8.3% and 4.8% yields! 2 hot dividend shares I’m looking to buy
I’m searching for the best high-yield dividend shares to add to my portfolio today. Here are two I’m looking to snap up when I have spare cash to invest.
Britain has been failing to build enough homes to meet its growing population for years. If anything, the yawning gap between supply and demand looks set to worsen before it gets better.
Residential construction data from S&P shows that homebuilding fell at its sharpest rate for three years in April. This was due to delays in new development projects and subdued homebuyer appetite.
The government’s plan to create 300,000 new homes appears to be in tatters. It’s a theme that will have huge implications for the home purchase and rental markets. Home availability in the latter sector is already sinking as buy-to-let landlords exit in huge numbers.
So I believe The PRS REIT (LSE:PRSR) could be a hot stock to own in the current climate. This small-cap stock operates a portfolio of more than 5,000 family homes in the UK.
Rents here have been growing by healthy mid-single-digit percentages. But recent industry data suggests that the income it receives could get much better. The average rent on private properties hit £1,199 in April, representing annual growth of 9.9%.
I think PRS REIT is a particularly great buy for dividend investors. Under real estate investment trust (REIT) rules, the company is obligated to pay at least 90% of annual rental profits out in the form of dividends.
As a result, its yields for the financial years to June 2023 and 2024 sit at 4.7% and 4.8% respectively. I’d buy the firm despite the threat that elevated build costs pose to earnings growth.
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TBC Bank Group
Investor demand for UK banking stocks is yet to recover following Silicon Valley Bank’s demise in March. In fact, the failure of First Republic this week suggests the saga is far from over.
But I think TBC Bank Group (LSE:TBCG) is an attractive dip buy following recent price weakness. Its early days and contagion across the banking sector can’t be totally ruled out. But the smart money suggests this is a problem that — Credit Suisse aside — is confined to small- and medium-sized US banks.
Besides, I believe the threat of industry troubles is baked into TBC Bank’s share price. March’s decline means it now trades on a forward price-to-earnings (P/E) ratio of 4 times.
I think the bank could experience rapid earnings growth this decade. Georgia’s economy grew rapidly during the 2010s. And following the global pandemic GDP expansion is tipped to accelerate which could, in turn, supercharge demand for banking products. The Asian Development Bank reckons Georgia’s economy will grow 4.5% in 2023 and 5% next year.
On top of that low earnings multiple, TBC Bank shares carry a mighty 8.1% dividend yield. I think right now it could be one of the FTSE 250’s most attractive value stocks.
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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.
Motley Fool UK 2023