The Motley Fool

2 ‘safe’ dividend stocks I’d buy with £2,000 today

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.

Lady researching stocks
Image source: Getty Images.

When it comes to generating secure hands-free income, you can’t go wrong with property, and that’s why Secure Income REIT (LSE: SIR) was founded. The business is built on the concept of generating a steady income and capital growth for shareholders from property assets that are exceptionally safe and on long leases. At the end of June 2017, the real estate investment trust’s portfolio of property had a weighted average unexpired lease term of 22.7 years with no break options.

As well as this guaranteed income stream, the company has increased its net asset value by over 100% since its IPO in June 2014 by reinvesting earnings and borrowing additional funds to invest. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Unfortunately, the one downside of this strategy is that Secure Income’s net loan-to-value ratio was 51% at the end of June. Although considering the stability of the group’s earnings stream, as well as the fact that interest repayments are covered twice by rental income, I do not believe that investors should be concerned about this high level of leverage.

Slow and steady wins the race

Secure Income has a record of generating steady returns for investors, and it looks as if this is set to continue with the company’s tenants in place for the next two decades. At the time of writing the shares support a dividend yield of 4.1% and the net asset value per share at the end of June was 355p, so the stock is trading at a modest price of just one times book value.

Overall, if you are looking to invest your first £1,000 in a reliable, defensive, income-paying stock, Secure Income should not be overlooked.

Undervalued property 

Another real estate investment trust that could be a great starter income investment for your portfolio is Green REIT (LSE: GRN).

Like Secure Income, this Ireland-based investment trust has a record of generating value for shareholders. Over the past four years, book value per share has increased by around 50%, and since its IPO at the beginning of 2013, the stock has returned 37% for investors, excluding dividends. At the time of writing the shares support a dividend yield of 3.9%.

According to Green REIT’s figures for the six months to the end of December, which were published this morning, the company produced a total return of 13.6% for investors, following a return of 13.5% for 2016. Unlike Secure Income, the firm has been able to accomplish this growth with a relatively low level of debt. Its loan-to-value ratio was just 22.1% at the end of December with an all-in cost of debt of 1.8%. 

At the end of the period, Green REIT’s net asset value per share was €1.68, indicating that at the time of writing the shares are trading at a 7.7% discount to the value of the underlying property. With this being the case, this stock could be a better buy for income investors seeking to gain exposure to a secure income stream from property at a discounted valuation. The one downside is that this REIT’s dividend yield is below 4%, although the unleveraged balance sheet (leaving plenty of room for further asset growth) and discounted valuation more than make up for this lack of income in my opinion.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Rupert Hargreaves owns no share 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.