5 FTSE stocks to beat inflation as BoE warns it can hit 10-year high

Summary 

• The Bank of England has issued a warning that inflation can hit a 10-year record high of 4% by the end-year.
• Despite soaring inflation expectations, the Monetary Policy Committee (MPC) kept the interest rate at a historic low of 0.1%.
• The BoE expects supply chain issues to ease as the global economy reopens, trading normalises, and demand shifts to services from goods.

The Bank of England (BoE) has issued a warning that inflation can hit a 10-year record high of 4% by the year end (since 2011) from the current 2.5%, as the country’s economy recovers from the impact of the pandemic. The apex bank, despite highlighted the temporary surge in prices expects inflation to return to 2% by H2 2023.

Despite soaring inflation expectations, the BoE’s MPC (Monetary Policy Committee) kept the interest rate at a historic low of 0.1%. Banks often use higher interest rates to encourage people to save. Higher costs are mainly driven by inflation amidst a shortage of goods such as semiconductors and an increase in construction materials demand. The surge in shipping costs is reflective of the increase in demand for raw materials and goods.

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The BoE also said that issues across the supply chain were expected to ease as the global economy reopens, trading normalises, and demand shifts away from goods towards services. Reopening the economy offers workers more power as far as wages are concerned, as employers are on a hiring spree. The Bank highlighted that increase in staff wages could put permanent pressure on inflation in the country. The Committee underlined the need for medium-term fiscal tightening measures to ensure CPI inflation is kept in check.

Here we take a look at some FTSE listed stocks that can protect you from inflation. It must be noted that these are not recommendations to buy or sell. These stocks have been selected based on their five-year average dividend yields, one of the many important parameters to watch for an inflation resistant stock.

Amigo Holdings Plc (LON: AMGO)

Amigo Holdings Plc is among the UK’s leading providers of guarantor loans. For the financial year 2020, Amigo Holdings registered revenue growth of 8.7 per cent to £294.2 million, from £270.7 million in 2019. It also registered a year-on-year net loan book reduction of 9.1% to £643.1 million (2019: £707.6 million) and £64.3 million cash and cash equivalents as of 31 March 2020 compared to £15.2 million in 2019.

The country’s non-standard finance sector has grown significantly, with about 10–12 million adults unable to access loans through mainstream lenders. This presents Amigo’s with tremendous growth opportunities for the future as well.

Amigo’s 5-year average dividend yield stood at 18.1 per cent, and market capitalisation was £41.35 million as of 6 August 2021. 

KKV Secured Loan Fund Limited (LON:KKVL)

KKV Secured Loan Fund Limited is an equipment leasing and asset finance investment company. It reported a combined net profit of £15.1 million for the half-year ended 31 December 2020 compared to a loss of £223.8 million for the half-year ended 30 June 2020.

On 7 July 2021, the Board announced that it would return an amount of 3 pence per share to ordinary shareholders amounting to £10.6 million, and an amount of 7 pence per share to C shareholders to £9,724,695.

KKV Secured Loan Fund Limited’s 5-year average dividend yield stood at 15.6 per cent, and market capitalisation was £56.60 million as of 6 August 2021. 

Pharos Energy Plc (LON:PHAR)

Pharos Energy is into oil and gas exploration and production. On 29 July 2021, it announced the completion of a 3D seismic programme in Block 125 in Vietnam’s Phu Khanh Basin and refinancing its Reserve Based Lending Facility secured against the producing assets in Vietnam.

The group’s working interest H1 production stood at 9,147 boepd net, which includes 5,429 boepd in Vietnam and 3,718 bopd in Egypt. The group’s working interest production guidance for the full year 2021 remains unchanged at 9,200 - 10,600 boepd net, including 5,200-6,200 boepd for Vietnam and 4,000-4,400 bopd in Egypt.

The company’s revenues for the half year ended 30 June 2021 were $73 million. The average oil price per barrel for the period for Vietnam was $67/bbl, with a premium of around $2/bbl to Brent, and for Egypt was $60/bbl, representing a discount of around $5/bbl to Brent.

Pharos Energy’s 5-year average dividend yield stood at 12.8 per cent, and market capitalisation was £97.28 million as of 6 August 2021. 

Newriver Reit Plc (LON:NRR)

NewRiver Reit is a prominent real estate investment trust in the country and specialises in the purchase, management and development of community and convenience-based leisure and retail assets in the UK. On 26 July 2021, NewRiver inked an agreement for Hawthorn sale to a member of Admiral Taverns group’s, in line with the company’s decision to divest its community pub business. For the first quarter ended 30 June 2021, the company completed 252,500 sq ft of leasing deals. Across its retail portfolio, occupancy increased over 1% to 97.0% since March 2021, and average retail rent remains at £11.54 per sq ft for the quarter ended 30 June 2021 (March 2021: £11.51 per sq ft).

On 5 August 2021, NewRiver fixed the final dividend for the year ending 31 March 2021 at 82.46 pence per ordinary share of one penny each.

Newriver Reit’s 5-year average dividend yield stood at 12.0 per cent, and market capitalisation was £255.76 million as of 6 August 2021. 

Global Ports Holdings Plc (LON:GPH)

It is one of the largest independent cruise port operators globally. On 30 July 2021, it announced a new five-year loan agreement with Sixth Street, a global investment firm, for $261.3 million. This enabled GPH to repay the $200.3 million outstanding amount, plus accrued 8.125% interest due 14 November 2021, issued by Global Liman Isletmeleri A.S., a wholly-owned subsidiary of Global Ports.

For the quarter ended 31 March 2021, total revenue increased to $13.9 million from $12.7 million reported in the same quarter last year. Cruise passenger volumes for the quarter declined by 99 per cent year-on-year due to the impact of the pandemic on the cruise industry. However, cruise activities have resumed in some of the company’s Mediterranean ports and Singapore.

Global Ports Holdings’ 5-year average dividend yield stood at 10.5 per cent, and market capitalisation was £82.30 million as of 6 August 2021.