The FTSE 100 has fallen by just over 3% over the last month. That means that September might be a great time for me to look at UK shares, especially dividend stocks.
Now, the fact that a stock is down doesn’t automatically mean that I should be interested in buying it. It might have further to fall, or it might have gone from being extremely overpriced to just being moderately overpriced.
But lower share prices can bring with them buying opportunities. And one of the few things in investing that is certain is that buying the same stock at a lower price means better long-term returns and higher dividends.
With that in mind, I’ve found two UK dividend stocks that I think are particularly interesting. I’d be interested in buying either of them in September.
Endeavour Mining
Top of my list is Endeavour Mining (LSE:EDV). The stock has been up and down over the last few months, but it’s down at the moment, with shares 11% lower than they were three months ago, meaning that the dividend yield is around 3.6%.
The company owns and operates a number of gold mines across Africa. That brings with it a degree of risk – Endeavour’s mines are located in countries that can be politically unstable.
But the result of this is that the company has extremely low costs associated with its operations. In my view, this more than offsets the political risk.
I once heard Warren Buffett say about oil that anybody can make money when prices are high. What really matters is the ability of someone to find sources of oil that can be extracted at a low cost.
As I see it, the same is true of gold. That’s why I think that Endeavour Mining’s low cost of production gives the business an important advantage and why I’m looking at buying the stock for my dividend portfolio in September.
Howden Joinery Group
The other UK stock I’m looking at is Howden Joinery Group (LSE:HWDN). The company supplies kitchens and appliances to the trade market.
Howden’s stock has fallen quite sharply – the shares are down 18% over the last month. Zooming out, things don’t look much better, with the stock down over 40% since the beginning of the year.
The reasons for the stock’s decline are straightforward enough. As consumer budgets become stretched, spending on new kitchens and other large non-essential purchases typically declines.
I think that the market is missing a trick here, though. Rising interest rates are making mortgages more expensive and I expect that this will slow the property market as buyers decide to stay put.
This, I think, is going to cause more people to improve their current houses, rather than buying new ones. If I’m right about that, then business might well remain strong for Howden’s over the next few years.
In my view, the risks with this stock are outweighed by the rewards. I think that the 3.59% yield makes this an attractive dividend stock at current prices – I’d be happy buying its shares for my portfolio.
