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3 income stocks to buy (including a 14.4% dividend yield!)

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Now’s a great time to go shopping for income stocks, I feel. Market volatility has pushed yields to spectacular levels, giving passive income investors something to get very excited about.

Here are three dividend stocks I’m thinking of investing in today.

Warehouse REIT

Dividend yield: 4.4%

Real estate investment trusts (or REITS) are popular income stocks because of the rules governing dividends. Such firms are required to distribute a minimum of 90% of annual profits by way of shareholder payouts.

I like Warehouse REIT (LSE: WHR) in particular. This is because it operates large warehouses across the UK. Demand for properties like this is soaring as e-commerce goes from strength to strength.

Amazon announced on Friday plans to create an extra 4,000 jobs in Britain this year alone. This illustrates the additional growth potential for online shopping, and by extension underlines the bright outlook for firms like Warehouse REIT. Interestingly hiring for warehousing staff will be an area of focus for Amazon too.

The investment trust could suffer if current economic pressures hamper its tenants’ ability to pay rent. But from a long-term perspective I still think Warehouse REIT is a top-class buy.

Pagegroup

Dividend yield: 8.5%

Recruitment businesses like Pagegroup (LSE: PAGE) are also vulnerable to worsening economic conditions. They could also suffer if labour shortages worsen and they struggle to fill posts.

But currently, the recruiters continue to report exceptional trading as staff shortfalls push up fees. Pagegroup itself said last week that gross profits soared to a record £280.9m in the second quarter, up 25.5% year-on-year.

Research from McKinsey & Company suggests that market conditions could remain white-hot too. It reports that 40% of people it surveyed are seeking to leave their job in the next three to six months. Workers continue to search for new jobs in huge numbers as they seek better pay and improved work/life balances following pandemic lockdowns.

I particularly like Pagegroup because of its huge dividend yield. But I’m also a fan due to its rock-bottom earnings multiple. A forward P/E ratio of 9.4 times fails to reflect its excellent momentum.

Rio Tinto

Dividend yield: 14.4%

The Rio Tinto (LSE: RIO) share price has fallen sharply as recession worries have hit commodity prices. On Friday, for instance, copper plunged below $7,000 a tonne for the first time since late 2020.

Raw materials prices could keep slumping in the near term too. And particularly if key data from major commodities consumer China continues to shock.

However, I recently bought Rio Tinto shares despite this risk. And I’m tempted to buy more following further share price weakness. As well as that 14%+ dividend yield, the mining stock trades on a forward P/E ratio of just 5 times.

I expect Rio Tinto’s share price to soar from current levels over the long term. Demand for its iron ore will rise as construction activity recovers, for instance. Meanwhile, sales of its aluminium will grow strongly as carbuilding gradually picks up.

In the meantime, the company’s strong balance sheet should give it the financial firepower to pay big dividends even if earnings disappoint. Rio Tinto is one of my favourite cheap dividend stocks right now.

The post 3 income stocks to buy (including a 14.4% dividend yield!) appeared first on The Motley Fool UK.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has positions in Rio Tinto. The Motley Fool UK has recommended Amazon and Warehouse REIT. 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.