Stock market

2 Dividend Stocks I’d Buy and Hold to Create a Passive Income Stream

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With the goal of building additional income streams, the best dividend stocks are firmly on my radar.

Pick two I would like to buy next time I shop. British territory (LSE: BLND) and Greencoat UK Wind (LSE: UKW).

Before I delve into my reasoning, allow me to note that both stocks are structured as real estate investment trusts (REITs). It simply means that they are real estate businesses that make money from their assets. The attraction of these types of stocks is that they return 90% of profits to shareholders, so you can understand why I’m attracted to them! However, it’s worth noting right away that profits are never guaranteed.

Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content in this article is provided for informational purposes only. It is not intended to be, nor does it constitute, any tax advice.

British territory

One of the largest and oldest REITs around, the diversification of properties owned by British Land is an enticing prospect. These include residential, retail and corporate properties. A diverse set of features is attractive because not all eggs are in one basket. Weakness in one area can be offset by strength in another.

Shares have risen 26% over the 12-month period to current levels of 434p from 343p this time last year. I think this could be a sign that the property market is showing signs of recovery.

From a return perspective, a dividend yield of 5.8% is hard to ignore. Also, the business has a good track record of rewarding shareholders, and is an established business with a healthy balance sheet.

When it comes to British soil, my biggest concern at the moment is that continued economic pressures could affect rent collection. Because higher interest rates can mean higher rents, the risk of defaults increases. If the performance decreases, the level of return may also be affected.

Overall, I think British Land is a solid income fund that helps build wealth through regular and consistent returns.

Greencoat UK Wind

Renewable energy is like the artificial intelligence of the energy world, if you ask me! It’s a hot ticket item, and I think it’s here to stay for the long haul.

Greencoat invests in onshore and offshore wind farms and can count on major energy suppliers. SSE And Centrica as customers.

Shares are down 6% over the 12-month period since they were trading for 149p at this time last year, compared to current levels of 139p.

From a bearish perspective, it’s worth noting that growth isn’t necessarily easy for GreenCoat. This is because regulations around land for building wind farms are very strict. Also, higher interest rates mean higher borrowing costs for fund growth. Both of these issues can reduce performance and potentially reduce investor returns.

As for returns, the dividend yield of 7.5% is attractive. Also, the firm has been paying dividends continuously for more than 10 years. However, I understand that past performance is no guarantee of the future.

I think GreenCoat could be a great income stock now and for the foreseeable future. This is linked to the growing sentiment around a shift away from traditional fossil fuels led by world governments.


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