10 stocks to watch as households face record dips in real income

Highlights

• Average energy bills of UK households are expected to lift to £3,500 this October while the gas prices witness a seven-fold rise.
• A Bank survey of UK businesses unveiled that households were already moving away from expensive brands to relatively cheaper brands in their weekly supermarket shops.
• The most significant contributor towards the rising household bills is the soaring energy costs.

Average energy bills of UK households are expected to rise to £3,500 this October, as the gas prices witnessed a seven-fold rise owing to the impact of the war in Ukraine. While it would potentially take a few years for the inflation levels to fall in line with the central bank’s 2% target, policymakers have claimed that they are prepared to push for further rate hikes if there are signals that price and wage hikes are becoming an established phenomenon.

A bank survey of UK businesses unveiled that households were already moving away from expensive brands to relatively cheaper brands in their weekly supermarket shops. Also, the probability for them to repair and restore their broken items instead of replacing them and putting off dentist appointments is also higher now.

The Government has been making efforts to tackle the inflationary crisis and support households struggling with rising bills. The purchasing power of households has been going down, and even though the overall consumer spending has gone up recently, the goods and services bought by consumers hasn’t, mainly due to rising prices.

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The cost-of-living squeeze has been worsening and there are several factors responsible for the same. The most significant contributor towards the rising household bills is the soaring energy costs. The energy prices were already pretty high, and the Russia-Ukraine war further worsened the situation sending prices into overdrive. Rising energy demand following the easing of Covid-related restrictions accompanied by supply cuts have pushed energy prices to skyrocketing levels.

Apart from fuel bills, rising food bills have also been digging a hole in the pockets of households. The war has substantially contributed towards a spike in food prices globally and the poorer households have been hit the hardest due to it. Covid had already created a lot of supply chain issues across the world, and these issues have lately been aggravated due to the war, leading to a rise in prices.

As inflation levels are going up, the workers’ struggle is also increasing, pushing them to ask for higher pay. This feared phenomenon in which wages keep increasing in line with prices is known as the wage-price spiral. The continuous spiral builds up the inflationary pressures and leads to further deterioration of the economy.

Amid the falling real wages and rising inflationary pressures, Brits can protect their hard-earned money, and even grow it, by investing in the stock market. Investing in blue-chip stocks offering dividend payouts is a great way of beating inflation. Kalkine Media® deep dives into the stocks currently doing well amidst the ongoing situation. 

Diversified Energy Company plc (LON: DEC)

The shares of the US-based oil and gas producing firm, Diversified Energy Company plc, surged by 0.49% at 1:02 PM (GMT+1) on Friday and were trading at GBX 122.80. The firm holds a market cap of £1,040.73m at the moment and has provided positive returns to investors as of 5 August. DEC offered returns of 16.37% and 17.71%, respectively on yearly and YTD basis. It presently offers a dividend yield of 11.1% a year.

M&G plc (LON: MNG)

The shares of M&G plc, dipped by 0.68% at 1:10 PM (GMT+1) on Friday and were trading at GBX 217.70. The firm holds a market cap of £5,547.71m at the moment and comes under the FTSE 100 index. M&G has provided positive returns of 9.12% to investors as of 5 August on YTD basis, however its one-year return is negative, at -5.95%. It presently offers a dividend yield of 8.3% a year. 

Imperial Brands plc (LON: IMB)

Imperial Brands plc’s shares dipped by 0.11% at 1:16 PM (GMT+1) on Friday and were trading at GBX 1,831.50. The firm holds a market cap of £17,425.73m and IMB had both yearly and YTD returns at 16.02% and 13.06%, respectively. It presently offers a dividend yield of 7.6% a year.

British American Tobacco plc (LON: BATS)

The shares of the globally leading cigarette producer, British American Tobacco plc, rallied by 0.78% at 1:20 PM (GMT+1) on Friday and were trading at GBX 3,244.50. The firm holds a market cap of £72,540.14m at the moment and comes under the FTSE 100 index. British American Tobacco has provided positive returns to investors as of 5 August on both yearly and YTD basis, standing at 19.84% and 18.66%, respectively. It presently offers a dividend yield of 6.7% a year. 

Vodafone Group plc (LON: VOD)

Vodafone Group plc shares rose by 2.34% at 1:23 PM (GMT+1) on Friday and were trading at GBX 121.48. The firm holds a market cap of £33,125.48m and VOD has provided positive returns to investors as of 5 August on both yearly and YTD basis, standing at 3.94% and 8.25%, respectively.

ContourGlobal plc (LON: GLO)

The shares of the power generation group, ContourGlobal plc, were trading at GBX 257.00 at 1:29 PM (GMT+1) on Friday. The firm holds a market cap of £1,688.08m at the moment and comes under the FTSE 250 index. ContourGlobal has provided positive returns to investors as of 5 August on both yearly and YTD basis, standing at 30.21% and 34.02%, respectively. It presently offers a dividend yield of 5.7% a year.

Investec plc (LON: INVP)

The shares of the company providing financial services, Investec plc, plummeted by 0.13% at 1:32 PM (GMT+1) on Friday and were trading at GBX 445.70. The firm holds a market cap of £3,106.62m at the moment and comes under the FTSE 250 index. Investec has provided positive returns to investors as of 5 August on both yearly and YTD basis, standing at 68.35% and 18.95%, respectively. It presently offers a dividend yield of 5.6% a year.

GSK plc (LON: GSK)

The shares of the leading producer of pharma products, GSK plc, dipped by 0.36% at 1:44 PM (GMT+1) on Friday and were trading at GBX 1,652.40. The firm holds a market cap of £67,452.98m at the moment and comes under the FTSE 100 index. GSK has provided positive returns to investors as of 5 August on both yearly and YTD basis, standing at 15.39% and 12.96%, respectively. It presently offers a dividend yield of 5.2% a year.

Man Group plc (LON: EMG)

The shares of the UK-based investment manager, Man Group plc, plunged by 0.46% at 1:49 PM (GMT+1) on Friday and were trading at GBX 240.10. The firm holds a market cap of £3,153.09m at the moment and comes under the FTSE 250 index. Man Group has provided positive returns to investors as of 5 August on both yearly and YTD basis, standing at 18.16% and 5.58%, respectively. It presently offers a dividend yield of 5.0% a year.

The Renewables Infrastructure Group (LON: TRIG)

The shares of the renewable energy focused investment trust, The Renewables Infrastructure Group, rallied by 2.86% at 1:53 PM (GMT+1) on Friday and were trading at GBX 143.80. The firm holds a market cap of £3,468.44m at the moment and comes under the FTSE 250 index. Man Group has provided positive returns to investors as of 5 August on both yearly and YTD basis, standing at 6.84% and 6.99%, respectively. It presently offers a dividend yield of 4.8% a year.