Last month I took what I knew was a big risk and bought the dividend stock with the highest yield on the entire FTSE 100. 

It was paying 19.47% at the time, which is an insane sum. Every warning sign was flashing, because I know full well that a high yield suggests a company in trouble. Yet I still dived in and snapped up shares in housebuilder Persimmon (LSE: PSN).

My reasoning was that the stock was cheap, having fallen roughly by half over the previous 12 months (with a similar drop over five years). Persimmon was valued at less than five times earnings, and looked stunning value to me despite current worries.

This dividend stock had an amazing yield

I accepted that the dividend may be vulnerable, but decided its sheer scale left plenty of leeway. Even if management slashed the payout in half, I would still be getting income of 10% a year.

Also, Persimmon has a reputation for rewarding shareholders handsomely. I told myself that management would be reluctant to trash this unless it had no choice. Also, I reasoned that a dividend cut would do little damage to the share price, given how cheap the stock already was.

All those arguments turned to dust on Tuesday, when management delivered a miserable trading update. Cancellation rates jumped and sales fell after mortgage rates surged in the wake of former Chancellor Kwasi Kwarteng’s mini-Budget fiasco. The share price fell 7% on the day.

Even where buyers held firm, reservation prices fell 2%. With a growing army of analysts predicting a property market crash of 10% to 15%, a much bigger drop looks baked in

Persimmon is making fewer land purchases as it looks to “navigate the uncertain outlook for the UK housing market”. As if all that wasn’t enough, it also had to increase Grenfell provisions for unsafe cladding to £350m.

Buying FTSE 100 shares is a long game

Today, we learned that GDP fell by 0.2% in the quarter to September. Chancellor Jeremy Hunt’s autumn statement will pile on the misery, bringing spending cuts and tax hikes. It’s a dismal picture and it looked like I had chosen a really daft time to invest in the UK property market.

I braced myself for the worst when I checked my portfolio prior to writing this. So imagine my surprise (and relief) when I discovered I was actually up 20% on my purchase.

Buying cheap worked in my favour. After Tuesday’s dip, Persimmon’s shares quickly recovered, because investors decided they were still good value. Everyone knows the property market is vulnerable, so the poor update was hardly a surprise. Once the details had sunk in, things didn’t look so bad.

So am I celebrating my 20% increase? Not really. While it’s nice to know I haven’t made a complete howler, I’m looking to hold this stock for two decades, rather than two weeks. Over such a timescale, short-term swings are neither here nor there.

So what would I have done if my shares in Persimmon had crashed? Bought more, probably. They’d be even cheaper.

The post Have I just made a terrible mistake in buying this FTSE dividend stock? appeared first on The Twelfth Magpie.

More reading

• Down 63% and yielding 6.3%! Is this FTSE 100 share a brilliant bargain?
• This 5.5%-yielding income stock’s at a 13-year low and cheap to-boot! Time to consider buying?
• Down 65% but yielding 6%! Is this FTSE 100 dividend stock an unmissable bargain?
• A 6.7% forecast yield and 53% below ‘fair value’! 1 stunning FTSE income stock for investors to consider today?
• How much do you need in an ISA to target a £2,066 monthly passive income in 2066

Harvey Jones owns shares of Persimmon. 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 hunting for dividend income, and there are so many FTSE 100 stocks to buy offering sky-high yields that I’m getting a little dizzy.

I’ve just taken a gamble and bought housebuilder Persimmon, which at the time was yielding almost 20% a year. Not only that, it was trading at just five times earnings.

It still felt like a risky move, given that house prices are starting to fall as interest rates rise. Yet I’m betting that the shortage of property supply should sustain demand. Also, mortgage rates may not rise as much as we expected just a couple of weeks ago.

Top income stocks to buy

Persimmon’s dividend cover is thin at 1.1% but even if management does cut its shareholder payout, it should still be pretty substantial.

At the other end of the risk spectrum, I think it is nearly always a good time to buy shares in National Grid. This is one of the most solid income stocks on the FTSE 100, supported by its regulated earnings, while exposure to North-Eastern US energy market gives it a bit of buzz.

