Forget ISA Cash! I can get 6% a year from these two income stocks – Stock Market News

Forget ISA Cash! I can get 6% a year from these two income stocks

Image source: Getty Images

The FTSE100 is full of income stocks that offer sky-high dividend yields that crush cash yields.

I’d much rather buy them to build retirement wealth than save in a Cash ISA, even though the Bank of England has just raised base rates to 4%. Why support a little over 3% on easy access when I can double that from high dividend stocks like these two.

Dividend stocks for me

Investors in a copper mining group based in Chile antofagasta (LSE: ANTO) have experienced strong growth in recent times. Its share price soared by 27.14% over 12 months, and by 87.78% over five years. Yet it still trades at an undemanding price of 14.9 times earnings.

There could be more to come as investors predict demand from China, the world’s biggest copper importer, will soar now that the country is free of lockdown. However, guessing movements in commodity prices is tricky, as a global recession could affect demand elsewhere. Also, the price of copper has climbed 19.5% in one year, and will have to work hard to climb higher.

Last month, Antofagasta reported a 10.4% drop in production to 646,200, mainly due to lower ore grades and a drought. However, he predicts this will rise to between 670,000 and 710,000 tonnes in 2023.

That’s the income I’m looking for, though. Currently, the stock is yielding an impressive 6.7%, but that’s only covered once by earnings. On closer inspection, Antofagasta’s dividend history is a bit bumpy. It paid a dividend of 44 cents per share in 2018, which fell to 18 cents in 2019, then rose to 55 cents in 2020 and $1.43 in 2021.

Another concern is that Antofagasta generates revenue in US dollars. As the Fed slows and eventually reverses its interest rate hikes, the greenback is likely to fall from today’s high, which could affect earnings.

I would invest in Antofagasta rather than a cash ISA, but I think there are safer dividend yields on the FTSE 100. Like this.

A platinum investment

Anglo-American (LSE: AAL) is another mining company listed on the FTSE 100, but with greater diversification as it also produces platinum, diamonds, nickel and iron ore. It is the world’s largest producer of platinum, with around 40% of global production, and owns the world’s largest diamond company, De Beers Group.

The company’s stock price barely rose over the past year, rising just 1.7%, but it’s up 100.41% over five years. Anglo American shares are nevertheless cheaper than Antofagasta, trading at just 6.5 times earnings.

Its dividend also looks healthier. It pays 6.9%, hedged 2.5 times earnings. Payouts have also been smoother, with the dividend per share set at $1 in 2018, then $1.09 in 2019, $1 in 2020 and $2.89 in 2021.

Fourth-quarter figures today show copper production up 52% ​​to 244,000 tonnes following a ramp-up at its Quellaveco mine in Peru. The total production of its portfolio is up 10%.

Again, investors like me should balance the improving Chinese outlook with global recession fears and a weaker US dollar. However, I find Anglo American’s low valuation and high yield tempting. I will buy it when I have some money to spend.

Forget ISA Cash! I can get 6% a year from these two income stocks

Source link