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Dividend stocks can be a great source of passive income. Rising interest rates also mean that there are some stocks with interesting yields at the moment.
We currently have two dividend stocks that we are considering buying. Both are based in the UK. One is a health care landlord and the other he is a brick manufacturer.
Primary health property
Rising interest rates are putting pressure on UK property prices. As a result, there are some compelling opportunities in the real estate investment trust (REIT) sector.
UK REITs have seen significant declines in asset prices as interest rates have risen. And stock prices follow almost across the board.
An example of this is Primary health property (LSE: PHP). The stock has fallen 28% over the past 12 months. dividend yield rises to 6.5%.
As a company that owns and leases GP surgeries, the company has unique risks. 90% of rental income comes from the NHS. This makes the company vulnerable to changes in health policy.
At today’s prices, I think the risk is worth the reward. Primary Health Properties continues his 27th consecutive year of dividend increases despite falling property values.
This stock is on my buy list because it is attractive at its current price and I believe it will continue to provide a permanent source of passive income. I’m thinking of buying it by the end of this month.
Forterra
I want to buy brick maker stock Forterra (LSE: Fort) this month. I’ve had a crush on this strain for a while, but always thought there were more attractive strains.
That said, I don’t think so at this point.Stocks are traded at Price Earnings Ratio (P/E) The dividend yield is 9% and the dividend yield is 5%.
That dividend doesn’t come at the expense of growth. The company has expanded its manufacturing capacity to take advantage of local supply, which is in short supply in the UK.
The new facility also means that bricks can be produced at a lower cost than before. This is important because one of the biggest risks Forterra currently faces is inflation.
Reported earnings for the week. One of the core challenges that emerged from this announcement was the potential for higher costs and lower profit margins.
There are two sources of margin pressure. The first is rising energy costs and the second is rising raw material prices.
Both of these are issues that investors want to focus on. But the company has done a good job of maintaining margins so far.
Aggressive procurement enabled Forterra to secure 80% of its energy requirements this year. The company is also adjusting its pricing structure to accommodate rising cement costs.
Overall, I think Forterra is a company with a bright future. The fact that I think it’s trading at a decent price also puts the stock firmly on my buy list this month.
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