With inflation at a 30-year high and showing no signs of slowing down just yet, I think it’s prudent for me to have at least some of my cash stashed away in high-yielding dividend shares.
Here are three that jump out at me, two of which I already own in my Stocks and Shares ISA. All are from the FTSE 250.
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I’ve held stock in trading platform provider IG Group (LSE: IGG) for a few years now, partly due to the income on offer. I’ve never gone so far as to calculate the actual figure. However, this company must have increased the value of my ISA by thousands of pounds in dividends alone. And with the shares yielding a forecast 6%, I’ve no intention of selling yet.
Another thing I really like about IG is that it’s geared to perform well in choppy markets. Sure, we might not see a repeat of the explosion in trading that we saw during the pandemic. Even so, the firm must be making healthy profits from the volatility we’ve seen on an almost daily basis in 2022.
An investment here isn’t devoid of risk. Companies often find themselves subject to scrutiny from regulators and new rules can temporarily dent earnings while it adapts. IG is also far from the only option available to market participants in this space.
Nevertheless, a P/E of just 8 looks brilliant value.
A second FTSE 250 dividend share that I’d buy more of is price-comparison specialist Moneysupermarket.com (LSE: MONY). That’s despite the shares losing over a third of their value in the last 12 months.
One silver lining for me throughout this is that Moneysupermarket has continued to pay dividends. It now offers a massive 7% dividend yield.
Of course, this may be reduced if trading doesn’t improve soon. As things stand, the payout is covered only 1.2 times by profit. Ideally, I’d be looking for something in the region of two times profit.
On a positive note, CEO Peter Duffy remarked last month that the company had seen a “strong recovery” in its Money and Travel divisions in Q1. I reckon the rise in the cost of living we’ve seen since has pushed more households to save money where they can by visiting its site.
At 13 times earnings, Moneysupermarket looks cheap for an otherwise high-quality share. I’m more than prepared to wait for a recovery, enjoying the income stream in the meantime.
A final big dividend share from the FTSE 250 I’ve got my eye on is housebuilder Vistry (LSE: VTY), formerly known as Bovis Homes.
I’m usually wary of owning stocks like this. The housing market is notoriously cyclical and I do wonder if fears over a UK recession (not to mention a return to normal working conditions for many) could bring the post-pandemic property boom to an end in 2022.
Again however, a lot of this looks priced in. Vistry’s stock currently trades at just five times forecast earnings. That’s even cheaper than FTSE 100 rivals such as Taylor Wimpey and Persimmon. A stonking 9.1% yield, safely covered by profit, could be worth the risk.
Vistry would also help to diversify my portfolio, allowing me to mitigate the impact of any dividend cuts elsewhere.