The UK stock market is at a crossroads. Fears about inflation and rising interest rates have slowed share price growth across many sectors as investors wonder what will come of 2022. I think, however, that there are many great stocks I can add to my portfolio, so long as I plan on holding them for at least 10 years.
The reason I’m choosing dividend stocks is that whatever happens to the share price, I get a return for my holdings. I do have to remember thought that companies are under no obligation to pay a dividend.
Lloyds Bank (LSE: LLOY) has been cutting costs everywhere it can, closing branches up and down the country. It is one of the few firms set to gain with rising interest rates and is making significant moves into the UK rental property market. Its dividend payment of 2.49% is small, but manageable, and will balance out my riskier investments.
Imperial Brands (LSE: IMB) pays a much heftier dividend at 8.61% and has managed to pay at least 7% to investors every year since 2002. While tobacco use is on the decline, IMB has taken significant strides to streamline its business during the pandemic. So far in 2021, it has made £1.6bn in profit and has committed large amounts of revenue to developing new, safer products for its customers. I believe that despite the bad press, tobacco has staying power and will remain relevant for another decade at least.
Naked Wines (LSE: WINE) was founded in 2008 but really burst onto the scene during the pandemic. The wine retailer moved the vast majority of its operations online right before the start of lockdown and proved itself to be an invaluable service to those of us stuck at home with nothing to do. Low overheads allow for it to offer good quality products at affordable prices and its ‘Angels’ subscription programme has built up a sizeable repeat customer base. Growth has slowed since the end of lockdown, but I believe that the subscriptions will provide it with a consistent source of revenue, while low prices and convenience of wine delivered to our doors will continue to add new customers to that list.
Argo Blockchain (LSE: ARB) is easily the riskiest investment on this list. The world of cryptocurrency and blockchain tech is still largely uncharted territory. It may all come crashing down tomorrow for all I know. But with high risk comes high reward. Right now, ARB trades for 131.4p on the London Stock Exchange, a pullback of nearly 50% since its all-time high of 282p in February. I really believe in the future of cryptocurrency but I think excitement over bitcoin pushed the share price higher than was sustainable. Now it has settled at a more reasonable place, it would be remiss for me not to invest in the infrastructure that makes cryptocurrency possible.
All of these investments come with risks. But understanding the investments and planning to hold for the long term is how I am able to minimise them. UK stocks have a lot of potential and I’m going to be sure to take as much advantage of that as I can.
James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands and Lloyds Banking Group.
The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of investment advice. Bitcoin and other cryptocurrencies are highly speculative and volatile assets, which carry several risks, including the total loss of any monies invested. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
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.