Most income seekers stick to buying companies from the FTSE 100 and FTSE 250. However today, I’m taking a closer look at the three dividend shares I reckon many UK investors haven’t considered as a way of tackling inflation.
Strix
Kettle safety control manufacturer Strix (LSE: KETL) is a stock I’ve held for a few years now. Although not the sort of company to get the pulse racing, it has a huge share of a niche market.
Unfortunately, Strix is also an example of how far small-cap stocks can tumble when investors get scared. Having steadily climbed in value since listing in 2017, shares have given back a lot of their gains over the last nine months.
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Am I bothered? Not really, especially as the company has already shown itself to be a consistent dividend hiker. Right now, the shares yield a forecast 4.6%. That’s clearly not enough to beat inflation, but it will help take the sting out. Despite the risks involved in buying shares, it’s also a far better return than I’d get from a cash savings account right now.
The resurgence of Covid-19 in China could cause more supply chain disruption for Strix. But with current trading meeting expectations, I think a lot of this is already priced in.
I’d happily buy more today.
Central Asia Metals
Copper miner Central Asia Metals (LSE: CAML) is another dividend share I’d be comfortable buying. The business is based in Kazakhstan and also has a lead, zinc and silver operation in Macedonia.
Naturally, the share price of any resource play is likely to be volatile and CAML is no exception. The stock has jumped all over the place year-to-date and I suspect will continue to do so, especially if the conflict in Eastern Europe drags on.
As far as income is concerned however, this stock looks like a winner. Based on analyst projections, the shares currently yield an inflation-battling 7.2%. The payouts should be covered well over twice by profit too.
Considering the potentially huge demand for copper in the years ahead (due to the green energy revolution), this dividend share also looks cheap at less than six times forecast earnings.
Premier Asset Management
Asset managers have been hit hard by people moving their money out of the markets. Premier Asset Management (LSE: PMI) is just one example. The company’s share price has dropped by over a third in 2022 even though it’s up over 10% in a year.
Even management believes there could be more to come. In last week’s half-year results, CEO Mike O’Shea said the outlook for investment markets “remains uncertain.”
On a more positive note, Premier also reported a 60% rise in pre-tax profit in the six months to the end of March. That should mean that dividends are safe for now. Speaking of which, the interim payout was kept steady at 3.7p per share. If it does the same with the final payout, the shares currently yield a massive 8.1%!
Of course, Premier is just one option for investors in a very competitive space. A risk here is that it may need to lower its fees in an effort to remain competitive.
Then again, this might not be necessary. No less than 90% of its funds have outperformed the median return over three years.
