2 stocks to buy for long-term passive income!

Dividend shares are a proven way for investors to make a second income. Here are two I think could be the best picks for the next decade.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Smiling white woman holding iPhone with Airpods in ear

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m searching for the best dividend stocks to buy to boost my passive income over the next decade. Here are a couple I think could be too cheap to miss.

NextEnergy Solar Fund

Investor interest in renewable energy stocks like NextEnergy Solar Fund (LSE: NESF) is accelerating sharply. This particular green share’s share price has exploded since its IPO in 2014 and just hit new record highs.

It’s not a mystery as to why they are becoming so beloved. Demand for clean energy is soaring as the fight against climate change intensifies. NextEnergy Solar owns around 100 assets that generate energy using the power of the sun.

The majority of these are located in the UK with a small number situated in Italy. And the business is expanding rapidly to maximise its position in this growing market. Its total installed capacity rose to 865MW from 814MW a year earlier.

Share Price116p per share
Price movement in 2022+13%
Market-cap£677m
Price-to-earnings (P/E) ratio9.7 times
Dividend yield6.5%
Dividend cover1.6 times

The trouble with investing in renewable energy stocks is that energy production can be intermittent. In other words, they can stop producing electricity during adverse weather conditions, causing a negative impact on profits.

But all things considered I think NextEnergy Solar’s a great buy for long-term passive income. Solar energy demand is tipped to explode over the next decade (S&P Global analysts think solar and wind capacity will soar 47% in the decade to 2030).

What’s more, NextEnergy Solar’s essential operations mean that profits will remain stable even during downturns. This means it should have the financial strength to pay big dividends at all points of the economic cycle.

Banco Santander

The Banco Santander (LSE: BNC) share price meanwhile has slumped sharply in 2022. It’s a fall that reflects its highly cyclical operations and the prospect of profits crashing as the global economy cools.

Santander’s share price has been especially weak over the summer too. This is because of severe commodity price falls and the economic strain this will cause in Brazil. This is comfortably the bank’s single largest market by profits and customer numbers.

Share Price206p
Price movement in 2022-17%
Market-cap£33.7bn
Price-to-earnings (P/E) ratio4 times
Dividend yield7.3%
Dividend cover3.4 times

Yet despite these issues, I’m hugely tempted by the bank’s excellent all-round value. In particular I think its 7.3% dividend yield makes it a terrific way to boost my passive income. Santander’s strong dividend cover suggests it’s in great shape to make the full dividend payment that brokers are expecting.

I’m also consider Santander as a great way to boost my exposure to emerging markets. The bank’s broad geographic footprint — spanning The Americas and Europe — gives it extra resilience through diversification. And it provides access to the fast-growing Latin American region where product penetration is low and wealth levels are tipped to grow strongly.

Santander currently generates around 31% of underlying profits from Latin customers.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

How I’d invest my first £20k ISA to target £4,900 a year from dividend shares

Looking for dividend shares in a new Stocks and Shares ISA, and want diversification too? Here's how I'd go about…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »