5.5%+ dividend yields! 2 inflation-resistant shares I’d buy

Inflation continues to rise at eye-popping rates across the globe. Here are two inflation-resistant UK shares I’d buy to protect my investment portfolio.

| 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.

Young brown woman delighted with what she sees on her screen

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.

Buying gold, or gold mining stocks, is a popular play in times like these. I’m considering investing in metal digger Centamin (LSE: CEY) as inflation ravages the value of paper currencies and boosts the outlook for hard currency gold.

Bullion values haven’t soared so far due to fears of severe moves by central banks to tame inflation. Such unexpected action is a real risk which the move by Norway’s central bank this week perfectly illustrates. On Thursday, it hiked rates by the largest margin for 20 years, to 1.25%.

I’m still thinking of tailoring my portfolio for a sudden rise in gold values. And I’d do this by snapping up Centamin.

I like the company’s ultra-low price-to-earnings (P/E) ratio of 10.1 times. I also think it’s a better choice than buying physical gold, or a financial instrument like a gold ETF. This way I can receive a dividend as well as potentially ride a soaring share price. Centamin’s dividend yield by the way sits at a large 5.9%.

Inflation and other issues

I’m not convinced by the effectiveness of central banks in fighting the current inflationary boom. Frantic rate rises haven’t, so far at least, stopped inflation gauges in major regions hitting new multi-decade highs each month.

The pressure on central banks to cool their aggressive actions might mount too as recessionary risks increase. Tepid action from the Bank of England last week (when it raised rates just 0.25%) illustrates the difficult decisions policymakers currently face.

Meanwhile, a worsening Covid-19 crisis has the potential to deepen supply chain problems and boost inflation further. So does a long war in Ukraine that might drive up key commodity prices.

I wouldn’t just buy Centamin to own for the short-to-medium term either. I think the business could prove an excellent long-term pick as it ramps up mining production. It remains on course to produce 430,000-460,000 ounces of gold in 2022 and is on the road to eventually dig out half a million ounces per year.

Another inflation-resistant share I’d buy!

Gold isn’t the only precious metal that could soar in this high-inflation environment. Platinum group metals (PGMs) might also rebound strongly again before too long. It’s why I’m considering adding Sylvania Platinum (LSE: SLP) to my portfolio as well.

Like Centamin, this platinum producer carries a rock-bottom valuation. It trades on a forward P/E ratio of just 3.9 times. In addition, its dividend yield stands at a solid 5.6%.

I’d buy Sylvania even as weak economic conditions threaten industrial demand for its product in the near term. And I’d look to hold its shares for the long haul too.

I think demand for pollution-battling metal platinum could soar as the fight to reduce car emissions increases. I also reckon off-take of its material could soar over the next decade, thanks to its critical role in hydrogen production.

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.

Royston Wild has no position in any of the shares mentioned. 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

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

10% dividend growth! 2 FTSE 100 stocks tipped to supercharge cash payouts

These FTSE 100 stocks have strong records of dividend growth. And they're expected to keep on delivering, as Royston Wild…

Read more »

Investing Articles

Down 17% in a month and yielding 7.39%! Is this FTSE 100 share a screaming buy for me?

When Harvey Jones bought Taylor Wimpey last year he thought this FTSE 100 share was a brilliant long-term buy-and-hold. Has…

Read more »

Investing Articles

Here’s how I’m using a £20k ISA to target £11k+ in income 30 years from now

Is it realistic to put £20k in an ISA now and earn over half that amount every year in passive…

Read more »

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

If I could only keep 5 UK stocks from my portfolio I’d save these

Harvey Jones is running through his portfolio of top UK stocks to see which ones he couldn't bear to do…

Read more »

Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.
Investing Articles

I’m aiming for a million buying unexciting shares!

By investing regularly in long-established, proven and even rather dull businesses, this writer plans to aim for a million. Here's…

Read more »

Investing Articles

3 things to consider before you start investing

Our writer draws on his stock market experience to consider a few vital lessons he would use to start investing…

Read more »

Investing Articles

Will this lesser-known £28bn growth stock be joining the FTSE 100 soon?

As the powers that be plan a reorganisation of Footsie listing rules, this massive under-the-radar growth stock could find its…

Read more »

Investing Articles

Fools wouldn’t touch these 5 FTSE 350 flops with a bargepole – how come I own 3 of them?

Harvey Jones took a chance on three struggling FTSE 350 stocks in the hope that they'd stage a dramatic recovery.…

Read more »