2 hot income shares with high dividend yields!

Andrew Woods explains why these two income shares are attractive to him at the moment, while taking a look at their dividend policies.

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While finding the best growth shares on the market can be thrilling, I find it equally rewarding to uncover the strongest income shares. To that end, I’ve trawled through the indexes and found two businesses that I think fit the bill. They have solid dividend yields, so should I add them both to my portfolio soon? Let’s take a closer look.

Smoking hot?

The shares in Imperial Brands (LSE:IMB) have performed comparatively well recently. In the past six months, they’re up 17% and currently trade at 1,990p.

The firm – a cigarette manufacturer – has a very attractive dividend yield of 6.98%. For the year ended September 2021, the company paid a dividend of 139.08p. 

I’m aware that dividend policies may be subject to change in the future. But it’s good to know that I could derive this relatively high level on income. 

The firm also published sparkling results for the year ended September. In the report, the business stated that it had traded in line with expectations. Furthermore, it’s embarking on a £1bn share buyback scheme. This is appealing to me, a potential investor, because it means the possibility of more income. 

These schemes are essentially ways for companies to return profits to shareholders. They’re an indication that the business is in a strong financial state of health. 

There is, of course, the threat posed by inflation. It’s possible that higher costs and wages could lead to diminishing profits. Despite this, the firm has increased its market share across many important economies in Europe.

A high oil price

Second, Shell (LSE:SHEL) shares have been volatile of late, having climbed nearly 11% in the past six months. At the time of writing, they’re trading at 2,349.5p.

The oil and gas giant paid a dividend of $0.89 per share in 2021. At current levels, this equates to a yield of 2.82%

The business has been benefiting from markedly higher oil prices. These have been caused by heightened demand following the pandemic. Furthermore, a perceived supply shortage after the Russian invasion of Ukraine sent prices to well over $100 per barrel. 

Unsurprisingly, for the three months to 30 June, the company posted profits of $11.5bn. In addition, its refining profit margin per barrel tripled, quarter on quarter, to $28 per barrel. 

One concern of mine is whether oil prices can remain elevated for long. The factors leading to the price spike may also be resolved in coming months. Despite this, the winter period may bring with it increased demand for oil for customers to heat houses.

Overall, both of these well-established businesses boast solid dividends. Underpinned by strong results, it’s likely that these dividend policies could continue for the foreseeable future. With that in mind, I’ll add both companies to my portfolio soon.

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 assessed. Consider taking independent financial advice.

Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands. 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.

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