I’m looking to boost my passive income through dividend-paying stocks. One option I’m taking a look at is British American Tobacco (LSE: BATS). Could this hig- yielding stock be a good addition to my holdings?

Share price drop

British American Tobacco is a multinational business that manufactures and sells cigarettes, tobacco, and other nicotine products. Established in 1902, it is one of the largest tobacco businesses in the world.

The British American share price has been on a downward trajectory for some time now. In fact, it is currently at 52-week lows. As I write, the shares are trading for 2,572p. At this point last year, they were trading for 3,383p, which equates to a 23% drop.

I believe the British share price has fallen for a few reasons. To start with, performance in the US market has dwindled recently. This has not been helped by the threat of changing regulation in the US regarding vapes and e-cigarettes. Furthermore, some recent changes in senior management may have spooked investors.

I’m not concerned by the share price drop. In fact, I consider it an opportunity to buy cheaper shares in a quality established business with lots of passive income opportunities ahead.

Passive income opportunity or one to avoid?

So let’s take a look at some of the bull and bear aspects of buying British American shares. Firstly, the shares look undervalued at current levels on a price-to-earnings ratio of just 8. I regard any stock under a ratio of 10 to be undervalued.

Next, at present, the British American dividend yield stands at 8.7%. This is over twice the FTSE 100 average of 3%-4%. Furthermore, I can see the company has grown its dividend for the past six years in a row. It is worth mentioning that dividends are never guaranteed and can be cancelled at any time by the business.

Finally, British American is investing heavily into tobacco alternatives, which is pleasing to see. Since the pandemic, the awareness surrounding the detrimental impact of smoking has only increased, as studies reveal its potential to worsen respiratory systems. Initiatives and products offering consumers alternatives could boost performance and returns and offset any drop in traditional tobacco product sales.

From a bearish perspective, British American is at the mercy of changing regulations. As I touched upon earlier, the share price has been affected by rumoured issues in the US market around changing regulation. These regulations could halt sales of certain products, which could affect the bottom line.

Finally, Action on Smoking Health reports that smoking levels are falling and have been for some time. This is bad news for businesses like British American Tobacco and others. A decline in its bread-and-butter products could hamper performance and any passive income shareholders are looking to make.

My verdict

To summarize, I believe British American Tobacco is a good stock to buy to boost my passive income. I would be willing to add some cheap shares currently, if I had the spare cash to do so.

British American’s dominant market position, dividend yield and payout record, performance history, and growth initiatives helped me make my decision.

The post Is this 8%+ dividend yielding stock perfect for boosting passive income? appeared first on The Twelfth Magpie.

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Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has recommended British American Tobacco P.l.c. 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.

With inflation still elevated, July seems like the perfect time for investors to begin generating some passive income to help put their money to work against red-hot interest rates.

Despite what some may think, a huge amount of cash upfront isn’t needed to generate healthy returns. And over the long term, these funds build up.

With that in mind, here’s the strategy I’d use this month to build passive income streams that could serve me for the years ahead.

The plan

To start, I’d target the FTSE 100. The last decade has proved to be a torrid time for the UK stock market. In this period, the Footsie has risen a meagre 16%. For comparison, the S&P 500 has climbed by over 180%.

However, as a Fool, I believe this presents an opportunity. And I see plenty of value in UK stocks right now.

The index also has a host of companies that pay investors sizeable dividend yields. And on average, it trumps the payouts seen in overseas indexes. This year alone it’s predicted to reward investors with over £84bn in dividends.

The execution

So, what’s next?

Well, to execute my plan, I’d target a variety of industries within the FTSE 100. By doing so, I limit the risk of my investments being reliant on one company or industry.

There are currently over 10 companies that offer yields of 7% or more, with these spread across the investment, insurance, housebuilding, and tobacco industries. This includes the likes of insurance giant Legal & General, as well as British American Tobacco.

Elsewhere, there are stocks that offer slightly lower yields but still sit above the index’s average (around 4%).

For example, I currently like the look of banking stocks, so I’d look to add a few of those to my portfolio. Stalwart Lloyds offers a 5.6% dividend yield, while its 43p share price, in my opinion, looks cheap.

Boosting profits

There are other methods I could employ to boost income, such as reinvesting my dividends.

