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When buying stocks, look for investments that you can hold for the long term. That means finding a business that can grow its bottom line over the next 10 years or more.
Thinking in terms of the next decade means thinking in anticipation of a possible recession in 2023. This involves thinking about how demand for your product changes over time and which companies will benefit.
with Current dividend yield of 5%, Forterra (LSE: Fort) looks like an interesting stock for dividend investors. And I think the brick company will do well in the next decade.
UK bricks is an industry where demand exceeds supply. And we expect this to continue for the next decade.
Currently, about 2.6 billion bricks are used in construction projects, but the local capacity is only about 2.1 billion. This leaves a significant shortage and creates room for profitable growth for brick businesses like Forterra.
The company has tried to capitalize on this by upgrading its factories to increase production capacity. We expect this to pay off with a boost to earnings over the next decade.
Of course, other brick companies are doing the same, so there is a risk of significant competition. However, there are several reasons I believe this risk is limited.
First, Forterra bricks are used in about 25% of UK homes. This makes it a natural choice for extensions, and is expected to become more popular as the amount of available space dwindles.
Second, even with planned investments, domestic manufacturing supply still falls short of demand. This means that all UK bricks companies have room to generate good profits.
Forterra stock with a price/earnings ratio (P/E) of less than 10 looks cheap to me. I think they will be a great source of income for the next 10 years.
I think craft heinz (Nasdaq: KHC) is flying under most passive income investors’ radars as its dividend has remained flat since 2019. However, I expect increased shareholder returns in the near future.
Stocks are a very different type of offer than Forterra. Where demand for bricks is closely tied to interest rates and housing prices, demand for food is much more steady and stable.
As a result, I don’t think the company’s bottom line will get a big boost from the economy. But I think it has good potential for revenue growth.
Kraft Heinz’s main risk is the amount of debt it has. Balance sheetThat’s the main reason the dividend is stable, and what investors want to watch out for in interest rates.
However, this is something the company has been working on since 2019. During that time, the company’s long-term debt has fallen by about 32%.
With a better balance sheet, Kraft Heinz expects to spend less on interest payments. As a result, we expect shareholder returns to increase.
I don’t think this stock is expensive at today’s prices. I think it’s a great choice for investors looking for long-term passive income.
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