That means that if I was renting out my house, I’d have lost about 35% of my annual rental income on just that one repair.

I think property investing is like stock market investing. To generate a reliable income, you need a portfolio. Building a property portfolio is out of my reach. But investing in portfolios of high quality property through the stock market is easy and affordable. So that’s what I’ve done.

London focus

One lesson from previous market crashes is that good quality London property tends to be more resilient than anywhere else. This is why one of my top picks for property income would be Landsec (LSE: LAND), the FTSE 100 real estate investment trust formerly known as Land Securities.

Landsec does still own retail property outside London. But this side of its business is being scaled back. According to chief executive Robert Noel, 65% of the firm’s assets by value are in London, and all of its development projects are in the capital.

This strategy hasn’t stopped investors ditching the stock over fears about the future profitability of Landsec’s £2.5bn portfolio of shopping centres. The value of this property fell by 11.7% last year and Mr Noel expects further declines.

Retail exposure is a risk. But Landsec has more than £6.5bn of prime London property to help offset this risk. There’s also a lot of bad news already priced into the stock, which trades at a 37% discount to its net asset value of 1,341p per share.

I’d buy

Landsec has kept debt levels low and has already sold off much of its lower-quality retail property. The firm’s portfolio produced a rental income of £618m last year, 7% higher than the previous year.

For shareholders, a period of uncertainty seems inevitable. But I expect rental income to remain fairly stable. This should support the dividend, which is expected to yield 5.6% this year. I see this as a good entry point for investors wanting a long-term passive income.

Industrial focus

One area where Landsec has no exposure is industrial property. The market for modern warehouse space is booming and there are now a number of REITS specialising in this area.

However, my top pick in this sector is a smaller player, Hansteen Holdings (LSE: HSTN). Hansteen has a market cap of about £400m and owns a portfolio of urban distribution and light industrial properties around the UK.

The company focuses on properties serving local areas rather than the so-called big box logistics properties that are currently attracting premium valuations.

Joint chief executives Morgan Jones and Ian Watson have a track record of good market timing in this sector. They’ve also shown caution and discipline in the face of rising prices, selling some property and returning cash to shareholders.

Together, Mr Jones and Mr Watson own 5.6% — about £22m — of Hansteen stock. This suggests to me that their interests are well-aligned with those of shareholders like me.

At about 92p, HSTN shares trade at a discount of about 10% to their book value and offer a forecast yield of 5.5%. I may buy more over the coming months.

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Roland Head owns shares of Hansteen Holdings. The Motley Fool UK has recommended Hansteen Holdings and Landsec. 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.

Of course, it’s not the only dividend share that could be worth buying today. Reporting encouraging results on Monday was a FTSE 250-listed stock that could deliver high total returns in the long run.

Improving prospects

The company in question is investor in UK industrial property Hansteen (LSE: HSTN). Its full-year results showed that it is making good progress in delivering on its strategy, with the size of its portfolio continuing to fall as it believes now is the right time to crystallise value created before the cycle turns.

Its like-for-like property valuation increase was 6.5% for the year, with 874 new leases or renewals at 10.4% ahead of their estimated rental value. It generated a significant profit on disposals during the year, with capital being returned to shareholders.

With Hansteen having a dividend yield of around 6%, it appears to offer an impressive income outlook. It believes there are still opportunities for sales in the near term, but over the long run its management platform could allow it to capitalise on the long-term growth potential offered across the UK commercial property sector. Therefore, now could be a good time to buy it while it trades on a price-to-book (P/B) ratio of around 0.9.

Turnaround potential

While Centrica has continued to disappoint over recent months, its current valuation suggests that it may offer a wide margin of safety. As mentioned, it has a dividend yield of around 10%, which makes it one of the highest-yielding shares in the wider utility sector. This suggests that investors may have accounted for the ongoing challenges faced by the business. They include political and regulatory risk, while the restructuring taking place across the business may also be unsettling investor sentiment to some degree.