The 5.3% yield is only covered 1.2 times but this is less of an issue with utilities, as their earnings are more secure so they can pay out more of them. National Grid’s shares are valued at 15.6 times earnings, pretty much in line with the long-term average.

Supermarket chain Sainsbury’s has just reported a 29% drop in first-half profits to £376m as grocery prices rocket and consumer incomes plunge. However, last week’s results got a positive reception, as group revenues rose 4.4%.

I expect Sainsbury’s to continue struggling, as the cost-of-living crisis drags on and German discounters Aldi and Lidl continue to grab market share. Yet I am relatively confident about its dividend. This is now the main reason to hold the stock, and management will be reluctant to cut it.

I’m hoping that won’t be necessary, anyway, as its attractive 6% yield is covered 1.9 times by earnings. Trading at just 8.6 times earnings, many of the challenges Sainsbury’s face are in the share price.

Dividend investors spoilt for choice

Aviva’s shares have finally come alive after years of going sideways, bouncing 12% in 12 months. It’s the dividend that matters here, though, and the stock currently yields a whopping 8.8%, nicely covered 1.5 times by earnings.

The Aviva share price doesn’t exactly look expensive, either, trading at 7.5 times earnings. It is not the most dynamic stock on the FTSE 100, but I would still want it as a cornerstone of my portfolio. Today’s entry price looks attractive to me.

Finally, I’d like to add a commodity stock to my list of stocks to buy for sustainable income, and I’m plumping for Anglo American. The mining sector has picked up in recent days, as hopes grow that China is finally easing its Covid lockdowns. 

The upcoming global recession could squeeze demand for metals and minerals. Yet I’m not too worried, given that Anglo American’s 8.4% yield is covered 2.5 times, and the stock is valued at a dirt-cheap 4.8 times earnings. Anglo American is well worth its place on my list of best FTSE 100 dividend income stocks to buy today.

The post 5 stocks to buy for high and rising dividend income appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones holds shares in Persimmon. The Motley Fool UK has recommended Sainsbury's. 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.

Now may look like a bad time to buy FTSE 100 shares, but I beg to differ. Today’s turmoil offers a brilliant buying opportunity, but with three provisos.

At The Motley Fool, we never like to waste a stock market crash. Or even a dip, like the one the FTSE 100 is suffering at the moment. 

The index of top UK shares has been relatively resilient in 2022. It is down 8.09% year-to-date while the US S&P 500 has crashed 23.49%. Yet the FTSE 100’s relatively smaller drop is still throwing up lots of share buying opportunities for me.

FTSE 100 offers me great value

When an individual stock falls sharply in value, I tread carefully. Usually that’s due to a bad piece of company news, such as a profit warning, reduced dividend, or some other nasty that weighs on its prospects.

When the whole FTSE 100 falls, it’s a different matter, as good companies are sold off with the bad. Investors are fleeing risk right now, as today’s problems aren’t going away soon. Post-Covid supply shortages, war in Ukraine, and (crucially) rising interest rates are combining to destroy investor sentiment.

These problems will hit some sectors harder than others. Housebuilders such as Barratt Developments will suffer as rising mortgage rates hit demand. So will asset managers such as Schroders, as markets go haywire. Supermarkets like Sainsbury’s are also suffering, as customers buy less or trade down.

By contrast, luxury goods maker Burberry Group is on safer ground as the wealthy are less affected by the cost-of-living crisis. So is spirits maker Diageo, as its customers need a stiff drink right now.

I’m focusing my attention on companies that have been hit hardest, as their share prices have fallen most. They offer a tempting combo of dirt-cheap valuations and astonishing yields. I’ve just taken a punt on housebuilder Persimmon. I’m worried I may regret this, but found its 19.49% yield and valuation of just 4.81 times earnings too ridiculous to resist.

I’m now caught between buying Tesco for long-term income and growth, or investing in Rolls-Royce shares in the hope they will lead the charge when markets recover.

Three ways I reduce risk

The big risk is that markets could fall further from here, but I’m happy to take that chance for three reasons. First, it’s impossible to buy right at the bottom of the market. Today’s lower prices are good enough for me.

