We asked our freelance writers to share the top dividend stocks they’d buy in January. Here’s what they chose:
Rupert Hargreaves: Impact Healthcare REIT
Impact Healthcare REIT (LSE: IHR) focuses on buying healthcare properties in the UK. The properties are usually leased on long-term contracts with annual inflation uplifts. The firm has expanded its portfolio by around 150% over the past few years.
Thanks to this business model, Impact Healthcare has become an income champion. The stock currently yields 4.4%, and analysts expect the yield to hit 5.5% in 2022. I would buy the shares for my portfolio for these reasons.
Some challenges the firm may face include higher interest rates, which could reduce the amount of cash value for distribution to investors.
Rupert Hargreaves does not own shares in Impact Healthcare REIT.
Zaven Boyrazian: Anglo Pacific Group
Anglo Pacific Group (LSE:APF) is a royalties business that finances the development of mining sites of other companies. In exchange, it receives a portion of the materials extracted from the earth.
The firm has a stake in eight producing mines worldwide and another seven in early-stage development. Combined, they supply nine different metals, including cobalt and vanadium, which are key ingredients for electric vehicle batteries.
While the company is exposed to the risk of fluctuating commodity prices, it is currently yielding 6.5%. That’s why I think now is an excellent time to increase my position in this dividend stock!
Zaven Boyrazian owns shares in Anglo Pacific Group
Paul Summers: Somero Enterprises
At the risk of sounding like a stuck record, my top dividend stock for January – and one of my picks for 2022 – is Somero Enterprises (LSE: SOM). Offering a near-6% dividend in FY22, this quality AIM-listed company is doing exceedingly well as the infrastructure boom in the US continues. Somero manufactures laser-guided equipment to check that concrete flooring in warehouses is completely flat.
Clearly, recent momentum could be lost in the event of a serious wobble in the global economy. At a little less than 13 times forecast earnings, however, the valuation still looks reasonable to me for the income on offer.
Paul Summers owns shares in Somero Enterprises
Ed Sheldon: Legal & General Group
My top British dividend stock for January is Legal & General Group (LSE: LGEN). It’s a financial services company that specialises in insurance, investment management, and retirement solutions.
Legal & General has put together a solid dividend growth track record over the last decade. For 2020, it paid out dividends of 17.6p per share, up from 13.4p for 2015. For 2021, the total dividend is expected to amount to 18.4p. At the current share price, that equates to a very attractive yield of 6%.
One risk to consider here is that share price volatility can be elevated at times. This can impact overall returns. I think the key is to forget about the volatility and focus on the big dividend payments, however.
Edward Sheldon owns shares in Legal & General Group.
Royston Wild: ContourGlobal
ContourGlobal (LSE: GLO) constructs, acquires and runs power stations all over the world. And at current prices it’s one of the highest-yielding shares on the FTSE 250. A reading of 7.6% for 2022 beats the index’s broader 2% average by a massive margin too.
Concerns over central bank rate hikes and their impact on the global economy are significant. This has the potential to drive up debt costs at ContourGlobal. But unlike most UK shares, such monetary tightening shouldn’t stop this FTSE 250 business generating big profits, in my opinion. The critical nature of ContourGlobal’s services should see to that. So I think this is a top dividend stock for these uncertain times.
Royston Wild does not own shares in ContourGlobal.
G A Chester: Polymetal International
Gold and silver miner Polymetal (LSE: POLY) has a high-quality portfolio of producing, development and exploration assets in Russia and Kazakhstan. It’s a FTSE 100 company, and a top-10 global gold producer and top-five global silver producer.
Operational setbacks can be a risk with miners, but I think Polymetal’s nine producing mines mitigate the risk by reducing the adverse impact of a problem at any one.
I’m expecting a fourth-quarter production report later this month to underpin an analyst’s consensus forecast that gives the dividend stock a P/E of around eight and a generous yield of near to 8%.
G A Chester has no position in Polymetal International.
Roland Head: Ibstock
FTSE 250 firm Ibstock (LST: IBST) is one of the UK’s largest manufacturers of bricks and concrete building products. The company’s products are used by housebuilders, in commercial buildings and on the railway network.
Ibstock’s business has recovered from the pandemic, but its share price remains nearly 40% lower than at the end of 2019. At this level, the shares offer an attractive forecast dividend yield of 4.2% for 2022.
The main risk I can see for this dividend stock is that a downturn in the construction market could hit demand. However, management say demand remains strong. Ibstock is on my shopping list.
Roland Head does not own shares in Ibstock.
Christopher Ruane: Diversified Energy
Double-digit percentage yields are unusual, but one is offered by Diversified Energy (LSE: DEC).
The company owns over 60,000 oil and gas wells spread throughout the Appalachian region of the US. The sheer number of wells gives the dividend stock critical mass, even though many of them individually are fairly small. That enables it to generate substantial cash flows. The company pays dividends quarterly and currently yields over 10%. One risk, though, is the future cost of capping old wells. That could eat into profits.
Christopher Ruane owns shares in Diversified Energy.
The Motley Fool UK has recommended Anglo Pacific, Ibstock, and Somero Enterprises, Inc. 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.