Although it could be argued that Centrica has offered turnaround potential for some time, and has thus far failed to deliver, its recent update suggested that progress is being made in cost reductions. They are helping to underpin net debt levels, while new customer-facing capabilities in its consumer and business divisions could help to catalyse growth in the medium term. Divestments may also help to refocus the business on its best-performing areas over the coming years.

Since the stock has a dividend coverage ratio of 1.1, dividend growth may be subdued in the next couple of years. But with the company appearing to have turnaround potential and its yield being high at the present time, it could offer high total returns in the long run.

The post Forget buy-to-let. I’d buy the 10% dividend yield offered by the Centrica share price appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Centrica and Hansteen Holdings. The Motley Fool UK has recommended Hansteen Holdings. 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.

As my colleague Royston Wild explained recently, landlords are ditching buy-to-let in favour of better opportunities. In this article I’m going to highlight three property-related stocks I believe could be much more profitable than buy-to-let.

There’s still money in building

A slowdown in the buy-to-let market doesn’t mean that demand for housing has fallen. Would-be homeowners are still flocking to buy new houses with the help of the government’s Help to Buy scheme.

Alongside this, institutional investors are investing in bulk-buy rental property deals as a long-term investment.

All of this means that the UK’s major housebuilders are still performing well. My top pick in this sector is FTSE 250 firm Redrow (LSE: RDW). Founder Steve Morgan returned to the business 10 years ago, in the wake of the financial crisis. He’s patiently rebuilt the firm into a quality operator with a very strong balance sheet.

An operating margin of almost 20% supports strong cash generation, while the balance sheet is now free of debt. The forecast dividend yield for the current year is 4.7%, plus an extra 2% from a special dividend, giving 6.7% in total.

Mr Morgan has now retired from Redrow for a second time. But I believe he’s left behind a solid business, with a sustainable dividend and a positive outlook.

Bricks and blocks

An alternative way to invest in property is to own shares in companies that produce essential materials, locally. In this case, I’m looking at brick maker Forterra (LSE: FORT).

Some industries can be disrupted by cheaper imports. But builders always favour local brick supplies where possible because bricks are heavy, bulky and relatively low value. This means long distance transport costs are high, compared to the price of the product.

Like its peers, Forterra is reporting strong demand. Sales rose by 11% to £367.5m in 2018, while pre-tax profit was 9.3% higher, at £64.8m. I was pleased to see that net debt fell by 36% to £38.8m, providing good evidence of the group’s strong cash generation.

The risk here is that profits could slump in a downturn. But there’s no sign of this so far. With operating profit margins running at 18% and the shares yielding 3.5%, I believe the shares remain attractive.

A cautious approach

One company I’ve followed for a while and been consistently impressed by is industrial property landlord Hansteen Holdings (LSE: HSTN). Unlike some rivals, management here has used high prices as an opportunity to sell some assets, repay debt and return cash to shareholders.

The company’s business model is to buy, improve and sell property. Management expects to be net sellers for the foreseeable future until more attractive buying opportunities emerge. Not everyone will agree with this approach, but in my view it has some merit. I think this disciplined strategy is much less risky than that of companies which continue to expand at all costs in a rising market.

At some point, the tide will turn. In the meantime, Hansteen shares trade at a 10% discount to their net asset value of 100p and offer a forecast yield of 5.4%. The stock remains on my buy list and could soon find its way into my portfolio.

The post 3 property stocks I’d buy instead of buy-to-let appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Hansteen Holdings and Redrow. 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.

According to the Investment Property Databank (IPD) Healthcare Index, primary healthcare properties — such as GP surgeries — have delivered a total return of more than 7% per year since 2007, with less risk than any other class of property.

The first stock I want to look at today is healthcare property REIT Assura (LSE: AGR), which develops and invests in GP surgeries. Assura earns 84% of its rent roll from the NHS.

Assura now owns 556 properties, out of a total UK market of around 9,000 GP surgeries and medical centres. The company says that this makes it the sector leader “in a highly fragmented market”.

One attraction of this business is that rent payments are likely to be supremely reliable. This compares favourably to retail property, for example, where many tenants are suffering financial problems.

What could go wrong?

One possible downside is that high demand for secure income means that healthcare rental yields are quite low.

