I’d fight inflation with these 2 FTSE 100 dividend shares

With inflation hitting a 9%, I’m boosting my passive income and turning to these two FTSE 100 dividend stocks.

| More on:
Inflation in newspapers

Image source: Getty Images

We were told this week that UK inflation has hit a 40-year-high of 9%. With this trend set to continue, I’m looking to enhance my income to fight against rising prices. I think these two FTSE 100 shares offer stable dividends that will raise my passive income and reduce the strain from inflation.

A FTSE 100 insurer

Insurance firm Phoenix Group Holdings (LSE:PHNX) is my first candidate. The share is currently trading with a strong 7.5% dividend yield — far above the current 3.7% average for the FTSE 100. Alongside this, the company has 13m customers and £310bn in assets under management through arms such as Standard Life.

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!

Phoenix Group has typically made the bulk of its revenue from managing what it calls heritage business brands. These are pension and maturing life insurance plans that are no longer open to new customers. This business model provides relatively weak growth and the firm has been trying to grow its active insurance position through the acquisition of brands such as Standard Life.

The group has generated record cash of £1.72bn in the last year. This was slightly up from £1.71bn the year before. And management suggested that this growth proves the shift of focus toward operating insurance brands is working.

Despite management’s beliefs, I’m not convinced Phoenix Group will see much growth in the next few years. However, this isn’t a concern for me when the company offers the dividend yield it does. Even if the share price goes nowhere, I think the dividend on its own justifies adding this FTSE 100 share to my portfolio.

A global energy giant

The BP (LSE:BP) share price has been boosted by rising oil prices over the last year. The share price has risen a strong 37% as a result.

The energy giant offers a 4.3% dividend yield, which is higher than most FTSE 100 shares but not excessively so. And BP has promised to increase returns to shareholders in other ways too. The company recently announced an expansion of its share buyback programme by $2.5bn. This constrains the supply of shares and it could help investors offset the woes of inflation through a rise in the share price.

The FTSE 100 company does have risks that need to be considered. There have been calls for a windfall tax on energy companies that have benefited from a rise in oil prices that they’re not responsible for. This would see BP forced to pay the government a percentage of its profits and could harm future returns.

Alongside this, the future of BP is heavily dependent on the global energy transition. While the firm has made small steps to increase its renewable operations, I believe it needs to do more to safeguard its future in the energy category.

Despite these concerns, I believe BP is still placed well to deliver high returns through its dividend and share buyback programme that could help me offset the costs of inflation. I’m seriously considering taking out an investment with my next chunk of savings.

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

Finlay Blair has no positions in any of the shares mentioned. The Motley Fool UK has 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

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

£10,000 invested in BT shares 10 years ago is now worth this much

It's painful to remember that BT shares reached over £10 at the peak of the dot com bubble in 1999.…

Read more »

Close-up Of A Piggybank With Eyeglasses And Calculator On Desk
Investing Articles

Is now the time to buy bank shares?

Our writer considers whether bank shares could be a bargain buy for his portfolio right now -- or a potential…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

After steep falls, are Royal Mail shares a steal?

Royal Mail shares have more than halved since peaking a year ago. After months of steep falls, this popular stock…

Read more »

Young Woman Drives Car With Dog in Back Seat
Investing Articles

Dirt-cheap, 1 of my best stocks to buy also pays an above-average dividend!

This Fool has decided to buy the shares on his best stocks to buy now list with the shares looking…

Read more »

Light bulb with growing tree.
Investing Articles

The AFC share price just tanked! Is now the time to buy?

The AFC share price fell nearly 10% on Wednesday after the H1 revenue announcement. So, should I add this stock…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

These shares have been growing dividends for decades. I’d buy!

Our writer considers the merits for his portfolio of buying two shares with a track record of growing dividends.

Read more »

Close-up of British bank notes
Investing Articles

Is the M&G dividend yield heading to 10%?

As the M&G dividend yield heads towards double digits, out writer explains why he is considering buying more of the…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

3 top dividend shares to buy now

With weakness in the markets, I reckon it's a good time to search for top dividend shares to buy now.

Read more »