Our writer has a list of UK shares to buy now for his portfolio. These two high-yielders make the list thanks to their long-term income potential.
Image source: Getty Images
The allure of passive income is as strong as ever in the current inflationary environment. Right now, quite a few companies have dividend yields I find attractive. I have a list of UK shares to buy for my portfolio that have appealing income potential. Here are two I have bought that both yield over 8% at the moment.
It is not an easy time to be in the fund management industry. As Jupiter said in its interim results yesterday, “the first half of 2022 has been particularly challenging”. That is true for the industry as a whole, with consumer anxiety and economic problems causing assets under management to fall at firms including Jupiter.
Rival Abrdn (LSE: ABDN) may struggle with such challenges in a similar way to Jupiter. We will find out next month when the company unveils its interim results. Meanwhile, the company has a dividend yield of 8.9%. I find that very attractive and as a shareholder in Abrdn already, certainly appreciate the dividend income I get from the firm.
I think the company’s reputation and brand can help it attract and retain clients. Financial services can be a lucrative sector as the sums involved are large, so even a small commission can make for healthy profits. The profit margins can also be very high. Last year, for example, Abrdn made a profit of £995m on revenue of £1.7bn. That is a 59% margin, which I think is excellent.
Navigating choppy economic waters could mean lower profits in coming years. But with a strong business foundation and customer base, I think Abrdn earns its place on the list of UK shares to buy now for my portfolio.
Another UK share with a yield close to 9% is tobacco producer Imperial Brands (LSE: IMB).
When it comes to growth, I see limited reasons for optimism here. Cigarettes are in long-term decline in many markets. Meanwhile, Imperial’s ambitions in non-cigarette products are more modest than those of rivals like British American Tobacco.
But cigarette sales have been declining for decades already yet remain highly cash generative. That could continue for a long time yet. Meanwhile, Imperial has been investing in marketing for key countries. It hopes that by building its market share it can achieve a slower rate of sales decline than the overall market.
All of that adds up to juicy dividends and currently the yield is 8.9%. A big cut in 2020 put the dividend on a more even footing. Imperial can sometimes feel like a company in its sunset years but that sunset may keep going for many decades. If I get a dividend yield of almost 9% for holding the shares, I do not mind Imperial’s lack of exciting growth prospects!
Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.
Christopher Ruane owns shares in Abrdn, British American Tobacco, Imperial Brands, and Jupiter Fund Management. The Motley Fool UK has recommended British American Tobacco, Imperial Brands, and Jupiter Fund Management. 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.
| Alan Oscroft
New investors might be scared to start their first Stocks and Shares ISA during gloomy times like the present. Here’s…
Read more »
| Andrew Woods
Andrew Woods explains why a potential recovery in the stock market is prompting him to add these two FTSE 100…
Read more »
| Stephen Wright
With money to invest in August, I’m looking at two dividend stocks to boost my monthly income. The first is…
Read more »
| Cliff D’Arcy
Lloyds shares have lost a lot of ground since peaking at 56p in late January. But recent quarterly results look…
Read more »
| Harshil Patel
With 13% dividend yields on offer, shares can be an excellent way to earn passive income. Our writer outlines a…
Read more »
| Christopher Ruane
Paypal stock has plummeted in the past 12 months. But our writer likes the business model and has added the…
Read more »
| Royston Wild
Billionaire investor Warren Buffett has made his name (and his fortune) by not following the herd. Here’s how I’d spend…
Read more »
| Christopher Ruane
After losing a third of their value in the past year, eBay shares have caught our writer’s eye. Here he…
Read more »
View All
Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.
To make the world Smarter, Happier, And Richer
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show and premium investing services.
Read more about us >
We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. Any opinions expressed are the opinions of the authors only. The content provided has not taken into account the particular circumstances of any specific individual or group of individuals and does not constitute personal advice or a personal recommendation. No content should be relied upon as constituting personal advice or a personal recommendation, when making your decisions. If you require any personal advice or recommendations, please speak to an independent qualified financial adviser. No liability is accepted by the author, The Motley Fool Ltd or Richdale Brokers and Financial Services Ltd for any loss or detriment experienced by any individual from any decision, whether consequent to, or in any way related to the content provided by The Motley Fool Ltd; the provision of which is an unregulated activity.
The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested. You should not invest any money you cannot afford to lose, and you should not rely on any dividend income to meet your living expenses. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, administrative costs, withholding taxes and different accounting and reporting standards. They may have other tax implications, and may not provide the same, or any, regulatory protection. Exchange rate charges may adversely affect the value of shares in sterling terms, and you could lose money in sterling even if the stock price rises in the currency of origin. Any performance statistics that do not adjust for exchange rate changes are likely to result in an inaccurate portrayal of real returns for sterling-based investors.
Fool and The Motley Fool are trading names of The Motley Fool Ltd. The Motley Fool Ltd is an appointed representative of Richdale Brokers & Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority (FRN: 422737). In this capacity we are permitted to act as a credit-broker, not a lender, for consumer credit products. We may also publish information, opinion and commentary about consumer credit products, loans, mortgages, insurance, savings and investment products and services, including those of our affiliate partners. We do not provide personal advice and we will not arrange any products on your behalf. Should you require personal advice, you should speak to an independent, qualified financial adviser.
The Motley Fool Ltd. Registered Office: 5 New Street Square, London EC4A 3TW. | Registered in England & Wales. Company No: 3736872. VAT Number: 188035783.
© 1998 – 2022 The Motley Fool. All rights reserved. The Motley Fool, Fool, and the Fool logo are registered trademarks of The Motley Fool Holdings Inc.
