2 dividend shares on my radar in September

Interest rates are sending prices higher, but Stephen Wright thinks there are still opportunities for dividend investors looking for shares to buy.

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Stock prices in the UK and the US might have gone up in August. But for investors who know where to look, I think there are still some dividend shares trading at very attractive prices.

Diageo

The Diageo (LSE:DGE) share price has climbed 10% from its 52-week lows. But investors who think the opportunity to buy the stock has passed must have short memories. 

Created with Highcharts 11.4.3Diageo Plc PriceZoom1M3M6MYTD1Y5Y10YALL31 Aug 201931 Aug 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

The chance to buy Diageo shares at £25 must have seemed unrealistic a year ago when the stock was trading at £33. Yet here we are.

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Challenges in various regions have caused sales to fall for the first time since 2020. But the company’s key advantages – the strength of its brands and the scale of its distribution – are still very much intact.

A dominant position in the US, for example, has been an issue recently as weak consumer spending has weighed on volumes. Over the long term though, I think it could well be an advantage.

Alcohol in the US is distributed by wholesalers rather than directly to retailers. This leads to higher margins for producers like Diageo, which helps with profitability.

Macroeconomic weaknesses and foreign currency fluctuations are a genuine risk for a business with Diageo’s reach. But with the stock still some way from its highs, it’s still on my buying list.

Albemarle

Lithium prices have crashed over the last couple of years, taking mining stocks with it. As a result, Albemarle (NYSE:ALB) shares trade at their lowest level since October 2020.

Created with Highcharts 11.4.3Albemarle PriceZoom1M3M6MYTD1Y5Y10YALL31 Aug 201931 Aug 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

The company’s key competitive advantage – the quality of its assets, which allow it to produce lithium at a lower cost than its competitors – is still intact though. At least, it is for the time being. 

Albemarle’s Chilean operations have the lowest costs of any lithium mine in the world. However, the government’s expressed an intention to own a majority stake in such projects in future.

If this happens, the company could be forced to trade partial ownership of its key asset for the right to renew its lease. That would be very bad for shareholders.

Albemarle’s lease has just under 20 years left to run though, so this might be a problem for the future. Until then, the business should benefit from growing demand driven by the rise of electric vehicles.

Despite the volatile lithium price, the company’s a dividend aristocrat. And I think right now could be an opportunity to buy a great business for the long term at a discounted price.

Stocks to buy

Diageo and Albemarle are very different businesses. But they have a couple of things in common that make them stand out as attractive stocks to consider buying in September. 

The first is they both have durable advantages that are impossible for competitors to replicate. This makes them attractive for the long term. 

The second is that both are trading at unusually low prices. That’s why I think there might be a good opportunity in September for my Stocks and Shares ISA.

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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.

Stephen Wright has positions in Diageo Plc. The Motley Fool UK has recommended Diageo 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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