I’m searching for the best dividend stocks to buy for long-term passive income. Here are two I’ll be looking to acquire when I have spare money to invest.
Assura
I think real estate investment trusts (REITs) can be excellent ways to make dividend income. This is because, in exchange for certain tax breaks, they are required to pay a minimum of 90% of annual profits from their rental operations out by way of dividends.
Many of these property stocks also operate in highly defensive property sectors like healthcare. This makes them extra appealing in uncertain times like this. However badly the UK economy performs over the short term they should still have the means to pay decent dividends.
This is why I’d buy primary healthcare facility operator Assura (LSE:AGR) shares today. Its resilience across all stages of the economic cycle means it has lifted dividends each year for almost a decade.
To illustrate this point, City analysts expect shareholder payouts to keep growing despite the threat of a domestic recession. Rewards of 3.09p and 3.22p per share are predicted for the financial years to March 2024 and 2025 respectively.
Such projections yield an impressive 6.3% and 6.6% respectively. And they would represent 12 straight years of annual dividend growth.
Admittedly, earnings and payout growth could come under pressure if a mass exodus of NHS staff happens. The service has predicted that worker shortages could soar to 571,000 by 2036, up from 150,000 at present.
Yet on balance I believe profits at Assura will still climb strongly in the years ahead. As the UK’s elderly population rapidly expands, demand for healthcare facilities like GP surgeries will also boom.
National Grid
I think National Grid (LSE:NG) is another top stock to buy given the uncertain outlook for the UK and global economies.
Like healthcare, our need for a reliable electricity platform remains unchanged during good times and bad. This provides stable long-term profits at National Grid, the company that has a monopoly on maintaining the country’s power grid.
I think this business has better growth prospects than most utilities operators, though. Profits could rise strongly as it expands its asset base at home and in the US.
The danger of investing in National Grid is that maintaining and upgrading Britain’s energy infrastructure is expensive business. The costs could climb steadily too as the number of extreme weather events rises due to climate change.
Still, I believe the potential benefits of owning the FTSE 100 firm still outweigh this risk. City analysts certainly expect it to keep growing profits over the next few years at least and as a result to continue raising dividends.
Full-year payouts of 58.07p and 59.35p per share are anticipated for the financial years to March 2024 and 2025 respectively. This creates chunky yields of 5.1% and 5.3% for these corresponding years.