In a trading statement issued today, the company said it had paid £108.2m for 39 medical centres and two developments during the first quarter. Collectively, these properties generate £5.5m of rent each year and have a weighted average lease term remaining of 13.3 years.

This suggests a gross rental yield of 5.1%, which seems fairly low to me, given that the group’s debt carries an average cost of 3.3%.

As a contrast, my second stock today has similar levels of gearing and an average debt cost of 2.9%. But it recently announced a £57m property acquisition with a net initial yield of 9.15%.

To sum up, my view on Assura is that investors are paying a high price for a secure income. Given that interest rates seem likely to rise, I think these shares are already fully priced.

One property stock I’d buy

The other company I mentioned above is FTSE 250 property firm Hansteen Holdings (LSE:HSTN). This group owns offices and industrial property, such as warehouses and distribution centres.

Demand for logistics properties is pretty high at the moment, due to the growth of internet shopping. Hansteen took advantage of this strength to sell its Dutch and German portfolios for €1.3bn in 2017. Earlier this year the firm continued to lock in gains on its portfolio, selling £116m of UK property.

Adding value

The proceeds from these sales have been used to fund significant returns to shareholders. Management said it has opted to return capital rather than buy new assets because high prices mean that opportunities for new investments are “limited”.

I like this conservative approach from management. I also like the company’s ability to buy properties and improve them by increasing occupancy and rental levels. This allows Hansteen to create value for shareholders in a way that I suspect may be harder for Assura.

Higher returns

Here’s another way of comparing the two companies. Hansteen generated a return on capital employed of 10.4% last year. Assura generated ROCE of just 4.1%.

Hansteen shares currently trade in line with their book value and offer a forward yield of 5.2%. I’d be happy to buy this stock today, despite the group’s exposure to the UK economy.

The post Forget buy-to-let! These FTSE 250 property stocks yield more than 5% appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Hansteen Holdings. 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.

Within the FTSE 100, though, are a number of shares such as Royal Mail (LSE: RMG) which offer even higher income returns than the index. As such, the company could be worth buying alongside a FTSE All-Share stock which reported an upbeat set of results on Wednesday.

Improving outlook

The company in question is urban multi-let industrial property business Hansteen (LSE: HSTN). It reported half year results which showed an increased in its property valuation of 3.7% versus the same period of the previous year. Its profit increased to £29.2m from £13.3m in the first half of the previous year. It continued to enjoy high occupational demand, with supply being limited in all of its regions. Rents are continuing to grow, which could lead to further growth for the business over the medium term.

The company was able to sell its Industrial Multi Property Trust (IMPT) portfolio during the period, with it returning £144.5m of capital to shareholders. It expects to be a net seller for the foreseeable future as there remains a lack of meaningful supply on the horizon.

With Hansteen having a dividend yield of 4.8%, it offers a relatively high income return. It is due to deliver double-digit earnings growth in the next two financial years. This could allow it to return further capital to shareholders due in part to the lack of investment opportunities that it appears to have over the medium term.

Dividend growth

The dividend prospects for Royal Mail may also be relatively impressive. The company is expected to increase dividends per share by 4.4% in the next financial year. This puts it on a forward dividend yield of 5.6% for the 2020 financial year, which makes it one of the highest-yielding shares in the FTSE 100. This should ensure that its income return remains well above inflation even if a weaker pound leads to rising CPI over the next few years.

With Royal Mail in the process of change, the near term could be a relatively volatile period for the business. It has recently changed its CEO, and this could lead to a refreshed strategy in the short term. There is continued pressure on its UK operations. While parcel volumes are helping to offset declining letters volumes, the reality is that the division can only make a limited amount of efficiency improvements to offset disappointing revenue growth. As such, the international growth potential of the company could become increasingly important over the next few years.

Since Royal Mail has a price-to-earnings (P/E) ratio of around 13, it seems to offer good value for money. As such, now could be the right time to buy it for the long run.

The post Forget the State Pension: FTSE 100 dividend share Royal Mail could help fund your retirement appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Hansteen Holdings. The Motley Fool UK has recommended Hansteen Holdings. 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.

