1 FTSE 100 and 1 FTSE 250 dividend stock to buy for 2022

As Manika Premsingh plans investments for 2022, the opportunity to earn from dividend stocks looks particularly rich. Here are two stocks she could buy now. 

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Businessman touching on number 2022 for preparation

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

To grow my passive income in 2022, I have to channel my investments into dividend stocks. The good news is that both the FTSE 100 and FTSE 250 indexes offer me choices with average dividend yields that are well above average. Here I look at two such stocks. 

Advantage insurers

The two stocks have more in common than just paying good dividends. They are both insurers too. According to data provider statista, the global insurance market will grow by more than 44% between 2020 and 2025. This is favourable to the companies in the sector, which can ride the growth wave now.

Now that economic recovery is underway, I reckon that non-life insurers could benefit in particular. As incomes rise, people are more likely to get insurance. And they are also more likely to make auto and property purchases, both of which are big non-life insurance categories. Life insurance in countries like the UK is anyway likely to grow on account of an ageing population. In the UK, the group aged 65 and over has grown by 23% in the last decade or so. This compares to an only 7% increase in the country’s population as a whole. 

Should you invest £1,000 in Purplebricks Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Purplebricks Group Plc made the list?

See the 6 stocks

Legal & General: FTSE 100 stock with a 6% dividend yield

Keeping this in mind, the one FTSE 100 stock I like is Legal & General (LSE: LGEN), the life insurer and investment manager. There is much to like about the stock. First, it has a dividend yield of 6%. With inflation at 4% right now, and expected to average at this level in 2022 as well, I like a stock that can give me positive real returns. Moreover, this high dividend yield is not a flash in the pan. The stock has yielded on average 6.1% for the last five years. 

Its performance has fluctuated, but I like that it has managed to clock net profits year after year. This is important considering that I would like to buy the stock with dividends in mind. If a company is unable to maintain its profits, it is unlikely to keep on paying dividends.

On the downside, its share price has not really gone anywhere in the past year, which is underwhelming. However, considering that it is still trading below its pre-pandemic highs, I think some upside is possible here. I would buy it for dividends. 

Direct Line Insurance: FTSE 250 high dividend stock to buy on dip

The FTSE 250 stock I like is Direct Line Insurance. It has a pretty good dividend yield of 8.3% right now, better than that for Legal & General. And over the last five years, it too has maintained a strong trend, with an average yield of 5.4%.

The general insurer’s share price has taken a hit in recent years owing to its weak performance, but I reckon that could change going by the improvements in its latest numbers and as the UK’s economic recovery gathers steam. I have bought the stock already. 

Should you invest £1,000 in Purplebricks Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Purplebricks Group Plc made the list?

See the 6 stocks

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 assessed. Consider taking independent financial advice.

Manika Premsingh owns shares of Direct Line Insurance. 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.

More on Investing Articles

Long-term vs short-term investing concept on a staircase
Investing Articles

Down 37% from May, does Glencore’s near-£3 share price look cheap to me?

Glencore’s share price has tumbled from its one-year traded high, which suggests there may be good value in it. I…

Read more »

Dividend Shares

How much would an investor need in dividend shares to make £1,000 a month?

Jon Smith talks through both the strategy and the numbers behind the investment aim of using dividend shares to make…

Read more »

A row of satellite radars
Investing Articles

Defence spending is on the rise and this UK growth stock could be set to cash in

With the UK ready to increase its defence spending, Stephen Wright thinks the stock likely to benefit the most isn’t…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£11,000 in savings? Here’s how investors could use that to target an annual passive income of £12,892 over time!

Money put into high-dividend-paying shares with the returns used to buy more of them can generate potentially life-changing passive income.

Read more »

Investing Articles

Down 10% and 15% in a month! 2 cheap shares investors might consider buying with £2k today

It's always a good time to buy cheap shares! Harvey Jones picks out two FTSE 100 companies that have fallen…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Here’s how £350 a month could put a stock market beginner on the road to wealth!

Interested in getting a foot on the stock market ladder? Our writer breaks down the facts and figures so aspiring…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

The 5 most popular FTSE 100 shares on the AJ Bell trading platform

Our writer’s been looking at the FTSE 100’s most bought stocks on one particular investment platform. And he’s heartened by…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

Why isn’t everyone aiming for £37m in stocks and shares?

It’s never too early to start investing in stocks and shares through a SIPP or ISA. Dr James Fox explains…

Read more »