Soaring inflation means UK share investors like me need to make a positive return in 2022. Latest Office for National Statistics data showed consumer price inflation (CPI) hit 5.2% in November. Many analysts think it’ll go even higher in the spring too. Deutsche Bank expects CPI to rise as high as 6% by next April.
This poses a challenge for me if I’m looking to make a positive return with dividend stocks next year. But locating shares that could make me a decent pot of cash next year isn’t an impossible task. Here are five stocks whose yields for 2022 sit above current levels of inflation.
#1: Bank of Georgia
Banking shares are good options for me as central banks could move to curb inflation by hiking interest rates. Financial firms like Bank of Georgia benefit under this scenario as rate increases widen the difference between what they offer borrowers and savers, giving profits a nice boost. This particular bank offer a chunky 7.7% dividend yield for next year. I’d snap it up even though worsening Covid-19 infection rates in Georgia could hamper the economic recovery there.
#2: Triple Point Social Housing REIT
Property stocks are also a good way to make solid real-term returns even when inflation is rising. This is because rental income and property prices usually increase when inflationary pressures worsen. I’d buy Triple Point Social Housing REIT, a company which provides accommodation for individuals who have special needs, to capitalise on this phenomenon. The yield here sits at 5.2% for next year. I’d buy it even though adverse changes to social housing regulations could hit profits.
#3: Polymetal International
Gold mining stock Polymetal International could also see revenues jump in 2022 as rising inflation tends to boost precious metal prices. Despite the threat posed by a rising US dollar I think this makes the FTSE 100 digger a top buy right now. Furthermore, I’d stock up on Polymetal because of its CPI-mashing 10.1% dividend yield for next year.
Platinum group metals (PGMs) are among those safe-haven metals that often soar in price when inflation increases. This makes Tharisa an attractive stock to buy, in my book, but it’s not the only reason I’m bullish on it for 2022. Modern environmental regulations mean PGMs are needed in increasing quantities for the manufacture of catalytic converters in cars. I’d buy Tharisa despite the ever-present threat of metal production issues that could smack revenues. Tharisa carries a 9.8% dividend yield for fiscal 2022.
The 5.3% dividend yield over at SSE also makes it an attractive dividend stock, in my eyes. That’s even though rising inflation poses a significant indirect risk to utilities like this. The cost of servicing its high levels of debt could soar if central banks start hiking rates to slow price rises. But, all things considered, I think this FTSE 100 shares a great buy in this climate. The essential nature of its services means the electricity generator can expect earnings to remain stable, whatever happens in 2022.
The post 5%+ yields! 5 UK dividend shares to buy as inflation soars appeared first on The Motley Fool UK.
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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.