For the second time in six months, the company has decided to return cash received from property sales to investors, claiming that the “high level of demand for industrial property” means that opportunities to reinvest the cash “are likely to be limited”.

In November, £580m was returned to shareholders through a tender offer. Today the company has announced plans for a further £145m return. This will see shareholders receive 35p per share in cash.

The news was announced alongside the group’s 2017 results. These are interesting because the firm sold its German and Dutch portfolio last year, reducing the size of its holdings substantially. Today’s accounts give us a chance to see what’s left, and to judge whether the stock remains attractive.

I’m impressed

Hansteen’s portfolio is now made up of 15.9m square feet of industrial property in the UJK, and 900,000 in Belgium and France. The overall portfolio has an attractive passing rental yield of 7.5%.

I’m impressed by management’s restraint in an increasingly expensive market. Rather than accepting lower rental yield, the top team has returned cash to shareholders and reduced the group’s loan-to-value ratio from 40.9% to 27.6% since December 2016.

The portfolio’s shrinking size meant that normalised income fell to £51.9m last year, down from £64.5m one year earlier. However, this still supported a dividend of 6.1p, up from 5.9p in 2016.

Looking ahead, the business has a net asset value (NAV) of 130.6p per share. The current share price of 139p represents a slight premium to NAV, but given the stock’s 4.4% yield I think that’s acceptable. On balance, I’d rate Hansteen as an income buy at current levels.

A more difficult choice

Not all types of commercial property are booming in value. Tough market conditions for large retailers and restaurant chains means that the market is finding it more difficult to value shopping centres and other large retail properties.

As a result, FTSE 100 property group British Land Company (LSE: BLND) is trading at a 30% discount to its net asset value of 939p per share. British Land owns £6.6bn of retail property around the UK, including Ealing Broadway and Sheffield’s Meadowhall. Retail accounts for about half of the trust’s total portfolio by value.

As yet, there’s no sign of trouble. The portfolio was 98% occupied at the end of September and net asset value rose by 2.6% to 939p during the half-year period.

Alongside this, British Land’s loan-to-value ratio has been reduced to 26.9%. The group’s debt carries a weighted average interest rate of just 3%.

What’s the risk?

I believe that some of British Land’s major tenants may reach a point where they will close shops and restaurants if they can’t secure lower rents. At this point it could find itself forced to accept lower rates in order to keep hold of key anchor tenants.

I’m still undecided about this stock, so I’m staying on the sidelines. But with a forecast yield of 4.7% and an attractive discount to NAV, British Land could be a great long-term income buy at current levels.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended British Land Co and Hansteen Holdings. 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.

But if this method is a bit too narrow for your tastes, an easier way to profit may be to invest in the property companies that own the warehouses that support package storage, sorting and shipping.

A history of success not to be ignored

This is one area where Hansteen Holdings (LSE: HSTN) shines with its portfolio of around 300 estates in the UK and a smattering in Belgium and France that support a respectable 3.9% dividend yield. The group focusses solely on industrial properties and has a wide variety of tenants that provide a very nice level of diversification, so not too much exposure to any one particular sector.

The group’s management team also has a very long track record of success and knowing when to enter and exit certain markets. The latest call made was to sell off the entirety of the group’s German and Dutch holdings for €1.28bn at a time when occupancy and rental rates were high and the weak pound made the transaction even more attractive in sterling terms.

The proceeds of this sale were used to retire a significant amount of debt, fund a relatively small acquisition and return a lot of cash to shareholders. That return was facilitated though a shareholder-friendly tender offer that repurchased and retired a whopping 50% of the group’s outstanding shares for a total of £580m.

The group is now concentrating on the UK market, where it still sees a solid medium-term outlook for the industrial property market as GDP growth continues despite recent wobbles in the housing market. And on top of GDP growth, fact that the group’s portfolio properties are concentrated on large estates close to major highways means it should continue to benefit hugely from the shift towards e-commerce.

An aptly named option

Another company operating in the same vein is newly public Warehouse REIT (LSE: WHR). The group raised £150m in its September IPO and has already invested a bit more than this in building a portfolio that stretches from the south coast of England to Glasgow.

