I’m searching for the best dividend shares to buy for a long-term passive income. In particular, I’m on the lookout for UK stocks that are trading below value following recent market turbulence.
During this search I’m seeking shares that, for their current financial years, carry
- A price-to-earnings (P/E) ratio below the FTSE 100 average of 14 times, or
- A price-to-earnings growth (PEG) multiple under the bargain watermark of one, or
- A dividend yield above the 3.8% average for the FTSE index.
Here are three I’ll be looking to buy when I next have spare cash available to invest.
The PRS REIT
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Soaring rents in the UK make The PRS REIT (LSE:PRSR) a top buy at the present time. Latest data from estate agent Hamptons shows that average private rents rose 12% in the year to August, to £1,304. That is the biggest annual rise on record.
Higher rates on landlord mortgages are pushing tenant costs higher. But this is only part of the story. Weak housebuilding activity and steady population growth has created a huge supply shortage. And market experts are predicting that this chronic market imbalance will drag on.
Rent collection problems could become an issue as the cost-of-living crisis endures. Yet PRS’s strong performance on this front helps soothe any fears I have. It collected 99% of all rents it was owed between April and June.
Today the real estate investment trust (REIT) carries a chunky 5.7% dividend yield. I think this warrants serious attention from income investors.
Clean energy business Greencoat Renewables (LSE:GRP) is another great-value dividend share on my watchlist. Its forward-looking dividend yield sits at an even better 6.3%. And its forward P/E ratio sits at an undemanding 12 times.
There are many UK renewable energy stocks I can choose from today. However, this one grabs my attention due to its wide geographic footprint. It owns wind and solar assets in Ireland and across parts of Mainland Europe (including Spain and France).
Profits can suffer at companies like this when unfavourable weather conditions hit electricity generation. But Greencoat’s operations across multiple countries reduces the risk of this at group level.
Central Asia Metals
Base metals mine Central Asia Metals (LSE:CAML) also offers attractive all-round value for money. Not only does it trade on a P/E ratio of 7.6 times, it carries a mighty 8.2% dividend yield at current prices.
This isn’t the only similarity it has to Greencoat Renewables. It could also be a great way for investors to profit from the green economy thanks to its copper, lead, and zinc mining operations in Kazakhstan and North Macedonia.
Demand for these commodities is tipped to rocket thanks to growing demand for electric vehicles and renewable energy. Yet a weak development pipeline means that a huge material deficit could emerge in these markets, which could in turn drive metals prices through the roof.
Mining for metals can be massively expensive and problematic. But on balance I still believe Central Asia Metals is a great dividend share to buy.