Second, I’m building a balanced portfolio of FTSE 100 stocks on top of that, to turbo-charge my growth. I aim to hold at least a dozen, so if one or two fail to deliver, hopefully the others should more than compensate.

Finally, and most important, I’m only buying shares that I plan to hold for the long term. That means at least 20 years, which should give plenty of time for the FTSE 100 to rebound from its current troubles.

Sometimes I have to steel myself to click the ‘buy’ button but if I wait until after the FTSE 100 has recovered, then the same stocks should cost a lot more than they do today.

The post I don’t care if FTSE 100 shares fall further, I’m buying them today appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended Burberry, Diageo, Schroders (Non-Voting) 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.

If I had as much as £10,000 to pump into a Stocks and Shares ISA right now I’d be looking to load up on top FTSE 100 dividend shares.

After years of trailing major indices such as the S&P 500, London’s blue-chip index is showing it’s made for tough times. US tech stocks may have cashed in on the cheap money era, but FTSE 100 shares now offer bruised investors a welcome safety net.

Investing goes in cycles and the tech splurge lasted beyond its natural term. That came as central bankers piled on the stimulus during the Covid crisis. Now investors are prioritising ‘value’ stocks, dividend-paying companies trading at low valuations. 

My ISA line-up

The FTSE 100 is full of them and I’d start by exploring these 10 companies. All have risks, but offer big opportunities too.

Insurer Aviva has delivered little share price growth in recent years. But it’s a dividend aristocrat paying income of 9.95%. Trading at a dirt-cheap 6.8 times earnings, it’s hard to resist.

Barclays is even cheaper at just 3.7 times earnings, while yielding 4.28%. Sticking with financials, I also like Lloyds Banking Group, cheap at 5.5 times earnings with a 4.82% yield (and future dividend growth).

The financials sector is being shaken by the gilt crisis, while rising interest rates could squeeze both small business and retail customers. But I reckon those risks are reflected in their rock-bottom valuations.

I’d also include transmissions giant National Grid. Frankly, this is a stock I’d buy at any time, as a core portfolio holding. Today it yields 5.77% and looks fair value at 14.4 times earnings. It’s a solid long-term buy and hold for my ISA.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Higher yields

With that as security, I’d take a bigger punt and buy a housebuilder such as Persimmon that yields a ridiculous 19.37%. Although I expect the dividend to be cut sooner rather than later, that won’t be a disaster given today’s starting point. House price crash fears are priced in at a valuation of 4.9 times earnings. At least, I hope they are.

Mining giant Rio Tinto is the second highest yielder on the FTSE 100 offering 14.21% and trading at 4.2 times earnings. Chinese demand for commodities is slowing and the dividend may be reduced at some point. Now still looks like a great entry point for contrarians like me. I’d also consider gold miner Fresnillo. It may benefit when inflation easies, the US dollar softens and the gold price recovers.

Clothing retailer Next will obviously suffer as discretionary consumer spending falls. But it looks better placed than most, and I’d consider it for my ISA too. Then I’d buy Unilever, because I’ve never seen it this cheap at 17.2 times earnings (it’s usually around 24 times) while yielding 4.42%.

Finally, I’d include spirits giant Diageo in my top 10. Yes, it looks expensive trading at 24.1 times earnings while the yield is just 2.08%.But it’s a solid, recession-proof business and they come at a premium in these troubled times.

The post How I’d invest £10k in a Stocks and Shares ISA today appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended Barclays, Diageo, Lloyds Banking Group 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.

Sometimes the FTSE 100 throws up such a dirt-cheap bargain that I have the urge to cast all caution aside and buy it, despite the risks. I think I have found just such a stock.

Housebuilder Persimmon (LSE: PSN) offers the kind of dividend yield that would normally have me running a mile. Incredibly, it pays income of 18.56%. That is almost double the current inflation rate.

This is a massive income stock

I would normally view a massive yield like this as a red light rather than a green one. Yield is calculated by taking the dividend per share, and dividing it by the company’s share price. This means when the share price falls, the dividend automatically rises. A high dividend is therefore normally a sign of a collapsing share price.

