Hunting for dividend shares? I’d snap up this 6%+ yielding stock in a heartbeat!

Dividend shares can help build wealth. Our writer explains why this real estate investment trust (REIT) could help her do just that.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’ve learnt that dividend shares come in all shapes and sizes. One FTSE 250 pick that grabbed my attention recently is Urban Logistics REIT (LSE: SHED).

Here’s why I’d buy the shares for my holdings the next time I have some funds to invest.

Last mile delivery

As the name alludes to, Urban is set up as a real estate investment trust (REIT). This means in exchange for favourable tax conditions, it must return 90% of profits to shareholders. This makes it an attractive prospect from a dividend perspective, to me at least.

Should you invest £1,000 in Urban Logistics Reit Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Urban Logistics Reit Plc made the list?

See the 6 stocks

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.

Urban specialises in warehousing and logistics properties, but focuses on last mile delivery assets. This helps businesses with online and e-commerce stores to cater to their customers, and ensure they can fulfil orders efficiently.

The shares have meandered up and down like a roller coaster. Over a 12-month period, the shares have gained 3%, from 116p at this time last year, to current levels of 120p. Economic turbulence has hurt the commercial property market, but more on that later.

Created with Highcharts 11.4.3Urban Logistics REIT Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The good stuff

Starting with the positives, I’m buoyed by Urban’s modus operandi, and the fact it caters to the ever-growing e-commerce sector. Warehousing in general has grown exponentially in recent years due to soaring demand. However, online shopping and changing consumer habits have meant the need for such last mile delivery hubs is outstripping supply. There are currently no signs of this slowing either. This could spell good news for Urban’s earnings, and could translate into increased shareholder returns.

Speaking of returns, a dividend yield of 6.2% is attractive. For context, the FTSE 100 average is 3.5%. However, I do understand that dividends are never guaranteed. Plus, the firm possesses what looks like a strong balance sheet, as mentioned in its recent FY24 report. This can help with future growth and shareholder return initiatives.

Let’s break down the key takeaways I took from the report, released in June. Net rental income increased compared to the previous year by over 8%. Crucially, the business managed to turn a profit, compared to a loss last year. A dividend of 7.6p per share was the same as last year.

Potential risks

From a bearish view, I must admit economic turbulence is still a concern for me. As we’ve seen recently, higher interest rates present a problem. They can impact rent collection, increase the chances of defaults, and make debt management costlier. Plus, net asset values (NAVs) have been driven down too. We aren’t out of the woods yet, and I’ll keep an eye on developments.

Another issue I’ll be watching closely is Urban’s propensity for acquisitions to boost growth. Acquisitions are great when they work out. However, when they don’t, they can have untold financial damage and hurt investor sentiment too.

Overall, there’s lots to like about Urban Logistics, in my view. A thriving sector with growth ahead, an enticing level of return on offer, and excellent results recently have helped me make my investment decision today.

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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 no position in any of the shares mentioned. 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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

10% dividend yield! Here’s a FTSE 100 share to consider in April for passive income

This FTSE 100 stock just soared past the 10% yield mark, making it a potentially lucrative option for investors targeting…

Read more »

Young black woman using a mobile phone in a transport facility
Investing Articles

3 FTSE 100 safe haven stocks to consider as trade wars bite

I'm confident in the long-term outlook for the FTSE index of stocks. But these blue chips may protect investors from…

Read more »

Investing Articles

Here’s how Trump tariffs could hand us some top passive income bargains

As tariff terror grips the stock market, it's time for passive income investors to steel our nerves and look for…

Read more »

Investing Articles

These FTSE shares may offer some safety as Trump slaps tariffs on trading partners

FTSE shares moved lower on 3 April, after US President Donald Trump introduced hefty tariffs on its trading partners. These…

Read more »

Investing Articles

6.8% dividend yield! Consider these 2 ‘secret’ passive income stocks to target a £1,360 payday in 2025

Looking for ways to generate above-average dividend income? These lesser-bought income stocks are worth a close look.

Read more »

Elevated view over city of London skyline
Investing Articles

The M&G dividend yields over 10% — and could get higher!

Christopher Ruane explains why he's upbeat about the long-term outlook for the M&G dividend yield and would happily buy the…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

2 popular UK growth stocks I wouldn’t touch with a bargepole in today’s market

Buying growth stocks can deliver market-beating returns, but this FTSE 250 pair doesn't look like a convincing investment for our…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

10 FTSE shares falling today after President Trump’s tariffs bombshell!

Our writer explains why JD Sports Fashion from the FTSE 100 and a diverse bunch of other UK stocks are…

Read more »