Even with the stock market enjoying a double-digit rally this year, some of my favourite dividend shares to buy are still on sale. Not every industry has successfully bounced back from the 2022 market correction, with real estate in particular still limping on due to higher interest rates.
However, with rates already having been cut from 5.25% to 4.75% and analyst expectations of further cuts to 3.75% by the end of 2025, the wind might soon change directions. As such, time might be running out to snap up some terrific property-focused enterprises at their current discounted prices. With that in mind, let’s take a look at two companies I’m going to buy more of.
Britain’s second-largest commercial landlord
Despite what the name suggests, Londonmetric Property (LSE:LMP) has a vast real estate portfolio that spans across the entire country rather than just the capital. Its assets are primarily focus on critical logistics and warehousing, which the e-commerce sector is reliant upon.
However, through acquisitions, Londonmetric’s also gained exposure to other commercial properties used by the healthcare, education, entertainment and convenience retail sectors.
Like many of its peers, the stock hasn’t been a stellar performer, and higher interest rates have adversely impacted the market value of its properties. However, while the firm’s incurred paper losses from falling asset prices, the net contracted rental income is still rising and sits at £340m a year, backed by 99% total occupancy across its portfolio.
As such, dividends continue to be hiked. And they’re now on track to achieve 10 years of consecutive increases by March 2025. Of course, the business isn’t risk-free.
Its recent acquisition of LXi promoted Londonmetric to becoming the second-largest commercial landlord in the UK. However, the deal also included properties it doesn’t have much experience of managing. And should this lead to underperforming assets, shareholder value creation could be adversely impacted, especially considering its £2.1bn in debt obligations.
Nevertheless, the firm’s impressive capital allocation track record makes me optimistic.
Self-storage king
Another real estate business that’s suffered poor share price performance this year is Safestore Holdings (LSE:SAFE). The self-storage enterprise has seen its market capitalisation shrink by 10% since the start of 2024. With households and businesses seeking to cut costs, the firm suffered a drop in occupancy that understandably spooked investors.
However, looking at its latest results, the business appears to be faring far better than many of its rivals. And while overall revenue in the third quarter came in flat, international growth is firing on all cylinders despite unfavourable conditions. This is especially true in Spain, where year-to-date revenue is up 47.7%, followed by the Netherlands at 16.6%.
Compared to the UK, Europe’s self-storage market isn’t as developed. As a result, these international operations currently only account for 27% of the top line. But that’s steadily changing. Safestore’s first-mover advantage could deliver tremendous long-term growth if it can replicate its historical success.
Of course, international expansion comes with added risks. Currency price fluctuations can be quite problematic if not properly hedged. And management will also have to tackle navigating new regulatory environments and cultures that could impede growth. Yet, with such an impressive track record and almost 15 years of consecutive dividend hikes, that’s a risk I’m willing to take.