A quick look at Persimmon’s stock chart confirms that’s the case here. It’s a sea of red. In the last week it has fallen 7.02%. Over 12 months, it is down 51.03%. Measured over five years, it is down 45.45%. Those are horrible figures.

Bargain-seekers who loaded up on Persimmon stock over that period will be licking their wounds. Each drop has been followed by another. The comeback never comes.

I accept that I could quickly find my name enrolled on the lengthy list of losers. UK house prices finally look vulnerable as the cost-of-living crisis intensifies. Affordability is at an all-time high of 9.1 times the average salary, up from 3.55 times in 1997. That’s as dizzying as the Persimmon yield. Neither may be sustainable.

While the stamp duty cut and shortage of property supply will partially offset this, at some point buyers will find purchasing new homes too expensive. Especially if the current sterling crisis forces the Bank of England to hike interest rates even more aggressively.

Yet I would still buy this stock. If Persimmon didn’t face extreme headwinds, it wouldn’t be trading at a crazily low forward valuation of 5.5 times earnings. And the yield wouldn’t be so high.

The FTSE 100’s biggest yielder

Its current dividend is covered just 1.1 times earnings, as is the forward yield of 16.3%. It could make up any shortfall from its £780m cash holdings, but can’t keep doing that. Management may simply decide the yield is embarrassingly high, and chop it. Yet even if the payout was slashed in half, it would still yield 8% or 9% a year.

Another danger is that inflation will drive up building costs, although management has partly protected itself by bringing many of its operations in-house. Pre-tax profit for the six months to June 30 did fall, from £480m to £439.7m, while revenue and completions fell too.

Yet Persimmon is still on course to hit up to 15,000 completions for the full year, with forward-sales rates at 90%. Operating margins are 26.6% and the return on capital employed is 27.4%. It’s hardly a company in peril.

The big, big risk is that house prices crash, Persimmon shares fall further and the shareholder payout is cut. Yet I think today’s crazy dividend and valuation justify taking a risk with a small corner of my portfolio. I’m holding for a minimum 10 years, ideally 20, or more.

The post This dirt-cheap income stock yields a staggering 18%. I’m going to buy it! appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones doesn't hold any of the shares mentioned in this article. 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.

FTSE 100 shares are down sharply today as chancellor Kwasi Kwarteng’s mini-budget speech continues to rattle global markets. The index has fallen 1.11% to 6,940, at time of writing. That’s the lowest level of the year. It is now down 7.53% in 2022.

Sterling is in freefall as traders expect base rates to hit 5.8% next year. That’s a huge increase on today’s 2.25%, which is already the highest for 14 years.

FTSE 100 shares are falling today

There are even reports that the Bank of England may have to announce an immediate base rate hike to stop the pound’s rout. That could be as much as 2%. Panic is setting in and FTSE 100 shares are not immune.

I’ll leave others to discuss the politics of Kwarteng’s controversial budget. My focus is on the FTSE 100 and only one thing matters to me right now. Shares listed on London’s index are cheaper than they were just a few days ago.

I am building a portfolio of FTSE 100 shares for retirement and my strategy is simple. I buy when they look relatively cheap and hold them for the long term. And when I say long-term, I mean decades.

I believe the longer I invest, the better my chances of generating serious wealth from the stock market. As we have seen this year, shares are highly volatile. In the short term, nobody has any idea where prices will go.

Yet in the longer run, the trajectory has been upwards. Better still, FTSE 100 shares pay generous dividends. By reinvesting them into my portfolio to buy more stock, I can make money even if the market goes nowhere for years.

When I wrote about the FTSE 100 last week, the index was yielding an impressive 3.93% a year. After today’s dip, that has increased to an even juicier 4.14%. So already I’m getting 0.21% more income as a result of today’s drop. 

Some individual stocks on the lead index have fallen fast this morning. The housebuilding sector is selling off as investors assume that higher interest rates will drive up mortgage costs will make property even less affordable.

