2 dividend stocks I’d buy and hold to build a passive income stream

Dividend stocks with a generous rewards policy can help build a second income stream. Our writer details two picks she’d love to snap up.

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With the aim of building an additional income stream, the best dividend stocks are firmly on my radar.

Two picks I’d love to buy when I next can are British Land (LSE: BLND) and Greencoat UK Wind (LSE: UKW).

Before I dive into my reasoning, allow me to note that both stocks are set up as real estate investment trusts (REITs). This simply means they’re property businesses that make money from their assets. The attraction of these types of stocks is that they must return 90% of profits to shareholders, so you can understand why I’m drawn to them! However, it’s worth noting straight away that dividends are never guaranteed.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

British Land

One of the largest and oldest REITs around, the diversification of properties that British Land owns is an enticing prospect. These include residential, retail, and corporate properties. A diversified set of properties is attractive as not all the eggs are in one basket. Weakness in one area could be offset by strength in another.

The shares are up 26% over a 12-month period from 343p at this time last year, to current levels of 434p. I reckon this could be a sign of the property market showing signs of recovery.

From a return view, a dividend yield of 5.8% is hard to ignore. Plus, the business has a good track record of rewarding shareholders, and is an established business with a healthy balance sheet.

The biggest worry I have right now when it comes to British Land is the fact that continued economic pressures could impact rent collection. As higher interest rates can mean rents are hiked, the risk of defaults increases. If performance dips, return levels could also be impacted.

Overall, I reckon British Land is a solid income stock to help boost wealth through regular and consistent dividends.

Greencoat UK Wind

Renewable energy is like the artificial intelligence of the energy world, if you ask me! It’s the hot ticket item, and I reckon it’s here to stay for the long term.

Greencoat invests in onshore and offshore wind farms and can count major energy suppliers SSE and Centrica as customers.

The shares are down 6% over a 12-month period as they were trading for 149p at this time last year, compared to current levels of 139p.

From a bearish view, it’s worth noting that growth isn’t necessarily easy for Greencoat. This is because regulations around land to build wind farms are very tight. Plus, higher interest rates mean increased borrowing costs to fund growth. Both of these issues could dampen performance and potentially investor returns.

Speaking of returns, a dividend yield of 7.5% is enticing. Plus, the firm has been paying dividends consistently for more than 10 years. However, I do understand that past performance is not a guarantee of the future.

I reckon Greencoat could be a great income stock now, and for the future. This is linked to the increased sentiment around moving away from traditional fossil fuels led by global governments.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended British Land Plc and Greencoat Uk Wind Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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