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2 UK Dividend Stocks to Buy During Times of High Inflation

Everyone is searching around for places to put their money. But there does not appear to be anywhere obvious to put it. I’ve been thinking about dividend stocks I can add to my portfolio that will give me some continued protection again inflation, whilst also returning my some cash to re-invest during the market downturn. I thought there may be others interested so thought I would share here.

I landed on two ideas, neither revolutionary.

1.) CEY – Centamin PLC

Centamin is a gold miner, that actually turns a profit, and pays out a ton of cash via its dividend. Its current yield stands at around 7.5% although I should note the dividend has been reduced in years passed. This is not a romantic or perfectly sculptured dividend play. The reason I mention it, is that gold has long been seen as a hedge against inflation, admitedly this has not played out quite as much as some gold bulls hoped in 2022. But gold should at least hold it’s value, and being a large gold miner that is not reliant on external capital will put CEY in an excellent position moving forward.

2.) Unilever – ULVR

Another obvious play that, IMO, is a much safer bet than CEY. ULVR owns some of the most well known household brans (think – Fairy Liquid), and thus it has something that other companies simply don’t currently – pricing power.
People always need cyclical consumables, and they typically continue to buy what they know, even in a recession. Fairy liquid might be more expensive than the home brand equivalents, but, as anyone who has used the alternatives will know, it lasts a hell of a lot longer.
Dividend yield stands at around 3.7%, but the difference here is you can bet your bottom dollar the dividend will grow significantly over time. Some analysts reckon they could grow their dividend at up to 10% per annum for the next 10 years. This could give you a “safe stock” for a recession, that could also end up yielding you far more than just 3.7%.

ULVR Dividend Growth Rate

To give you an example of the power of dividend growth: after 30 years invested in the Washington Post, Warren Buffets quarterly dividends covered his initial stake in the company. That is the power of earnings / dividend growth over a long period of time. Mohnish Pabrai’s book “The Dhando Investor” will give you an excellent insight into this story in far more detail.

I will keep looking for opportunities to protect the downside, and find the updside. If you want to follow along on my journey, then please follow the blog!