2 top dividend stocks to buy in August

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Racing inflation continues to reach fresh highs in the UK, as official figures show that rates rose further in June. With cash in the bank depreciating, I’m on the lookout for dividend stocks that can create a passive income stream for my portfolio.

Here are two I think could be top picks this month.

Taylor Wimpey

My first pick is the home construction company Taylor Wimpey (LSE: TW). The stock has seen over 25% shaved off its price in the last 12 months as inflationary pressures from multiple directions have impacted the homebuilder’s operations.

Due to this, Taylor Wimpey currently offers a strong 7.2% dividend yield. This is below the UK inflation figure for June of 9.4%. However, it does provide better value than storing my money in the bank.

The firm released its half-year figures earlier this week, showing strong growth even during challenging times. Within, it announced an interim dividend of 4.62p per share, totalling £163m.

More widely, it expects full-year operating profits to be at the “top end of the current market consensus range”.

It also stated that market fundamentals were positive and rising housing prices had offset higher costs. However, with the housing market looking like it may be hitting the brakes, the months ahead could be testing for the business.

Despite this, I’d still buy Taylor Wimpey shares. Its strong yield and positive outlook make it a buy for me.

Legal & General

My second pick is the financial and insurance services firm Legal & General (LSE: LGEN). The stock has sat pretty much still for the past 12 months. And despite falls this year, its rebounded 15% in the last month.

It currently offers a dividend yield of 6.6%. Again, this isn’t inflation-beating. However, with the firm announcing it has plans to increase these payouts in the years ahead, I think the stock is a smart move for my portfolio.

Legal & General is a renowned business, and with this investment, I’m adding an iconic brand to my holdings. It posted a strong performance last year as profits rose 28% year over year, while it also stated that it was on the path for its cumulative dividend ambition of £5.6bn-£5.9bn by 2024. This is part of Legal & General’s five-year ambitions programme. As an investor who buys for the long run, these are the sort of moves I want to see businesses making.

With this said, the release of its half-year results may paint a different picture. Rising inflation means consumers are tightening their belts. And because of this, the business may see a slowdown in investments made by customers. As a recession looms, people may be deterred from investing as they opt instead to keep cash nearby in case of emergency.

However, I’d still be keen to buy some shares in August. A solid brand, on track to achieve its long-term targets, with a meaty dividend, I deem Legal & General a must-have.