Dividend shares form the majority of my portfolio. I look for stocks providing stable returns and aim for some upward movement in the share price.
So, what would I do if I had £500 to invest right now? Well, I do have an amount to invest currently, and I’m looking to split in three ways — all income stocks.
Here’s my choices.
Fast-growing telecoms provider
I like dividend stocks with potential to grow, and Airtel Africa (LSE:AAF) certainly offers growth. Telecoms in emerging markets is clearly an area that has enormous potential.
The telecoms outfit, which currently offers a 3.5% dividend yield, also provides payment solutions. Increasingly, we’re seeing telecoms companies move into the payment solutions and finance market. And it makes sense as many of us use our phones for banking.
Less than half of adults in Africa have a bank account. Clearly, the market is ripe for growth, assuming the conditions are there to support it — however, the current macroeconomic conditions could be challenging.
Airtel Africa trades with a price-to-earnings ratio of 8.6, while a discounted cash flow model — which is naturally subject to assumptions about future cash flow — suggests the stock should have a fair price of 500p. That’s 300% above the current price.
I’m yet to buy this stock, but I’m looking to add it to my portfolio in the coming weeks.
UK renewables
Greencoat UK Wind (LSE:UKW) provides me with a dividend yield of 4.8% and plenty of growth potential. The trust looks to increase its dividend payments in line with CPI, which is excellent in this current environment. Plus, I’m also fairly bullish on the UK wind sector.
One thing that makes me bullish is the anticipated end to a moratorium on onshore wind. Onshore wind can be twice as cost-efficient as offshore wind, making it among the cheapest energy sources.
The UK is a windy nation, and that’s great for the sector’s potential. But I’m hoping to see more developments in battery tech in the coming years to deal with the temperamental nature of wind. I’m already a shareholder, but I’m looking to buy more.
Investment supermarket
I use Hargreaves Lansdown (LSE:HL) for my investments and I also invest in the stocks and shares supermarket.
The Bristol-based firm has 1,754,000 active clients, a figure that keeps growing, albeit at a slower rate versus the pandemic. It is the UK’s market-leading investment platform, but it is facing increasing competition from newcomers.
I’d buying more because of trends in investment, with more people taking their investments into their own hands, and because the platform is, in many ways, superior to its competitors. Hargreaves is also investing £150m to improve its offering.
Despite having huge grow potential, I also find the 4.6% dividend yield particularly attractive.
