As investors, we all want to try and get a good deal when we go shopping in the stock market. This applies when searching for dividend stocks for passive income, or growth stocks for capital appreciation. Here are several stocks I’ve added to my watchlist that are trading below £10 and also pay a dividend.
Building the watchlist
The first area where I can find opportunities is within finance. I’ve added abrdn and Close Brothers to my watchlist.
Abrdn is a large UK asset manager, with a share price of 153p and a dividend yield of 9.49%. The yield has remained elevated over the past year, even with the share price gaining 12% over this period.
Interestingly, the company kept paying out a dividend throughout the pandemic. This tells me that as a mature firm, it knows the importance of paying income to keep shareholders happy.
As for Close Brothers, the bank has a dividend yield of 7.5% and the share price is 900p. In late September, the firm published its full-year results and they showed profits took a hit due to the winding down of the Novitas division. However, when that’s excluded I think performance was fine. The slight increase in the dividend per share was due to “the Board’s confidence in the group’s outlook”.
The risk for both stocks is how market sentiment plays out. If investors get spooked by persistent inflation, they could pull assets out of abrdn, or default on loans from Close Brothers.
Don’t forget about the building blocks
Another sector is property. I know that some want to stay away from this area due to concerns that further property price weakness is due. It’s a cyclical area but I feel it makes more sense to buy when the market is down rather than when it has already rallied.
To that end, I’m looking at British Land and Primary Health Properties for passive income potential.
British Land trades at 308p and has a dividend yield of 7.33%. The share price fall of 13% over the past year reflects the concerns about property values. Yet in the latest business update, operations seem to be going fine.
In fact, the business has £1.7bn of undrawn facilities and cash, with no requirement to refinance debt until early 2026. This liquidity management means that I don’t see any risk to dividends in the near term.
Finally, Primary Health Properties has the lowest share price in the group at just 91p. With a yield of 7.24%, it’s certainly not one to count out.
As another sign that the property market isn’t completely down and out, the company just bought a community care facility in Ireland for £25m. The continued investment shows me that capital can be deployed well in the current market.
