The Motley Fool

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

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

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.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy 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. 

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. 

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.