Taylor Wimpey is down 7.03%, at time of writing, with Persimmon down 6.07% and Berkeley Group Holdings falling 5.34%. Yet I still think this is a good sector to invest in. Property shortages should limit the chances of a full-blown house price crash.

These stocks offer amazing yields

The housebuilding sector is a happy hunting ground for dividend income. Taylor Wimpey now yields 8.95% and trades at just 5.73 times earnings. Persimmon yields an incredible 18.53% and is valued at a dirt-cheap 5.43 times earnings.

There are plenty more bargain FTSE 100 shares out there, as the market sells off through no fault of its own. Naturally, buying stocks today could be risky. The index could easily fall further tomorrow. That is a chance I am willing to take.

I accept that I will never buy at the absolute bottom of the market. Today’s low valuation is good enough for me. If FTSE 100 shares do fall further, I’ll simply buy more at the lower price. Then hold them for decades.

The post I’d buy FTSE 100 shares today as the index dips below 7,000 appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

This year has been far from easy for investors. Markets have had the wind taken out of their sails as inflation has spiked globally, including near-10% rates in the UK. As such, I’m on the lookout for a FTSE 100 share with an inflation-beating dividend yield.

Investing during these periods can be difficult. However, by picking up a FTSE 100 constituent with a high yield I’m hoping to get a quality investment that can prevent, to some extent, my stagnant cash from losing value.

What I’d buy

With this, I’ve got my eye on Persimmon (LSE: PSN) – the highest yielder in the index.

The company is one of the largest housebuilders in the UK. With its headquarters in York, it has nationwide coverage through its regional operations. Persimmon built 14,551 homes last year, with an average selling price of just under £240,000.

The stock has suffered year-to-date. Its share price is down over 30% as building pressures have dampened economic outlooks and investor confidence. The last 12 months have seen the FTSE 100 share fall by 35%.

Why I’d buy

With this said, I’m not giving up on Persimmon just yet. Many stocks have seen their share prices dented this year, so it’s not alone in its struggles.

The major pull is its whopping 12.5% dividend yield, which is considerably better than the FTSE 100 average of 3%-4%. With inflation spiking to a new 40-year high of 9.4% in June for the UK, this also comfortably covers this.

The Bank of England has forecast rates to continue rising as we head toward the tail end of the year. Therefore, the passive income created from this investment seems like a smart way for me to put my cash to work. However, it’s worth noting that these payouts could be cancelled at any time by Persimmon, so there’s always that risk.

I’m also attracted to the stock by its low valuation. With a price-to-earnings ratio of around 7.6, this sits below the ‘value’ benchmark of 10.

I’m also bullish due to demand for homes in the UK. We’ve long faced a housing crisis that has yet to be solved. The government has ambitions to build 300,000 new homes per year, so Persimmon should benefit from this.

The group provided investors with a trading update last month, which revealed a slowdown in new homes delivered, along with revenues, as rising costs of raw materials have squeezed the firm’s margins.

Despite this, the release highlighted that current house price inflation is aiding in offsetting increased costs. And with the average selling price for the group rising 4% year on year, this should hopefully help Persimmon weather the storm.

So, regardless of these headwinds, I’d still buy Persimmon shares today. My main attraction is its meaty dividend yield, which will create a nice passive income stream. And with its low valuation, alongside a positive long-term outlook with increasing housing demand, I’d be happy to open a small position in the FTSE 100 share.

The post Why I’d buy this FTSE 100 share to fight inflation! appeared first on The Twelfth Magpie.

More reading

• Down 63% and yielding 6.3%! Is this FTSE 100 share a brilliant bargain?
• This 5.5%-yielding income stock’s at a 13-year low and cheap to-boot! Time to consider buying?
• Down 65% but yielding 6%! Is this FTSE 100 dividend stock an unmissable bargain?
• A 6.7% forecast yield and 53% below ‘fair value’! 1 stunning FTSE income stock for investors to consider today?
• How much do you need in an ISA to target a £2,066 monthly passive income in 2066

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.

