I’m always on the lookout for income stocks to buy for my portfolio. Here are four companies currently on my watchlist.
Income stocks to buy
The first on my list is Domino’s Pizza Group (LSE: DOM). With a dividend yield of 3.8%, at the time of writing, I think the stock offers an attractive income level. As the firm’s earnings per share have grown from 13.8p to 18.2p over the past five years, the payout has also expanded by 84%. If this growth continues, I think the company could potentially increase its distribution to investors.
That said, Domino’s reported windfall profits last year from the pandemic. As such, the company’s dividend growth may slow this year as restrictions on eating out are eased.
Still, I’d buy the income stock due to its track record of dividend growth and expansion plans.
My list also includes Assura (LSE: AGR), which owns and operates healthcare facilities around the UK. This is a defensive business as the country will always require specialist facilities for the healthcare industry.
Set up as a real estate investment trust (REIT), Assura has to return the bulk of its income to investors to achieve tax benefits. As a result, the company offers a desirable dividend yield of 3.8%.
The payout has grown steadily over the past five years as the company increased the size of its portfolio. The latest edition is an ambulance hub development in the West Midlands. Based on these positives, I’d buy the group for my portfolio of income stocks.
Despite its attractive qualities, Assura is exposed to some risks. Chief among these is the fact the government is one of its largest customers. If this customer decides to reduce spending, or take property services in-house, the group’s income could fall.
Another property company I’d buy for my portfolio of income stocks is LXI Reit (LSE: LXI). Just like Assura, this REIT has to return the bulk of its income to investors to achieve tax benefits. It also currently offers a dividend yield of 3.8%.
Unlike Assure, LXI’s portfolio is incredibly diversified. It owns healthcare properties, hotels, industrial asset and retail assets.
Unfortunately, this diversification means the group has suffered more over the past 12 months than its healthcare peer. As a result of the impact of the Covid-19 pandemic on its income, LXI’s full-year dividend is 3.5% lower than last year. This is disappointing, but I believe the overall package offered by the enterprise is appealing.
The final company I’d buy for my portfolio of income stocks is Rathbone Brothers (LSE: RAT). The equity currently offers a dividend yield of 3.8%.
The yield is supported by fees on assets managed by the group. These assets are growing steadily. In the three months to 31 March, funds under management and administration edged up 2% to £55.8bn, reflecting “continued good organic growth.”
As assets under management continue to expand, I’d buy the shares. Although, if assets under management start to decline, income may slide. This could put the company’s dividend under pressure. The threat of declining assets under management is the most considerable risk hanging over the stock today.
Nonetheless, I’m confident in Rathbone’s growth potential as we advance.
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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Dominos Pizza and Rathbone Brothers. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.