exposure to both large technology companies such as Alphabet (Google) and Microsoft, as well as smaller niche technology companies, such as the Polar Capital Global Technology fund. 

Sustainability

I’m also expecting sustainability to become more of a focus in the 2020s. In recent years, the world has begun to realise how much damage we have done to the environment in the past and as a result, many people are now far more aware of the products they buy and the food they eat (meat alternatives is an interesting sub-theme here). Interest in sustainable investment strategies has increased significantly too. I think this is just the tip of the iceberg, though. To capitalise, I’d look at sustainable funds, or companies that have sustainability at the core of their philosophy such as packaging specialist DS Smith.

Rising wealth in the emerging markets

Finally, there is the rise of wealth in emerging markets. Higher incomes in countries such as China, India, Indonesia and Brazil are likely to have implications for a number of industries. These include consumer goods (as disposable incomes increase, consumers want products that can improve the quality of their lives), financial services (rising wealth means more demand for savings and insurance products), healthcare, and travel. To capitalise, I’d look at companies such as alcoholic drinks manufacturer Diageo, which expects an additional 750m emerging market consumers to be able to afford international-style spirits by 2030; Prudential, which is now focused on the financial needs of those in Asia; and Unilever, which generates over 50% of its sales from emerging markets.

The post 4 of my top investment themes for the next decade appeared first on The Twelfth Magpie.

More reading

• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
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• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Edward Sheldon owns shares in St. James's Place, Ds Smith, Diageo, Unilever, Prudential, Microsoft, and Alphabet and has a position in the Polar Capital Global Technology fund. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Microsoft, and Unilever. The Motley Fool UK has recommended Diageo, DS Smith, InterContinental Hotels Group, and Prudential and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on 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.