From this, I can benefit from compounding. For example, if I own a stock that generates 7% growth per year and pays me a 6% dividend, I’d be looking at a 13% annual return. This means an initial £500 investment compounded over 30 years would equate to £24,000. Not bad.

Furthermore, if I topped up my investment with a small monthly payment of £30, after 30 years my pot would be sat at over £150,000.

The risks

Despite this, it’s worth noting that there’s always a risk when targeting dividend stocks. Payments can be reduced or cut altogether should unforeseen circumstances arise. And the business can do this at any moment.

However, diversifying and investing in a host of sectors mitigates the risk of any cuts having a major impact on a portfolio.

With that, if I had some spare cash, I’d use July as the perfect opportunity to kickstart my journey to creating a stream of passive income. Starting now and then topping up with monthly payments would hopefully see me build a sizeable pot in the years ahead.

The post I’d use July to take advantage of a once-in-a-decade passive income opportunity! appeared first on The Twelfth Magpie.

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Charlie Keough has positions in Legal & General Group Plc and Lloyds Banking Group Plc. The Motley Fool UK has recommended British American Tobacco P.l.c. and Lloyds Banking Group Plc. 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.

Investing in dividend stocks is an easy way to generate passive income. These stocks pay investors cash distributions on a regular basis out of company profits.

Here, I’m going to illustrate how I could generate £1,000 per year in passive income with Unilever (LSE: ULVR), a dividend stock listed on the London Stock Exchange. I already own this particular stock and plan to keep building up my position over time.

What I need to do

Unilever is a consumer goods company that operates in the areas of beauty and wellbeing, personal care, home care, nutrition, and ice cream. A well-established blue-chip company, it’s a very reliable dividend payer.

For 2022, Unilever is projected to pay out 171 euro cents (the company reports its financials in euros even though it’s listed on the London Stock Exchange) per share in dividends to investors. At today’s GBP/EUR exchange rate, that equates to around 149p per share.

What this means is that to generate £1,000 per year in passive income from Unilever shares, I’d need to own 671 shares (worth around £27k at today’s share price).

Right now, I own 85 Unilever shares, so I have a long way to go to build up my required position. However, I think 671 shares is an achievable target over time. I have 15-20 years until retirement (when I’ll need the passive income), so I have time on my side.

If I keep chipping away and adding to my holding on a regular basis, I think I can reach my goal in the long run.

Dividend growth could get me there faster

It’s worth noting that there are a couple of variables to consider here. One is dividend growth. Unilever tends to increase its dividend payout on a regular basis. For example, in 2021, it raised its dividend by 3%. If it was to keep lifting its payout in the years ahead (assuming constant exchange rates), I would need less than 671 shares to generate £1,000 per year in passive income.

This goes both ways though. If it was to cut its dividend in the future for some reason, I would most likely need a bigger share allocation to generate that level of passive income.

Another variable is the GBP/EUR exchange rate. Fluctuations in the exchange rate could have an impact on how many shares I’d need. If the pound was to weaken against the euro, it would benefit me as a UK investor, as my dividend payments would be larger. By contrast, if it was to strengthen, it would work against me.

The smart way to generate passive income

I will point out that while I plan to build up my Unilever position going forward, it’s not the only dividend stock I will be focusing on.

There’s always the chance that Unilever’s share price could fall over time. There’s also a chance it could cut its dividend at some point. So I wouldn’t want to have all my eggs in one basket.

That means I’ll be investing in many different dividend stocks in my quest to generate passive income. Doing this will lower my overall portfolio risk significantly and give me the best chance of success.

The post If I buy 671 shares in this company, I’ll generate passive income of £1,000 a year appeared first on The Twelfth Magpie.

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Edward Sheldon has positions in Unilever. The Motley Fool UK has recommended Unilever. 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.

One of the primary goals of my investment portfolio and strategy is to boost my passive income stream through dividend stocks. One business that I want to take a closer look at is Pagegroup (LSE:PAGE). Should I buy the shares?

Recruitment business

Pagegroup is an international recruitment business with over 8,000 employees spread across 37 countries. Formed in 1976, it has grown into an industry leader and continues to target expansion. It is split into four core brands and recruits across 25 main disciplines including technology, finance, legal, and HR.

So what’s happening with Pagegroup shares currently? Well, as I write, they’re trading for 375p. At this time last year, the stock was trading for 635p, which is a 40% drop over a 12-month period.

To buy or not to buy?