Persimmon (H1 trading update)

Persimmon (LSE: PSN) is one of Britain’s biggest and most renowned housebuilders. It builds properties ranging from flats to large family homes located across the UK. The FTSE 100 firm is expected to provide a trading update for its most recent half-year performance ending June 2022 on Thursday 7 July.

Analysts in the UK don’t normally publish earnings previews for six-month periods, so it’s best to compare the firm’s upcoming 2022 first-half numbers to the ones from a year before. The H1 2022 figures can also be useful to determine whether it’ll outperform its FY21 numbers, or even beat analysts’ FY22 forecasts.

In this case, Persimmon is predicted to show slight growth in its numbers as housing supply continues to attempt to match high demand. If the housebuilder posts a better-than-forecasted number on Thursday with positive guidance, it could be on course to beat its financial year estimates.

Entain (H1 trading update)

Entain (LSE: ENT) is an international sports betting and gambling company. It owns brands such as Bwin, Coral, Ladbrokes, PartyPoker, and Sportingbet. Entain will provide a trading update for its most recent half-year performance ending June 2022 on Thursday 7 July.

Based on the earnings preview, Entain expects to have a much stronger second half to its financial year than its first. Nonetheless, a headline beat on its previous year’s H1 results could spell a positive outlook for the firm.

Vistry (H1 trading update)

Vistry (LSE: VTY) is another housebuilder that’s providing investors with a trading update. The Kings Hill-based firm will be updating shareholders on for its most recent half-year performance ending June 2022 on Thursday 7 July.

Just like its peer, Vistry is also expecting modest growth in its numbers. This is expected to come from rising house prices. The key metric to look out for will be its diluted earnings per share metric. A better than expected number could make analysts’ predictions of achieving a much higher EPS later this year possible.

The post Earnings preview: Persimmon, Entain, Vistry appeared first on The Twelfth Magpie.

More reading

• Down 63% and yielding 6.3%! Is this FTSE 100 share a brilliant bargain?
• Could Andy Burnham boost this beaten-up FTSE 250 stock that’s crashed 80% in 20 months?
• This 5.5%-yielding income stock’s at a 13-year low and cheap to-boot! Time to consider buying?
• Down 65% but yielding 6%! Is this FTSE 100 dividend stock an unmissable bargain?
• What could an Andy Burnham government mean for these FTSE 250 stocks?

John Choong 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 UK’s FTSE 100 is renowned for its portfolio of blue-chip stocks. The index has an average dividend yield of almost 4%, with some dividend stocks boasting yields of 8%-10% on the upper end. With the index in the red this year, there’s room for me to buy the FTSE 100’s top income stocks for a bargain.

High yields are a commodity

Rio Tinto (LSE: RIO) has the FTSE 100’s highest dividend yield of 11%, paying investors approximately £3.07 per share. It’s also worth noting that the mining firm had a stellar 2021, allowing it to pay a special dividend of around £0.46 per share. This brings Rio’s total dividend to £3.53 per share, with its share price also up 8% this year!

While high dividends are attractive, it’s not always sustainable. This tends to be the case with mining companies as they operate in economic cycles. Given that the global economy is expected to slow down this year, Rio’s top line is expecting some bruising. Additionally, China, its biggest customer, still has city-wide lockdowns in place to eradicate Covid. This has halted many construction projects and demand for iron ore. Therefore, I am doubtful that the blue-chip stock can continue generating a high level of passive income for investors.

Bricks and mortar

Persimmon (LSE: PSN) is not historically known for paying a high dividend. Its current dividend yield of 11% is only so high due to its share price plunging 25% this year. That’s because as share prices decrease, yields go up as a result. Nonetheless, the company is expected to pay a dividend of £1.10 per share, down £0.15 from its previous payment.

The reason for this is the firm’s decreasing margins. Its initial dividend of 11% was not well covered by earnings nor forecasts to begin with. Not to mention, higher interest rates are expected to slow the demand for houses. This would have an impact on Persimmon’s sales revenue. Combine that with rising material costs and the FTSE 100 housing giant doesn’t have as much cash to hand out to investors. However, its ex-dividend date is in a month’s time, and could present an opportunity for me to make some passive income on a bargain.

