The Motley Fool

2 high-yield stocks I’d buy right now

While the rate of inflation has dropped back in recent months, it still remains a real threat to investors. Brexit talks may not progress as smoothly, as the market is beginning to price in, and this could lead to uncertainty regarding the future of the UK economy. The end result could be a weaker pound and higher inflation.

With that in mind, here are two high-yield stocks which could be worth buying right now, helping to keep income returns above inflation.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Improving outlook

Reporting on Wednesday was multi-utility infrastructure and services provider Fulcrum Utility Services (LSE: FCRM). Its trading update for the financial year to 31 March showed that it’s executing its strategy. It’s also on track to perform in line with expectations, while acquisition activity remains high.

For example in February, the company acquired The Dunamis Group, an electrical infrastructure company. The integration is progressing well, with significant cross-selling opportunities on offer.

The company also announced the acquisition of CDS Pipe Services alongside its trading update. It provides a range of specialised engineering services and will be acquired for £1.4m. The deal will be satisfied through a mix of new shares in the company and cash, with the potential to act as a positive catalyst on its financial performance.

In terms of outlook, Fulcrum is forecast to post a rise in its bottom line of 5% in the next financial year. However, dividends are due to rise by around 25%, which puts the stock on a forward yield of around 4.2%. And since dividend payouts are covered 1.7 times by profit, there appears to be scope for them to rise further.

Impressive outlook

Also offering a high dividend yield at present is water services company Pennon (LSE: PNN). The company’s share price has declined by 32% in the last year as investors become increasingly cautious about the prospects for a wider utility industry. Regulatory change within the sector could lead to a squeeze on profitability, which is causing the market to include a wider margin of safety when valuing stocks.

This means that Pennon now has a dividend yield of around 7%. This is historically high for the company and is backed-up by a forecast earnings growth rate of between 10% and 12% over the next two financial years. This should allow dividends to increase by around 7% per annum during the same time period. As such, beating inflation could be relatively straightforward for investors in the company.

Furthermore, the stock has a current price-to-earnings (P/E) ratio of just 11.5. This suggests that it could be undervalued and has the potential to deliver capital growth as well as a high income return. While volatile and uncertain in the near term, the stock could prove to be a strong performer in the long run.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Peter Stephens owns shares of Pennon Group. The Motley Fool UK has recommended Pennon Group. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.