Two stocks that could help me achieve my goals of boosting my passive income are Primary Health Properties (LSE: PHP) and Barratt Developments (LSE: BDEV). Although dividends aren’t guaranteed, here’s my investment case.
Calculating my returns
Primary Health Properties is a real estate investment trust (REIT). It invests in property assets to yield income and it must return 90% of profits to investors.
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Barratt is one of the largest residential property developers in the UK. There is an element of defensive ability here, in my opinion. After all, we all need homes to live in.
The table below shows how both stocks carry above-average dividend yields.
| Company | Dividend Yield |
| Primary Health Properties | 6.6% |
| Barratt Developments | 6.3% |
Using the average yield of 6.45%, if I had £20K to invest right now, I could earn £1,290 in a year!
Furthermore, I could look to reinvest these dividends to further boost my wealth. Plus, if I were to add to my position regularly by snapping up more shares, I could continue to build on this as well.
My investment case
Primary’s model of investing in properties for healthcare, which is essential, offers it defensive traits. Healthcare is a basic need for all.
The shares have fallen 18% in the past 12-month period from 117p at this time last year, to current levels of 95p. I reckon this is due to higher interest rates and soaring inflation, which has prompted economic turbulence.
As the UK population ages and grows, demand for healthcare should increase. Plus, Primary has a good safety net of renting out its provisions to the NHS. This usually involves long-term contracts, therefore revenue is stable.
The other side of the coin is that growth could be trickier with the current economic and property market landscape. Furthermore, the business does have a fair bit of debt on its balance sheet. This is costlier to pay during times of higher interest, like now, and could potentially dent payouts too.
Demand for housing is currently outstripping supply. This imbalance, and again the rising population in the UK, means house builders like Barratt should remain busy for years to come. Performance and payouts could grow here for the FTSE 100 incumbent.
The shares are up 11% over a 12-month period from 484p at this time last year, to current levels of 538p. Plus, they still look good value for money on a price-to-earnings ratio of just eight.
Conversely, recent volatility has made it costlier for builders to complete projects. In addition to this, buyers are struggling to obtain mortgages with increased rates. Higher costs, fewer completions, and fewer buyers isn’t ideal for performance and investor returns. Continued volatility could spell trouble for regular dividends, at least in the short term.
Final thoughts
I don’t have £20K laying around, or stuffed down the back of my sofa, last time I checked. However, based on the above, there is a clear path to boosting passive income and wealth, in my eyes.
I’d look to try and emulate the above as soon as I can.
