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Dividend stocks are a great source of passive income. Although the capital isn’t protected in the same way as a Cash ISA, the yield is often higher to compensate. So even with the Bank of England hiking rates, a base rate of 0.75% won’t really offset inflation running above 6%. As a result, here are two dividend stocks that we like the look of at the moment.

A FTSE 250 dividend gem

The first company is TP ICAP group (LSE:TCAP). The firm is an interdealer broker, listed on the FTSE 250. Currently, the dividend yield on offer is 6.25%.

An interdealer broker is an intermediary that helps to connect buyers and sellers of various financial assets. Usually, the clients are banks, hedge funds or asset managers. These companies would use TCAP to make trades go through smoother, faster, or without the knowledge of who is the end buyer or seller.

It’s a niche market to operate in, and TCAP rely on market volatility to make higher revenue. This is one reason why the 2021 results were somewhat disappointing. Adjusted EBIT for the year was £233m, 9% lower than the prior year (2020: £256m).

However, we like this dividend stock now because we feel that market volatility has not only been elevated in Q1, but should remain elevated for the rest of the year. Surging commodity prices, choppy equity markets and even the bond market is supportive of this opinion.

For investors that don’t agree with our thinking on market volatility, this is a share to avoid.

Riding for future market volatility

The second company we like for dividend payments is IG Group (LSE:IGG). We’re staying in financial services here, but going to a retail trading platform. The current dividend yield on offer is 5.2%.

IG has grown in popularity over the past few years as retail trading has become more popular. It’s also taken the initiative to strike while the iron is hot, so to speak. Expansion into Japan is starting to yield results. Further, the acquisition of US-based tastytrade is also generating revenue. For example, in the latest Q3 trading update, this part of the business generated £28.4m in revenue.

In a similar way to TCAP, the business relies on market volatility. However, this will be cushioned somewhat due to the provision of unleveraged stock trading and ISA options. Diversifying the revenue streams is another reason we like IG.

In terms of risks, the industry is heavily regulated, and could become more restricted with government intervention. Limiting leverage or increasing the bar to accessing certain products could hamper revenue in the future.

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