With economic conditions steadily improving, I’m on the hunt for some of the best shares to buy now. And for UK investors, there seem to be ample opportunities, especially among dividend stocks.
Depressed valuations lead to higher yields, securing a more substantial income stream while also opening the door to some chunky recovery gains. And two dividend-paying enterprises that have caught my attention this month are Games Workshop (LSE:GAW) and Safestore Holdings (LSE:SAFE).
Big money from miniatures
Warhammer miniatures may seem like a strange investment for those unfamiliar with the hobby. And yet, Games Workshop has built one of the most popular and addictive tabletop experiences in the world. So much so that despite being in a cost-of-living crisis, sales continue to expand by double digits, with profits hitting record highs.
These upward trends have been largely consistent over the last eight years. So it’s no surprise that the share price has exploded by nearly 2,000% since 2015. At the same time, dividends have climbed from 52p per share to 415p, making it one of the best shares to buy back then.
What’s more, this could be just the tip of the iceberg. With an upcoming streaming series on Amazon set in the Warhammer 40,000 universe, up to 200 million Prime members could be introduced to the hobby, especially since Hollywood A-lister Henry Cavill is leading the project.
However, as with any investment, there’s never any guarantee. With 3D printing technology becoming more readily available, some hobbyists are making their own Warhammer miniatures instead of buying official ones.
And as the process becomes easier, securing future sales growth will likely become increasingly challenging, placing pressure on the group’s current substantial pricing power.
To mitigate this threat, Games Workshop has been busy diversifying its revenue with licensing for video games, award-winning books, subscription services and other non-plastic generating income streams. As for the plastic models themselves, the firm continues to focus on maximising detail and quality that 3D printers can’t match.
Therefore, I think the long-term potential of this business continues to look rock-solid. And it’s why I believe Games Workshop shares are some of the best to buy now.
Self-storage is on the rise
Compared to battling in the grim darkness of the far future, self-storage hardly sounds like an exciting area for investment. And yet, those who stuck with the seemingly boring Safestore Holdings over the last decade are currently sitting on a large pile of money.
The group owns and operates a network of storage facilities across the UK and Western Europe, used by consumers and businesses alike. The simple business model means there are few operating complications or major expenses beyond acquiring new or renovating old locations. As such, underlying profit margins sit at 63%.
Much like Games Workshop, chunky profitability has increased the dividend payout substantially. And since 2013, the dividend per share has climbed from 5.75p to 29.8p – more than 400% growth.
Rising interest rates undoubtedly place pressure on the bottom line since real estate isn’t cheap. However, given the group’s track record, this is a risk worth taking, in my opinion. And that’s why I believe these shares are some of the best to buy now.
