Dividend investing isn’t easy as rocketing inflation hammers the global economy and corporate profits come under pressure. But with a little research it’s still possible to find great dividend stocks in this environment.
Here are two big-yielding dividend stocks on my radar today. I expect both to deliver big shareholder payouts in the near term and beyond.
Euro hero
Tritax Eurobox (LSE: EBOX) is a dividend stock whose profits are sensitive to economic conditions. Its retail tenants could struggle to pay the rent if business dries up. Still, in this period of high inflation, I think it’s a great stock to buy today.
You see, property businesses like this tend to raise their rental income in line with inflation. The impact of soaring prices on the bottom line can therefore be mitigated. So Tritax Eurobox doesn’t have to panic that last week the Eurozone Commission hiked its 2022 inflation forecasts for the region to 7.6% from 6.1%.
This income stock operates ‘big box’ warehousing and distribution assets in major European economies such as Germany, Italy and Belgium. I’m expecting it to deliver excellent long-term returns as the growth of e-commerce increases demand for its buildings.
Today, Tritax Eurobox carries a healthy 5.1% dividend yield for the financial year to September. This figure grows to 5.6% for next year too. I’d buy it even though a lack of decent acquisition prospects could damage its growth plans.
Another top property stock
Keeping with the theme of property stocks, I’m considering buying Residential Secure Income REIT (LSE: RESI) shares today.
Like Tritax Eurobox, it’s a great way to protect share investors from high inflation. What’s more, its ultra-defensive operations create excellent profits stability in good times and bad. Spending on accommodation doesn’t fall even when broader consumer expenditure weakens.
But the biggest attraction of Residential Secure Income today is the rate at which rents in the UK continue to soar. Property listing business Rightmove says that average rents outside London rose 11.8% in June, the biggest increase for 16 years.
The average rent excluding London now sits at a record £1,126 per month. I expect them to continue rising strongly too as the supply of properties should continue lagging demand.
Bright dividend forecasts
Finally, I like Residential Secure Income because of the benefits it brings to dividend investors. As a real estate investment trust (or REIT) it is obliged to pay at least 90% of annual profits to shareholders in the form of dividends.
City analysts expect the business to raise annual dividends in the short-to-medium term in line with earnings. This means the dividend stock sports handsome dividend yields of 5.1% and 5.2% for the financial years to September 2022 and 2023 respectively.
Residential Secure Income could see the value of its property sink in the event of a housing market crash. But, all things considered, I think the benefits of owning this UK share far outweigh the risks.
