The Stocks and Shares ISA is a great vehicle for medium and long-term investments. The deadline for using up my 2021-22 ISA allowance is Tuesday, 5 April, and the 2022-23 tax year begins on Wednesday, 6 April. Thus early April can be a busy time of the year for stock dealings.
While I won’t be rushing to do business, I’ll certainly be looking to improve my portfolio in line with my investment strategy. I’m always on the lookout for shares offering passive income in the form of dividend payments. This is especially true right now as inflation hits levels not seen for three decades. These dividend-paying stocks will help my Stocks and Shares ISA overcome this inflationary pressure.
The three passive income stocks I want to look at today are Vistry Group (LSE:VTY), Imperial Brands Group (LSE:IMB), and Lloyds (LSE:LLOY).
Vistry Group
I’ve written about Vistry before and have recently added it to my portfolio. The group is offering an attractive 6.33% dividend yield on the back of some stellar performance data.
The Kent-based homebuilder registered pre-tax profits of £319.5m in 2021. The figure ranks far above pre-pandemic levels, and the company’s bosses believe it’s in a good position to further increase profits and returns in 2022.
Inflationary pressure and interest rate rises represent headwinds for all homebuilders, but Vistry is already trading at a considerable discount. The stock is currently trading at 944p a share, down from a year high of 1,351p. The firm’s share price has also been influenced by the ongoing cladding fiasco, although recent estimates suggest homebuilders will take less of a hit than the government predicted.
Imperial Brands Group
Tobacco firm Imperial Brands offers a whopping 8.5% dividend yield, far above the FTSE 100 average. Moreover, the firm appears quite cheap, with a price-to-earnings ratio of just over six.
The Bristol-headquartered firm is currently trading at £16.27 a share, down from a year high of £18.21. It’s also substantially discounted relative to its pre-pandemic price. In fact, in 2016, it was trading at over £40 a share.
The discount comes despite impressive performance data. Last year’s operating profit of £3.2bn was the best performance over the past five years.
The Imperial Brands share price has experienced considerable volatility in recent weeks as it elected to suspend its Russia-based operations following the invasion of Ukraine. The forthcoming sale of its Russian assets will surely impact revenue, but I still think this looks like a good buy for my portfolio.
Lloyds
This blue-chip stock offers a 4.2% dividend yield at current prices. In 2021, the firm had a dividend coverage ratio of 3.75, suggesting it could easily afford to pay the attractive dividend payments.
Moreover, this stock is still trading at a discount versus its pre-pandemic price despite impressive performance data. In 2021, Lloyds returned a pre-tax profit of £6.9bn, its best performance over the past five years.
Inflationary pressure may cause banks like Lloyds problems in the near future, but I think the overall outlook is positive for the country’s biggest mortgage lender. If momentum in the housing market continues, the bank is likely to see its stellar results continue.
I currently hold shares in Lloyds and will continue to buy at the current price.
