The great British summer appears to be finally starting, with the hot weather a welcome change. As we go into July, I’ve also got my eyes on hot income stocks. With high inflation and relatively low interest rates, I still believe that dividends are a key way to help me make my money work hard. Here are my two favourite shares that I want to buy now.
Income stocks from finance
The first company I like is Ninety One (LSE:N91). The asset manager has a range of funds, but the focus is mostly on stocks with global exposure. Given the fact that the company has multiple funds, the share price doesn’t track the price of just one fund. It trades based on the firm’s overall business performance.
Over the past year, the share price has fallen by 12%. This has helped to boost the dividend yield to 7.44%. Most of this fall has occurred over the past month, following the release of the full-year results in May.
The results actually highlighted a record year for the company, with earnings and assets under management being the highest ever. However, the slump in the stock was due to concerns around the outlook. It noted “worsening conditions”, which has clearly spooked some investors.
I accept that 2022 is going to be a lot harder for the company to deliver profitable fund returns. This is a risk if I want to buy the stock. Yet at the same time, the asset manager has provided strong returns previously with a good track record. Therefore, I’m happy to look beyond the short term and focus on the long-term income potential.
An old star making a comeback
The second stock I’d buy for income is Kingfisher (LSE:KGF). Over the past year, the share price is down by 31%. This has been a slow grind lower, as the popular pandemic pick has followed the same trajectory as other lockdown stars.
However, I like the company despite the pandemic boost wearing off. We’ve got a cost-of-living crisis right now that doesn’t look like it’ll dissipate anytime soon. Therefore, I expect a lot of people to revert back to DIY projects in order to save money.
Given the B&Q and Screwfix brands that Kingfisher own, I think it could be well positioned to take advantage of this move.
The dividend yield for this income stock is currently at 5.06%. It’s not as high as my other pick, but I think this could be a great pick for income going forward. If sales pick up in the second half of this year, higher profits should result in a large dividend per share next year.
In Q1 results, the company noted that it was managing “inflationary and supply chain pressures”. This is a concern for me, as I anticipate that this could cause management a headache in being able to get goods delivered on time and at an acceptable price.