Like Hansteen, Warehouse REIT’s portfolio is concentrated on industrial properties that are either situated in close proximity to vital infrastructure links or in urban areas themselves. The latter are part of the group’s plan to be a key part of the ‘last mile’ delivery networks for e-commerce firms.

And with relatively high demand and limited supply for suitable properties, Warehouse REIT is expecting to achieve very high occupancy rates and steadily rising rental rates going forward. It’s still a bit early to tell if this is working out as planned, but the group’s acquisitions so far have taken place on estates with low vacancy rates and very nice annual yields.

Warehouse REIT isn’t a screaming bargain as it trades at a 7% premium to its net asset value, but if domestic economic growth continues apace and shoppers begin buying ever greater amounts of goods online, the company looks well positioned to benefit hugely.

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Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended Hansteen Holdings. 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.

However, with inflation already standing at 3% and forecast to move higher, a 4% dividend yield may not remain a real-terms income return in the medium term. Therefore, buying these two investment trusts with higher dividend yields than the FTSE 100 could be a shrewd move.

Positive outlook

Reporting on Monday was Midlands-focused property Group Real Estate investors (LSE: RLE). The REIT announced the sale of 24 Bennetts Hill in Birmingham for a cash consideration of £4m. This is a premium to book value and represents a 5.9% net initial yield. It also means the business has almost doubled its money versus the £2.06m it paid for it in December 2014.

In addition, Real Estate Investors has also completed the letting of Peat House in Leicester. The building is fully occupied and produces a rental income in excess of £0.5m per year. This has contributed to a record occupancy across the company’s portfolio of 95%, which suggests that it could enjoy continued strong momentum in future.

With a dividend yield of 5.1%, the company looks set to offer a real income return in the long run. Furthermore, its bottom line is expected to increase by 14% next year and this is due to prompt a rise in dividends of around 7%. This means that not only does it have an above-inflation dividend yield, its shareholder payouts could rise at a much higher rate than inflation in future years. As such, now could be the perfect time to buy a slice of the business.

Upbeat outlook

Also offering an impressive outlook is fellow REIT Hansteen (LSE: HSTN). The company’s asset base appears to be strong after several changes have been made, with its profitability due to rise by around 20% next year. This suggests that the performance of its end markets could continue to be strong, albeit with some uncertainty being present.

A double-digit rise in earnings is expected to prompt a rise in dividends of 6.3% in the 2018 financial year. This puts the company on a forward dividend yield of 4.7%. Beyond next year, there could be scope for a further rise, as the company appears to have a sound strategy which is benefitting from continued strong demand for rental space.

As well as this, Hansteen could deliver a rising share price. Its dividend yield suggests that it may offer good value for money, while a price-to-earnings growth (PEG) ratio of just 0.9 may do likewise. Therefore, although the UK economy may face an uncertain future due in part to Brexit and the potential challenges it may bring, now could be the right time to buy a REIT such as Hansteen for the long term.

The post 2 dividend investment trusts with higher dividend yields than the Footsie appeared first on The Twelfth Magpie.

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Peter Stephens owns shares in Hansteen. The Motley Fool UK has recommended Hansteen Holdings. 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.

The UK’s second largest commercial REIT reported a 2.6% rise in its EPRA net asset value per share to 939p, following healthy revaluation gains which demonstrated the resilience of its prime property assets.

It’s not all rosy though. Net rental income, a key measure of underlying profits, fell by £15m to £297m in the first half of the year. The decrease in net rental income during the period was mainly down to recent divestitures and lease expiries, although like-for-like rental growth also slowed considerably to 1.8%, from 3.4% in the same period last year.

In addition, amid a continuing overhang of uncertainty, chief executive Chris Grigg warned that he expects “rental growth across the market to be flat-to-down over the next 12 months.”

Big discount to NAV

Still, buying into a prime property portfolio at roughly 65p to the pound sounds to me like a great opportunity. The shares’ 35% discount to NAV also gives its dividends a nice boost. Following a 3% increase in its quarterly dividend to 7.52p per share, the shares offer an enticing prospective yield of 4.9%.

