Some investors are attracted to shares because they think a price gain could be rewarding. But some of these stocks also have attractive income potential. Here are a couple of shares with dividends I would consider adding to my portfolio in the coming month.
One of the income shares I would happily tuck away in my portfolio is healthcare property specialist Assura (LSE: AGR).
The firm rents property to a range of medical care providers, from local GP surgeries to ambulance depots and NHS trusts. I expect demand for such buildings to stay high and even to grow in coming years.
The company is currently developing new projects like the West Midlands Ambulance Hub and GP surgeries in places including Brighton, Cardiff and Sutton. The sorts of tenants involved seem likely to pay their bills in my opinion, reducing the risk of rent defaults on profits.
Assura grew its pre-tax profit by 44% last year. Earnings per share were up 37% to 5.6p. That comfortably covers the annual dividend of 3.12p per share. Dividends are paid quarterly and have risen annually in recent years, although that does not necessarily mean that they will keep doing so. One risk I see is inflation in building costs eating into profit margins.
At the moment, the shares yield 4.3%. That dividend, along with the potential for ongoing business growth, means I am considering adding Assura shares to my portfolio.
I am also increasingly drawn to ITV (LSE: ITV).
The long-term decline of television advertising is a risk to the company’s future revenues and profits. But I think investors may be overemphasising that at the moment. After all, the company continues to post impressive business results.
In the first quarter, for example, total external revenue grew 18% compared to the same period last year, to £834m. Although advertising is an important part of that revenue, it is not the key driver. Non-advertising revenue was larger than advertising revenue in the quarter. But even the ad revenue grew 16% in the quarter compared to the same period last year.
It seems to me that there is a lot of money still to be made from television advertising. On top of that, ITV is clearly positioning itself for the future by developing other sources of earnings, such as producing shows it can license and sell. I expect demand for content like that to be strong in future, even if it is watched on a wider variety of devices than was the case in television’s heyday.
ITV’s dividend yield stands at 4.8%. On top of that, the shares trade on a price-to-earnings ratio of around 7. That looks cheap to me. I would consider adding ITV to my portfolio soon both for its income and growth prospects.