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.
