Two dividend stocks I own are Regional REIT (LSE:RGL) and Topps Tiles (LSE:TPT). Both paid out dividends this week. Here’s why I bought them and plan to hold on to them for the long term.
Real estate investment trust (REIT)
REITs are designed to yield income from properties designed and rented out for a specific purpose. Furthermore, they make excellent dividend stocks as they must return 90% of profits to shareholders as dividends. I own a number of REITs as part of my holdings.
Regional focuses on commercial properties in the UK. Its portfolio is made up of office buildings and industrial spaces located outside the M25 motorway.
As I write, Regional shares are trading for 73p. At this time last year, the stock was trading for 91p, which is a 19% drop over a 12-month period. Many stocks have pulled back due to macroeconomic headwinds as well as the events in Ukraine.
The pull back has made Regional shares look great value for money on a price-to-earnings ratio of 11. Its current dividend yield stands at just under 9%. It is worth noting the FTSE 100 average is 3%-4%.
All dividend stocks carry one common risk, that dividends are not guaranteed. They can be cancelled at any time at the discretion of the business. Furthermore, Regional may struggle to collect rents and lease buildings due to current macroeconomic issues such as soaring inflation as well as rising costs. These have placed pressures on businesses and they may look to cut costs, such as renting offices and industrial space.
I do believe Regional will continue to provide consistent and stable returns for me based on its track record as well as future growth prospects. I understand past performance is not a guarantee of the future, however. Infrastructure spending in the UK is booming, and the demand for office and industrial space should only increase in the longer term, benefitting Regional and shareholders like me.
Tiling retailer
Topps Tiles is one the UK’s largest tiling and flooring retailers. It currently has over 300 store locations throughout the UK as well as an online store.
As I write, Topps shares are trading for 39p. At this time last year, the stock was trading for 69p, which is a 43% drop over a 12-month period.
Like Regional, Topps’ recent share price decline has made the shares look great value for money on a price-to-earnings ratio of just seven. The shares current yield stands at just under 10%.
A short-term issue that Topps does face is the current rising costs and supply chain crisis. Rising costs could affect margins and in turn, performance and returns. Supply chain issues could affect operations, which could also have a material impact on performance and returns too.
Topps has a good track record of performance too. I believe it can continue to perform and grow returns as well. Part of this is linked to the current housing situation in the UK. There is a huge demand for homes that is outstripping supply. These new and renovated homes will need flooring and tiles and Topps has an excellent market presence that could help it boost performance and returns.