And while I don’t expect the valuation gap to close anytime soon, I have high hopes that medium-term upside could come from its development pipeline. Committed developments are forecast to generate an extra £55m in annual rents over the next five years. At first glance, this may seem speculative to some investors, but it’s important to realise the company is defensively positioned with 57% of committed pipeline already pre-let or under offer.

Together with contracted rent rises and upcoming open market rent reviews, British Land expects to earn an extra £109m in annual cash flow by 2022/23. This equates to nearly a fifth of its current passing rent, which could lead to some serious dividend growth and additional share buybacks.

Discounted REITs are not always better

However, it’s not a simple case of buying those with the biggest discounts. A well-run REIT with attractive fundamentals may be worth backing even if the shares trade at a premium to its NAV.

I reckon that Hansteen Holdings (LSE: HSTN), which trades at a 3% premium to its NAV, is perhaps one such REIT.

The industrial property investment company has recently undergone a major transformation after selling its entire property portfolio in Germany and the Netherlands and doubling down on the UK. It’s a strategy which crystallises value for shareholders with the euro at a high point, and allows it to take advantage of opportunistic pricing of UK assets.

Market fundamentals have also fared more resiliently in the industrial sector, with rents rising modestly and vacancies historically low and stable. And although industrial units have not made the same valuation gains experienced for prime central London property, investment yields have been far greater. This is especially true for newly built stock as Hansteen earns an 8% yield on passing rent.

At current prices, it has a prospective dividend yield of 4.4%.

The post British Land Company plc: an unloved 4.9% yielder trading at a 35% discount to NAV appeared first on The Twelfth Magpie.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended British Land Co and Hansteen Holdings. 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.

As a REIT, the company must pay out 90% of its rental income as dividends, for which the company is given highly beneficial tax status. At present this dividend yields 4.09% annually.

Now, there are plenty of other property firms out there that also pay substantial dividends but a few things about Hansteen in particular have excited my interest. The first is that the firm’s co-founders are still joint CEOs and have proven adept at riding out the cyclical nature of the property sector with aplomb since founding the firm in 2005 and its predecessor in 1989.

This long experience in the industry lends the pair the trust of investors when they make ambitious calls, such as the recent sale of the entirety of the firm’s Dutch and German assets for €1.28bn to concentrate on its UK portfolio. Management decided that with occupancy and rent rates high, this was a good time to realise its investment and return a great deal of the proceeds to shareholders.

This return will take place through a £580m tender offer, whereby shareholders can sell up to one in two of their shares back to the company at 140p each. The rest of the proceeds will be used to pay down debt and provide the capital for further asset purchases in the UK.

As management sees UK property prices as elevated, these purchases will probably be small bolt-on acquisitions to its already sizeable portfolio of industrial properties. The value of these properties has risen nicely in recent years due to increased demand for e-commerce-related storage and shipping facilities, so valuation uplift potential looks solid, even with Brexit looming over other parts of the property sector.

With an already impressive dividend yield set to increase as the company buys back shares, I reckon Hansteen could be an interesting choice for yield-starved investors.

Building growth from the ground up 

Another Woodford holding on my radar is flooring distributor Headlam Group (LSE: HEAD). The company’s stock currently offers investors a 3.94% yielding dividend that has been growing steadily in recent years.

Growing dividends have been fuelled by rising earnings due to both organic growth and bolt-on acquisitions. In the half year to June, like-for-like sales (LFL) rose 2.1% in the UK and 3% in Europe, while overall group growth was 4% thanks to two bolt-on acquisitions and the weak pound.

Looking forward, there is still plenty of expansion potential as it moves into new territories in the UK and Europe, which currently accounts for only 14.1% of the group’s £340m of H1 sales. Also attractive is the company’s rising cash flow as the benefits of scale increase margins. In H1, operations generated £17.1m in cash that helped boost its net cash position to £49.8m.  

With lots of cash on hand, rising margins and impressive growth potential I reckon Headlam may prove an attractive income and growth option in the coming years.

The post 2 Neil Woodford dividend stocks I’d buy today appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK has recommended Hansteen Holdings. 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.