This morning we got the latest inflation figure for November. At 5.1%, it’s the highest figure in over a decade and one that I need to pay attention to. Why? The value of my spare cash is being eroded due to this rising price level. One way I can look to beat inflation is via investing in FTSE 100 dividend stocks, with yields above 5.1%. Here are two that I like at the moment.
A steady dividend payer
The first dividend stock I like is Legal & General (LSE:LGEN). The share currently offers a dividend yield of 6.17%, with the share price having risen 16% over the past year.
The company focuses on investment management along with retirement products such as annuities and pensions. I would say this is a fairly low risk business model. Once you’ve reached scale and have a reasonable amount of assets under management, fees and commissions keep ticking over.
In the H1 results, operating profit was up 14% from the same period last year. More importantly, this growth was seen across different business areas. This allowed the earnings per share to increase by 21%, with some of the overall earnings distributed as dividends.
Looking forward, not only can the dividend yield help me to beat inflation, but I think it’s a sustainable stock for the future. The company has a robust dividend policy and has paid out some form of income for the last decade.
As a risk, I could be hit with a double whammy if we see a stock market crash. Not only could the share take a hit, but the funds managed by Legal & General could also fall. This could compound the share price slump of this dividend stock.
A mining stock to consider
The second dividend stock I’m thinking about buying is Anglo American (LSE:AAL). It offers me a similar yield to LGEN, at 6.34%. Over the past year, the share price has risen by an impressive 20%.
There were concerns earlier this year regarding the company, with regards to the iron ore mined. With concerns around a slowdown in China (a huge iron ore consumer due to steel production), iron ore demand fell. Although prices have rebounded back above $100/T in recent weeks, this remains the big risk I see for the stock in 2022.
Aside from this risk, I think the company can perform well in other areas. For example, copper. The Quellaveco copper project in Peru is expected to be a big focus for the business. I should also note, in contrast to iron ore, the copper price is up around 18% over the past year.
I’m aware that this is a more volatile dividend stock than others, but it does have a generous yield that’ll allow me to beat inflation at current levels. I can accept that I’ll be taking on some added risk.
Overall, I’m considering buying both dividend stocks now to act as a way to counterbalance high UK inflation.
The post 2 inflation-beating FTSE 100 dividend stocks to buy appeared first on The Motley Fool UK.
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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.