10%+ dividends! Should I Buy These UK High-Cap Shares?

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I am looking for the best high quality UK stocks to buy for my portfolio. So should I buy one, both or one of these? FTSE 100 Income shares? Both have a profit share of more than 10% in the north.

NatWest Group

Of all the FTSE 100 banks, NatWest Group (LSE: NWG) offers the highest yield. For 2022, Monster will generate 11.8% dividend yield, which is more than double Lloyd’sAnother popular source of income.

In fact, the business offers excellent overall value on paper. As well as that massive product, it trades at a forward price-to-earnings (P/E) ratio of 7.4 times.

Earnings emerge at NatWest as interest rates rise in 2022 A further rise in borrowers’ fees in the first half of the year led to a 13 per cent rise in pre-tax profits to £2.6bn in the year.

The good news is that interest rates are also tipped to continue rising rapidly. In fact, analysts ING Bank They said they could now grow by more than 5% by 2023 with the measures outlined in Friday’s ‘minimal budget’.

A chart showing ING's interest rate forecasts
Source: ING Bank

But that’s not enough to warrant investing in NatWest shares today. Britain’s economy has recently been experiencing a period of painful contraction followed by low growth. Hence, such bank stocks are likely to face rising bad loans in the next couple of years and weak earnings thereafter.

I don’t mind buying bank stocks when the global economy is weak. However, I prefer to invest in exposure to fast-moving economies such as Asia-based ones. HSBC Or Standard Chartered. I think it is better to buy for long term growth.


On the other side of the coin, Persimmon ( LSE:PSN ) is a UK high-yielding share at risk from higher interest rates.

Recent action by the Bank of England means that the cost of owning a mortgage is rising significantly. And if those ING estimates are correct and interest rates double from the current 2.25%, demand for housing could drop significantly.

However, I’m still rooting for Persimmon and other home builds. This is why I bought FTSE 100 shares for my own portfolio in the summer.

I am optimistic, though, as I expect demand for new construction homes to continue to outpace demand as rates continue to rise. The government’s decision last week to cut stamp duty in the small budget will also reduce the impact of higher interest rates.

A graphic showing that the UK needs 340,000 new homes a year

Most forecasts suggest that Britain will need to create more than 300,000 new homes each year to meet demand. But with the government’s housing policy, the shortage of new homes to get off the ground is still worsening. This suggests to me that property prices should continue to rise for some time to come.

Persimmon trades at a P/E ratio of 5.5 times. And it yields a whopping 16.3% profit margin. I believe it is too cheap to lose at current prices.

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