2 tasty income shares to snap up for summer

Jon Smith writes about two of his favourite income shares with current yields easily above 5%.

| More on:
British bank notes and coins

Image source: Getty Images

If the pleasant weather so far this week is anything to go by, it could be a summer of fun and sun. Aside from personal plans, I also have my eye on income shares at the moment that I want to buy ahead of the summer. Not only can I get a kickstart on earning passive income from dividend plays, but I can also help to offset rising inflation. Here are two companies that I’m thinking of adding to my portfolio.

Short-term action, long-term buy

The first income share is Royal Mail (LSE:RMG). The company is in the news today, given the release of full-year results. With a share price drop of 13% today (down 47% over one year), something clearly didn’t go to plan. From reviewing the report, the fall in reported profit before tax of 8.8% versus last year didn’t help.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

Operational challenges flagged up included Covid-19 and labour issues that hampered performance. I accept this, but feel they’re short-term problems that won’t be present when I look years into the future.

I was impressed by the fact that even though parcel volumes fell by 7% versus last year, they were still up 31% in the pre-pandemic 2019/20 year. This shows that the company is still ahead of where it was before the pandemic, with momentum.

The business also prioritised the dividend payment in line with policy, despite the fall in profits. It currently has a dividend yield of 6.66%, which has jumped today due to the share price fall. I think this income share will be able to bounce back in coming years and so see it as a buy for me.

An above average income share

The second income share I think I’m going to buy is TP ICAP (LSE:TCAP). I’ve been watching this stock for a while, as it’s more of an unusual financial services stock. It’s an interdealer broker, which essentially means it acts as an intermediary between banks and other players. It helps to execute trades in a variety of different asset classes and acts as a middleman, earning a cut in the process.

Volatility is good for business, and this is one reason why Q1 revenue jumped by 14%. Although the share price is down 42% over the past year, the bulk of this move came last year due to lower action in financial markets.

This move lower has helped to push the dividend yield up to 7.68%, well above the average yield for both the FTSE 250 and FTSE 100.

With my expectation that the stock market will remain volatile for the rest of the year, I think that this income share will continue to pay dividends. One concern I have is that the business operates in a very niche area of finance. With that in mind, I don’t ever see the company becoming massive, as there simply isn’t enough business to reach that scale.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Jon Smith and The Motley Fool UK have 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.

Should you invest the value of your investment may rise or fall and your Capital is at Risk. Before investing your individual circumstances should be considered, so you should consider taking independent financial advice.

More on Investing Articles

Young female analyst working at her desk in the office
Investing Articles

Should I buy Amazon shares?

Amazon has a strong web services business and our author thinks its online retail operations are underappreciated. So should he…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

How I’d invest a Stocks & Shares ISA today for dividend income in the future

Our writer has been investing his Stocks and Shares ISA with the aim of building income streams for the long…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

2 undervalued passive income stocks I’d buy today with £1,000

Falling stock prices are pushing up dividend yields. As a result, our author is looking for undervalued passive income stocks…

Read more »

Close-up of British bank notes
Investing Articles

2 cheap dividend shares I’d buy in a heartbeat

Our writer picks a pair of FTSE 100 dividend shares he would consider for his portfolio, that he thinks look…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

With £500, I’d use the Warren Buffett method to find cheap shares

The legendary investor Warren Buffett has become a billionaire by following some key investment principles. Our writer explains why he…

Read more »

Man in a clothing store in a medical mask because of a coronovirus.
Investing Articles

Down 81%, are boohoo shares set for an explosive comeback?

boohoo shares have been falling rapidly. But could interest from a billion-dollar hedge fund cause a turnaround in 2022?

Read more »

Smartly dressed middle-aged black gentleman working at his desk
Investing Articles

The Tullow Oil (TLW) share price jumps after losses! Is now the time to buy?

The Tullow Oil (TLW) share price ticked upwards on Thursday morning after falling nearly 30% over the last month. So,…

Read more »

Female analyst sat at desk looking at pie charts on paper
Investing Articles

Is the Lloyds share price about to dip below 40p?

The Lloyds share price has been trading below 50p for the better part of the year. But could the stock…

Read more »