2 lesser-known income stocks, paying 8.5%, to buy in June!

Amid sky-high inflation, I’m looking at income stocks to help my portfolio grow. These two offer huge yields, but are they right for my portfolio?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Mature people enjoying time together during road trip

Image source: Getty Images

Income stocks form the core part of my portfolio. With inflation hitting levels not seen in decades, strong dividend yields are helping my portfolio grow. Today, I’m looking at two dividend big-hitters that aren’t overly well known.

So, are these two lesser-known stocks right for my portfolio?

Centamin

Mining stocks have generally seen their share prices shoot up this year. But Centamin (LSE:CEY) is an exception to this.

In March, the Jersey-registered gold miner recently announced a big hit to profits due to lower revenue and an impairment on assets in Burkina Faso.

However, 2022 should be a better year for Centamin. The miner said gold production is expected to be between 430,000 ounces and 460,000 ounces, up from 415,370 ounces in 2021.

Meanwhile, there appears to be some upward pressure on costs. Cash costs are expected to be $900-$1,000 per ounce produced. Centamin said all-in sustaining costs were expected to rise to $1,275-$1,425 an ounce sold.

By comparison, in 2021, fourth-quarter cash costs stood at $972 per ounce produced, and all-in sustaining costs were $1,256 per ounce sold.

Centamin has kept its production guidance despite production falling year-on-year in Q1.

However, the price of gold is very important to profitability. In Q1 of 2022, Centamin achieved $1,883 per ounce, up from $1,778 in Q1 of 2021. Today the spot price is $1,833.

This stock is down 26% over the last year and 51% over two years. It has a price-to-earnings ratio of 11.5, which isn’t expensive, especially with 2022 looking like a better year than last. It’s offering an 8.6% dividend yield at today’s price.

I’ve already bought Centamin shares, but may buy more, especially after seeing board members buying too. This is normally a good sign.

M&G

M&G (LSE:MNG) is a UK investment manager offering a very attractive 8.4% dividend yield.

Pre-tax profit fell substantially in 2021, following losses resulting from short-term fluctuations hitting investment returns and higher restructuring costs.

However other financials remained strong. Assets under management also remained relatively flat at £370bn. Net outflows from retail asset management were offset by inflows from institutional investors.

Adjusted operating profit before tax fell to £721m from £788m in 2021, but was ahead of forecasts.

M&G has a fairly consistent source of income in that customers are charged for services. But, the company makes more money if certain returns thresholds are hit. This greatly enhances M&G’s income. In that respect, this year’s market volatility may not be good for it.

However, the long-term prospects are positive. HSBC recently upgraded it to Buy.

We see M&G offering very attractive total capital return yields at an average of 20% per annum over 2022-24, which correspond to the group returning circa 60% of its market cap to shareholders over three years,” HSBC said.

I’m currently looking to add this one to my portfolio.

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.

James Fox owns shares in Centamin and HSBC. The Motley Fool UK has recommended HSBC Holdings. 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.

More on Investing Articles

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Should I invest in the FTSE 100 – or try to beat it?

Our writer has the option of investing in a FTSE 100 tracker fund. So why does he choose to buy…

Read more »

Young black woman walking in Central London for shopping
Investing Articles

£1,500 to invest in a Stocks and Shares ISA? Here’s how I’d do it

Our writer has been investing in his Stocks and Shares ISA. Here he details how he could put £1,500 in…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

2 top FTSE 100 shares I’d buy before the market rebounds!

Christopher Ruane identifies a pair of FTSE 100 shares that have both tumbled in the past year and that he…

Read more »

Business development to success and FTSE 100 250 350 growth concept.
Investing Articles

Here’s why the next bull market may have already begun

The UK stock market has taken the Bank of England's interest rate hike in its stride and green shoots suggest…

Read more »

Gold medal
Investing Articles

No contest! Here’s my stock of the week

An update from this company offered some relief from the economic gloom. It's this Fool's stock of the week.

Read more »

Cogs turning against each other
Investing Articles

Scottish Mortgage shares are back on the rise: is now the time to jump onboard?

Scottish Mortgage shares have risen over 25% in the past 30 days. This Fool takes a look at why and…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Why do Lloyds shares seem so cheap?

Lloyds shares have been losing ground and now look cheap on some valuations. So why has our writer removed the…

Read more »

Investing Articles

How to invest in shares to help beat inflation

Soaring prices could well outstrip our investing returns this year. I think it's more important to find shares to beat…

Read more »