An Imperial dividend

The Imperial Brands (LSE: IMB) share price is up 3% this year due to its defensive nature. Pair that with a dividend yield of 8%, and this stock has been a great asset for investors this year.

The tobacco firm released a positive trading update last month. Smokers do not seem to be quitting in a hurry, and its next generation products showed positive results. This indicates that there may be a future for the company when or if cigarettes die out. Management also mentioned that the firm is in line to meet expectations when it reports its half-year results.

We (expect) full-year net revenue growth of around 0-1% on a constant currency basis and adjusted operating profit growth of around 1%.

Source: Imperial Brands Pre-Close 2022 Trading Update

For that reason, Imperial Brands is likely to continue handing out a healthy dividend as one of the index’s best income stocks.

The post Are the FTSE 100’s top income stocks a bargain? appeared first on The Twelfth Magpie.

More reading

• Down 63% and yielding 6.3%! Is this FTSE 100 share a brilliant bargain?
• This 5.5%-yielding income stock’s at a 13-year low and cheap to-boot! Time to consider buying?
• How much do you need in an ISA to target a £9,999 second income that rises every year?
• Down 65% but yielding 6%! Is this FTSE 100 dividend stock an unmissable bargain?
• A 6.7% forecast yield and 53% below ‘fair value’! 1 stunning FTSE income stock for investors to consider today?

John Choong has no position in any of the shares mentioned at the time of writing. The Motley Fool UK has recommended Imperial Brands. 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 inflation skyrockets, the State Pension is looking even more inadequate. Especially since Chancellor Rishi Sunak has suspended the annual triple lock uplift.

The triple lock increases the State Pension either by earnings, inflation or 2.5%, whichever is higher. Pensioners were on course for an 8% increase this year, as wages rocketed in the wake of the pandemic, until Sunak intervened.

I’d rather rely on UK shares

Sunak scrapped the earnings element of the triple lock, so that pensioners will get a rise of just 3.1% from April 6. With inflation set to hit 7.25% that month, according to the Bank of England, the State Pension will actually fall by £387 a year in real terms. UK shares can be risky too, but at least politicians don’t decide how much I get each year.

The State Pension is hugely important because it offers a steady, rising income in retirement. From April, it will pay up to £9,627.80 a year. I would need a portfolio of almost £200,000 to generate a similar-sized income. So it plays an important role, but it’s not enough to fund a comfortable retirement.

That’s why I’m investing in a balanced portfolio of global funds, to spread my risk and give me international exposure. I will complement this with a blend of UK shares.

I make regular monthly contributions into a personal pension and Stocks and Shares ISA, plus lump sums when I have spare cash. I particularly like to load up on UK shares in the wake of a stock market crash, when valuations are cheaper.

It’s never easy buying shares when stock markets are falling and everybody is panicking. I get round this by reminding myself that I am investing for the long term, at least 15 or 20 years. That allows plenty of time for stock markets to bounce back.

I will reinvest all the dividends from my UK shares for capital growth, while I’m still working. When I retire, I will draw them as income, to supplement my State Pension.

I’d buy these FTSE 100 stocks for passive income

There are loads of top FTSE 100 dividend stocks paying an incredible passive income to pensioners. Fund manager M&G currently yields staggering 8.60%, while insurer Phoenix Group Holdings yields 7.65%.

Admiral Group, Antofagasta, British American Tobacco and Abrdn all yield more than 6%. That’s around 10 times the return on the average savings account, even after last Thursday’s Bank of England base rate increase.

Incredibly, housebuilder Persimmon and global minor Rio Tinto yield more than 10% right now. Although I’m always wary when UK shares offer such dizzying yields, and would investigate them carefully before buying.

Naturally, UK shares can be risky. If markets crash, so will my portfolio. Some individual stock picks will inevitably underperform. Dividends can be slashed, as well as increased. There are absolutely no guarantees. But in contrast to the State Pension, that’s down to me, rather than the whims of the Chancellor of the day.

The post The State Pension will rise by less than inflation — that’s why I’m investing in UK shares appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended Admiral Group and British American Tobacco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.