I’m excited about investing at the moment. I like it best when there are attractive opportunities in diverse sectors and I think that’s the case right now with dividend stocks.
This month, I have five stocks that I’m looking at buying for my portfolio. Three are based in the UK and two are based in the US.
Bricks
Top of my list is London brick manufacturer Forterra. I’ve been looking to buy shares in this company for a while and April might be the opportunity I’ve been waiting for.
The obvious risk with this type of stock is that it’s a highly cyclical business, so a recession means demand for bricks might fall in a weaker housing market. I think the impact on Forterra is likely to be limited, though.
In the UK, demand for bricks comfortably exceeds local supply. As a result, I expect demand for Forterra’s products to remain strong even in an economic downturn.
At a price-to-earnings (P/E) ratio of around seven and a dividend yield of almost 8%, I see this as a great opportunity. I’m looking to buy shares this month.
Banks
With bank shares still reeling from last month’s turbulence, I see an opportunity to buy. The two that stand out to me are Lloyds in the UK and Bank of America in the US.
In the short term, I don’t expect issues for either bank. Lloyds, in particular, has a huge base of retail deposits, which should make it less susceptible to the kind of liquidity issues we’ve seen recently.
Bank of America has the added advantage of being one of Warren Buffett’s largest stock investments. That means there’s likely a source of capital available if things get really tight.
Over the longer term, I think that both can do well. The biggest risk is the constant threat of regulation, but I think that both trade at prices that present a rare opportunity.
Lloyds shares come with a 5% dividend and trade at a P/E ratio of six. Bank of America shares currently have a 3% dividend and a P/E ratio of nine.
Buildings
Lastly, I have a couple of real estate stocks on my list. The first is Warehouse REIT and the second is Realty Income.
Warehouse REIT owns industrial distribution properties. Rising interest rates have caused the value of its assets to fall, but I think the market is overreacting to the situation.
The rental market in this sector looks strong, with more space leased than ever before. And the company’s rental income increased in 2022, supporting a 7% dividend yield despite the fall in the price of its assets.
I’m also expecting to buy shares in Realty Income. This is a US-listed real estate stock that has been the model of consistency with its business leasing retail properties.
The company is expanding its convenience store portfolio through an acquisition. I expect this to keep its dividend – which has a current yield of 5% – growing into the future.
Rising interest rates provide an ongoing risk to both stocks. But I expect decent demand for the buildings each business owns, so I see these as shares I’m looking to buy in April.
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