I think these could be three of the best cheap dividend stocks to buy right now. Here’s why I’d snap them up in 2022.
A FTSE 100 dividend star
I believe National Grid’s (LSE: NG) an ultra-attractive dividend stock as rocketing inflation and Covid-19 threaten economic growth. Sure, central bank rate rises in response to soaring prices could cause the FTSE 100 firm’s debt servicing costs to jump.
But I think the essential nature of its services — National Grid has sole responsibility to keep the UK’s power grid up and running — makes it a good pick for these uncertain times. It can expect earnings to remain stable, regardless of broader economic conditions.
I also like National Grid’s drive to expand its asset base in Britain and the US by 6%-8% each year. This could give profits and, consequently, dividends an extra shot in the arm. Today, the company’s dividend yield sits at a meaty 4.8%. And at current prices, National Grid trades on a forward price-to-earnings growth (PEG) ratio of 0.5. A reading below 1 suggests a stock could be undervalued.
Taking care of business
I also reckon Impact Healthcare REIT (LSE: IHR) could be a brilliant buy for me as Britain’s population rapidly ages. Demand for the sort of care homes it operates is therefore soaring and, as a consequence, so are rents. Buying property stocks like this could be a good idea as the rents it charges will rise alongside broader inflation. This dividend stock also trades on a price-to-earnings (P/E) ratio of just 10 times. It carries a chunky 5.6% dividend yield to boot.
Changes to the government’s social care funding could have a significant impact on future profits. Though it’s my opinion that this risk is baked into Impact Healthcare’s low share price. I like the company’s commitment to acquisitions to drive future profits. In December, it shelled out almost £52m to acquire a portfolio of 15 care homes across Scotland and Northern Ireland.
I’m also pleased by Impact Healthcare’s classification as a real estate investment trust (REIT). This means the firm’s obliged to pay 90% of annual profits to shareholders by way of dividends.
8.2% dividend yields!
I think Direct Line Insurance Group (LSE: DLG) could be another useful stock to own if the economy goes sideways. History shows us that consumer spending on general insurance products remains remarkably resilient, even when broader consumer spending comes under pressure. And this UK share can expect demand for its home, motor, pet, landlord and other insurance services to remain solid.
The only fly in the ointment is the potential for subdued revenues and higher claims at its travel divisions if further coronavirus-related lockdowns come down the pipe. I’d still buy Direct Line though because of its low price and massive dividend yield. The latter sits at a mammoth 8.2% while the insurer trades on a P/E ratio of around 10 times for 2022.
