Here are two stocks that I’ve got on my radar to consider buying.

Helping out the needy

First up is Civitas Social Housing (LSE:CSH). This is a real estate investment trust (REIT). The share price is down 40% over the past year, which is one factor pushing the dividend yield up to 10.89%.

The business is focused on investing in social housing projects in the UK. It has a portfolio of 697 properties, with over 4,500 tenants. It looks for opportunities in the newly constructed space, as well as renovated properties and existing properties that have been repurposed.

As a REIT, it has a mandate to pay out a set amount of profits as income (derived from rental payments). This gives me confidence that dividends in some form will always be paid.

The fall in the share price reflects concern around property market valuations over the past year. Further, the business will find it more expensive to take on more debt to purchase property going forward due to higher interest rates.

I accept the risk, but note the strong financials reported in the half-year update. I also like the ESG focus and benefit to society that the company advocates through social housing provisions.

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Investing in the future

The second company is Digital 9 Infrastructure (LSE:DGI9). The FTSE 250 firm only went public in 2021, but currently offers one of the highest yields in the index, at 9.10%. However, the share price has fallen 39% over the past year.

As the name suggests, the business invests in digital infrastructure projects. In practical terms, this means things like data centres and subsea fibre systems.

Given the way the world is going, digital continues rule and prosper. I can only see demand for these projects rising in the future, with Digital 9 well-placed to benefit from providing capital and reaping returns.

Of course, a concern is the steep fall in the share price. In the annual report, the business flagged up challenges including high inflation, high interest rates and the departure of key personnel in the investment team.

Yet with both high-yield stocks, the fall in the share price helps to elevate the yield. This goes back to the first sentence, that higher yield does mean higher risk.

Both stocks are on my watchlist for April. I do see myself buying the shares at some point. However, I’m going to see if they continue to fall in the next couple of weeks before making a decision… buy, or continue to watch and wait.

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If I feel that my investment can generate me £1,000 or more in income sustainably into the future, it gets me excited. Here’s one that I’m considering right now.

Connecting the world

The business is Digital 9 Infrastructure (LSE:DGI9). The fund is listed on the FTSE 250, with the share price down 15.5% over the past year. This in part has helped to push up the dividend yield to 6.53% at the moment.

Digital 9 invests in assets that are primarily involved in the provision, storage or related services around the internet. This includes everything from subsea fibre systems to data centres. It tries to generate a return for investors from rental income, but also in the long run from the periodic sale of infrastructure projects.

I think this is a really interesting sector to focus in on. The digitalisation of the world has already gone so far, but has a long way to go. Part of this is from infrastructure that broadens the reach of the internet, or improves it in existing areas. Yet it also goes deeper into the protection of data and facilities to support this.

Digital 9 also has a tilt towards ESG. For example, it has an investment in Verne Global, which is a 100% renewable-powered data centre campus in Iceland. This will likely make it more appealing to investors that want to focus on ESG friendly stocks.

A dividend stock for my portfolio

The company gets a tick in my box for being sound, but what about the dividend? It has paid out a quarterly dividend per share of 1.5p for the last year. So if I invested £500 now with a share price of 91p, I’d be able to buy 549 shares. If I assume the annual 6p dividend per share continues, I’d pick up £32.94 in passive income.

This clearly is nowhere near £1,000. Yet I’m a patient man and realise that this stock would be part of my broader portfolio. I’m not going to invest £10,000 into this stock tomorrow, it just wouldn’t make sense. Yet if I reinvest my dividends over time, my accrued dividend payments stack up.

If I simply leave my £500 and reinvest the dividends, after 17 years I will have made £1,000 in income. I know this might seem like a long time, but it’s an incredible figure considering I don’t invest a penny more.

Sure, the dividend yield might change in the future. The dividend might be cut, or the fund could be shut down. But I’m not thinking about this stock just in isolation. When I add this in with a host of other dividend stocks, I could be sitting on a fat pile of income several years down the line. I’m looking to buy Digital 9 shortly with free cash.

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Let’s take a closer look.

The investment case

The company is Digital 9 Infrastructure (LSE: DGI9), an investment trust that listed on the London Stock Exchange in 2021. Its investment objective is to “generate a total return for investors comprising sustainable and growing income and capital growth through investing in a diversified portfolio of resilient Digital Infrastructure Investments”.

I view the digital infrastructure sector as benefitting from some strong structural growth trends going forward. Digital 9 Infrastructure is in a great position to capitalise on this, in my view.

