I think these are among best dividend stocks to buy right now. Here’s why I’m hoping to snap them up, if I have spare cash to invest this month.
Cairn Homes
Investing in residential property can be one of the safest plays during uncertain economic times. We all need somewhere to live, right?
Irish housebuilder Cairn Homes (LSE:CRN) is one such business on my radar today. As in the UK, Ireland is suffering from a huge supply and demand imbalance in the housing market that’s supporting prices. Yet more moderate inflationary pressure in the eurozone means the interest rate threat there is much lower.
Latest trading news today underlines how healthy business remains at Cairn at the moment. Chief executive Michael Stanley said that the firm remains on course to “significantly increase” completions in 2023. It has predicted sales of 1,750-1,800 new homes, up from 1,526 last year.
High build cost inflation remains a danger to earnings. However, the firm is still expected to grow profits this year, thanks to its bulky gross margin (this remains robust at around 21%). As a result, the company trades on a forward price-to-earnings (P/E) ratio of just 9.5 times.
It also means Cairn is tipped to keep increasing the annual dividend. So the company carries a mighty 6.6% dividend yield. The firm’s solid balance sheet — which recently allowed it to launch a €40m share buyback programme — means it should be in good shape to meet current dividend forecasts too.
Assura
Buying real estate investment trusts (REITs) can be another great way to make a passive income. In exchange for certain tax advantages these property shares are required to pay at least 90% of annual rental income out in the form of dividends.
Of course that doesn’t guarantee investors will receive big dividends. Falling profits can have a significant impact on the payouts shareholders receive.
However, disappointing dividends isn’t something that holders of Assura (LSE:AGR) shares need to worry about, at least in the near term. As a major operator of primary healthcare properties it can expect rental income to continue streaming in at impressive levels.
Firstly, the business doesn’t have to worry about rents being missed, whatever the economic climate. Medical facilities like GP surgeries are in high demand, regardless of broader conditions. What’s more, the rental payments it receives are essentially guaranteed by the NHS.
Critically, property shares like this can also effectively link the rents they receive to inflation. This is why Assura’s like-for-like rent rolls increased by a healthy 7.2% during the 12 months to March.
Changes to NHS policy may dent profits and dividend growth here later on. But this looks unlikely as the government aims to reduce hospital numbers by investing in primary healthcare.
Assura is rapidly expanding to capitalise on this favourable environment too. Last week, it completed its 100th development.
For the current financial year the company carries a 7.7% dividend yield. I expect it to be a source of large dividends for years to come.
