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Dividend alert! 2 property stocks I’d always choose over buy-to-let

In a recent piece I sang the praises of property stock Warehouse REIT and explained to readers why it’s a much better investment choice than putting your money in buy-to-let property. On a similar theme, I’d like to detail why I’d also prefer to buy shares in GCP Student Living (LSE: DIGS), a business riding the wave of a shortage of decent student accommodation here in the UK.

During the six months to September, its EPRA unaudited net asset value — a figure which also included income at that time — soared to 170.12p per share from 153.02p a year earlier. Not only were its student digs fully occupied for the current academic year, but rents were also up 4.4% on a like-for-like basis.

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It’s clearly not a shock to see GCP’s share price continuing to surge. It’s up 22% since the start of 2019 and currently trading around all-time highs of 180p per share, leaving it trading on a forward P/E ratio of 29.3 times.

Reassuringly expensive

Expensive on paper, sure, but this particular FTSE 250 stock is worthy of such a toppy rating given the rate at which earnings are rising (City analysts are forecasting another 19% bottom-line rise in the current fiscal year to March 2020).

Indeed, so strong is trading at GCP, not to mention the state of its balance sheet, that the business announced it was shelling out its first interim dividend (of 1.57p per share) for the three months to September. For the full financial year, those same City brokers are forecasting a 6.3p total reward, one which yields an inflation- and market-beating 3.5%.

GCP goes to show that it’s possible to make big profits from UK property without the bother that comes with modern buy-to-let investing.

Country corker

Another property share shelling out market-beating dividends today is Countryside Properties (LSE: CSP). And like GCP, this is a company whose stock value is also ballooning right now (record highs of 385p per share mean it’s up a staggering 27% since the turn of the year).

In spite of these mighty gains, though, it could still be argued that this particular FTSE 250 share remains undervalued by the market. At current prices, investors can tuck into a P/E ratio of 8.8 times for the present financial year (to September 2020), well inside bargain-basement territory of 10 times and below.

What’s more, Countryside’s corresponding dividend yield of 4.6% — a reading that thrashes the broader UK forward yield of 3.3% for the UK’s mid-caps — provides plenty of value as well, thanks to an anticipated 17.6p per share payout.

The shadow of Brexit is still restricting share buyer appetite, sure, but with property demand from first-time buyers still outpacing supply, profits continue to boom. Adjusted earnings per share rose 13% in the fiscal year just passed, and thanks to a “record” forward order book, City analysts are predicting another 9% increase in financial 2020. With government housing policy looking as confused as ever, buy Countryside today, I say, in the expectation of Britain’s housing shortage delivering strong profits growth into the next decade and probably well beyond.

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Royston Wild 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.