It invests in three key areas: mobile phone towers, data centres, and fibre optic networks. Within these areas, expanding 5G networks, ultra-fast broadband, and cloud-computing should support growth over the long term.

According to Digital 9 Infrastructure, there will be 30bn of connected devices by next year, and 800m new internet users. And Amazon says that just 100ms of latency costs the company 1% of total sales. That’s a lot of lost revenue just because of slow internet speed!

In fact, some of Digital 9’s key customers are mega-cap technology companies such as Apple, Amazon, and Microsoft.

What’s in Digital 9’s portfolio?

As it stands, Digital 9 has made four investments: Aqua Comms, EMIC-1, Verne Global, and SeaEdgeUK1. This means the portfolio is 59% exposed to data centres, and the remaining 41% to subsea fibre cables. It does highlight some concentration risk, particularly towards data centres.

Its two data centre assets, Verne Global and SeaEdgeUK1, did perform well during 2021. Verne Global, in particular, outperformed, with revenue growing 80% on a profit margin of 60%.

There’s going to be a lot of investment to follow as Digital 9 looks to diversify its portfolio. Since listing, the company has already raised gross proceeds of £750m from investors. Therefore, the management team will have to keep finding high-quality assets at reasonable prices for shareholder returns to stay attractive.

Final thoughts

With the all growth in digital communication to come, there will have to be considerable investment in infrastructure. Digital 9 should be well placed to capitalise on this.

And because just about everything works digitally nowadays, I’d also consider it a defensive sector to invest in. Indeed, the global pandemic highlighted just how important digital infrastructure is to our economies.

Digital 9 is a new listing, so there isn’t a great track record to consider. However, the four investments it has made have been performing well so far, and the net asset value has risen 6.8% since the initial public offering, on 31 March 2021, to 31 December. I also consider the 5.4% dividend yield last year as attractive for my portfolio.

There’s still execution risk to consider as Digital 9 expands its portfolio. But for me, I think it’s one of my best stocks to buy now to gain exposure to this expanding sector.

The post Here’s 1 of my best stocks to buy now for the long term appeared first on The Motley Fool UK.

Let’s take a look at two that I’d buy today.

Digital infrastructure

I view Big Data as one of the next big mega-trends. Oracle say this is “data that contains greater variety, arriving in increasing volumes and with more velocity”.

This brings me to the first investment trust, Digital 9 Infrastructure (LSE: DGI9). It invests in a range of digital infrastructure assets, such as subsea fibre, data centres, and also wireless tower networks. According to Digital 9 Infrastructure, internet traffic was predicted to increase by an average of 30% every year, even before the pandemic. Therefore, I view the trust as an excellent way of gaining exposure to the growth in Big Data in the years ahead.

Digital 9 Infrastructure targets both income and capital returns for its investors. However, it’s a fairly new trust, having only listed through an initial public offering (IPO) back in March 2021. As such, there’s limited track record on dividend payments. Also, the trust has been highly acquisitive since the IPO. It raised an additional £275m by way of a share placing, and has acquired numerous other digital assets in a short space of time. This is in line with its strategy, of course, but the limited track record does heighten the risk slightly.

The trust also incorporates the UN’s Sustainable Development Goal 9 into its investment process, which is to build resilient and sustainable infrastructure. This is represented by the ‘9’ in the trust’s name. It’s a forward-thinking approach to digital infrastructure investments, in my view, given the concerted efforts towards sustainability today.

So, on balance, I think this is one of my best investment trusts to buy.

A diversified mining trust

I’d also add the BlackRock World Mining Trust (LSE: BRWM) to my portfolio. It invests in a diversified mix of metals and mining assets across the world.

The trust aims to maximise total shareholder returns. It certainly achieved this last year as the dividend yield was 4%, and the trust’s net asset value increased by over 13%. It’s important to note that commodity prices can be highly volatile, so these returns are certainly not guaranteed. The strategy can also use leverage, which can amplify both gains and losses. This does increase the risk of the investment.

There’s also a sustainability benefit to investing in the trust. This is because certain metals are crucial components in things like electric vehicles (EVs), batteries, and wind turbines. For example, EVs require three- to-four times as much copper as standard vehicles. The BlackRock World Mining Trust currently has 21% of its assets exposed to copper, according to its factsheet.

I do like the diversification that this trust can bring to my portfolio. I would gain exposure to an experienced team that invests in critical resources for decarbonisation and renewable energy sources. So, taking everything into account, I’d buy this trust in my portfolio today.

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