As part of ensuring my holdings are providing me with consistent returns, I look for dividend paying stocks to boost my passive income stream. One dividend stock I’m currently interested in is Land Securities Group (LSE:LAND). Let’s take a closer look at whether I should buy or avoid the shares.
Real estate investment trust (REIT)
Land Securities, often referred to as Landsec, is one of the largest REITs and property businesses in the UK. It buys, owns, operates, and rents out a number of different properties including retail, leisure, residential and office buildings. The income it yields from these properties is then paid back to shareholders in the form of dividends.
The beauty of REITs is that 90% of profits must be returned to shareholders. This is why I already a own a few as part of my holdings.
So what’s happening with Landsec shares currently? Well, as I write, they’re trading for 599p. At this time last year, the stock was trading for 666p, which is a decline of 10% over a 12-month period.
To buy or not to buy
I have compiled some pros and cons of me buying Landsec shares to help me decide what to do next.
FOR: I like the fact Landsec is one of the biggest operators in the UK. Through its £12bn portfolio, and 24m square foot operation, it has a diverse portfolio of property and covers lots of different geographical territories. I believe this diversity affords it some protection against challenges such as economic volatility.
AGAINST: Economic volatility is one of the biggest challenges I believe Landsec currently faces. Due to soaring inflation, a cost-of-living crisis has emerged in the UK. One concern I do have is that rent collection could become an issue, which would affect performance and returns. Furthermore, the changing face of retail due to the rise of e-commerce could see its retail outlets experience weaker demand. In addition to this, the working from home trend could impact demand for its office buildings.
FOR: At current levels, Landsec shares look decent value for money on a price-to-earnings ratio of just over five. Additionally, as with any dividend stock, I want to know the dividend yield, which would help me understand the level of return I could receive. Landsec’s dividend yield stands at 6.5%. This is higher than the FTSE 100 average of 3%-4%.
AGAINST: I am aware that dividends are never guaranteed. They can be cancelled at the discretion of the business at any time. Some reasons for this include economic volatility, a financial crash, or an unexpected event such as a pandemic. Dividends are usually cut to conserve cash.
A dividend stock I would buy
To summarise, I believe the positives outweigh the negatives when it comes to Landsec shares. Although I am unable to purchase every stock I like, I would be willing to add Landsec shares to my holdings to boost my portfolio. Its profile, presence, the dividend yield on offer, and current valuation all help me come to this conclusion.
