A great way to boost wealth is to buy and hold good dividend shares, in my view. However, it’s worth remembering that dividends are never guaranteed.
Two picks I reckon investors should consider snapping up are Keller Group (LSE: KLR) and Impact Healthcare REIT (LSE: IHR).
Let me explain why!
Building for the future
Specialist ground engineering business Keller Group basically helps prepare the earth for buildings to go up. If you’re not familiar with construction, this is a vital endeavour in any building project.
Keller Group shares have had an excellent 12 months, up 69% in this period from 783p at this time last year, to current levels of 1,330p.
From a bullish view, Keller makes a lot of its money in the US. This could be key to its future earnings, and potential continued rewards as the US government looks to spend billions on infrastructure in the coming years. A recent infrastructure bill passed in the US could aid this, and Keller could capitalise.
At present, the shares offer a dividend yield of 3.5%. Although this isn’t the highest out there currently, I’m more interested in consistent payouts, as well as bright future prospects.
The final bullish point I’ll note is that the shares look good value for money, despite the recent share price ascent. They currently trade on a price-to-earnings ratio of just 10. However, if the shares continue to climb, this valuation could be out of reach soon.
From a bearish view, there are risks involved too. The big one for me is that any economic shocks could halt infrastructure spending, especially across the pond in the US. This could have a material impact on earnings, as well as any returns I’d hope to receive. The other issue is that of the ongoing battle with inflation, which risks tighter margins in the construction industry related to operating and raw material costs.
Impact Healthcare REIT
Set up as a real estate investment trust (REIT), Impact makes money from healthcare-related properties it rents out. These firms must return 90% of profits to shareholders, making them an attractive stock to buy for dividends.
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Unlike Keller shares, Impact shares are down 4% over a 12-month period, from 90p at this time last year, to current levels of 86p.
I believe this is due to economic turbulence, such as higher interest rates and inflation, causing problems in the commercial property sector. Continued issues across the macroeconomic picture are the biggest risk. Higher rates mean growth, earnings, and returns are harder to come by. Growth is harder due to costlier debt, which REITs use to fund growth aspirations.
On the other side of the coin, I like Impact for a couple of reasons. To start with, it possesses defensive traits as healthcare is a basic necessity, no matter the economic outlook. Plus, with the rising and ageing population in the UK, demand for healthcare is only set to rise, which could offer Impact the opportunity to grow earnings and investor rewards.
Furthermore, the fundamentals look good too. The shares look good value for money on a price-to-earnings ratio of just eight. Finally, a mammoth dividend yield of 8.8% is very attractive!