Let’s take a look at some pros and cons of me buying Pagegroup shares.

FOR: I’m buoyed by Pagegroup’s recent performance. I am aware that past performance is not a guarantee of the future. However, looking back, it has recorded consistent revenue and profit for the past four years. More recently, it released a half-year report last week for the period ended 30 June 2022. I noticed that revenue and profit increased by 27% and 33% respectively compared to the same period last year. The interim dividend was higher than last year. Furthermore, Pagegroup announced a special dividend to reward shareholders. At present, the shares’ dividend yield stands at a mighty 11%. I do understand that dividends can be cancelled, however.

AGAINST: Due to current economic volatility and soaring inflation, confidence in business is falling. Businesses may need to cut costs, which could include hiring freezes. This could impact demand for Pagegroup’s services, and hinder performance and returns.

FOR: On the other side of the coin from potential hiring freezes due to volatility, there is a general shortage of candidates for relevant roles across many sectors throughout the world, especially in developed economies like the UK. This could see Pagegroup experience a rise in demand for its services, and boost performance. In addition to this, the shares look good value for money right now on a price-to-earnings ratio of just seven.

AGAINST: Recruitment is a saturated marketplace. Many firms, of all shapes, sizes, and profiles are vying to fill the same roles and have the best candidates on their books. I will keep an eye on competitors to see how they are performing against Pagegroup.

A passive income stock I will continue to monitor

Taking everything into account, I like the look of Pagegroup shares. It is a global business with a great track record as well as good recent performance. The shares also look good value for money.

What’s putting me off is the current economic volatility and the uncertainty that comes with it. This is the reason I will keep Pagegroup shares on my watch list for now and monitor developments.

The post This 11% yielding stock could supercharge my passive income! appeared first on The Twelfth Magpie.

More reading

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Jabran Khan 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.

One income stock I will be adding to my holdings imminently is Urban Logistics REIT (LSE:SHED). Here’s why I’m bullish on the shares.

Real estate investment trust

As a quick reminder, a real estate investment trust (REIT) is a business designed to yield income from property. As a rule of thumb, it must return 90% of profits to shareholders in the form of dividends. This is why I already own a few REITs as part of my holdings, with the primary aim of boosting my passive income stream.

Urban specialises in industrial and logistics-style properties to help with ‘last mile’ delivery. It focuses on smaller, single-let industrial properties in key locations throughout the country.

At present, Urban shares are trading for 134p. At this time last year, the stock was trading for 163p. This is a 17% decline over a 12-month period. This share price drop does not concern me. In fact, I view it as an opportunity to buy cheap shares in a stock I’ve had my eye on for some time.

An income stock with challenges to be wary of

Despite my decision to buy Urban shares, I must note bearish aspects which could hamper the shares. Firstly, I believe the share price has been pushed down by economic volatility caused by soaring inflation and rising costs. This is not good news for Urban as many businesses are struggling. This could see them struggle to pay rent to firms like Urban for the use of their properties.

Next, for any income stock, it is worth remembering that dividends are never guaranteed. They can be cancelled at the discretion of the business to conserve cash in times of volatility.

Finally, Urban has a record of acquisitions to grow its portfolio of properties. Acquisitions are great, but they have the ability to go wrong. One common issue is overpaying for a property in Urban’s case. This could have a detrimental impact on returns.

Why I like Urban shares

To start with, I like Urban’s business model and the sector it is currently targeting. E-commerce has exploded in recent years, and there is still a shortage of quality warehousing space for businesses to utilise. Urban specifically targets businesses looking for ‘last mile’ hubs. This should help boost performance and returns for some time to come.

Moving on to Urban’s level of return, the shares current dividend yield stands at an impressive 6%. This is higher than the FTSE 100 and FTSE 250 average of 3%-4% and 1.9% respectively.

Next, due to Urban’s recent share price drop, the shares look dirt-cheap on a price-to-earnings ratio of just over three.

Finally, Urban has a good track record of performance. I do understand that past performance is not a guarantee of the future. However, looking back, I can see it has grown revenue for the past four years consecutively. It also continues to expand its portfolio of properties for growth purposes.

In conclusion, I believe Urban will serve me well as a good income stock. I do expect some shorter term headwinds due to the current volatility in the economy. Despite this, I buy and hold for the long term, so I am happy to buy the shares and hold on to them for long-term returns.

The post Here’s why I’m buying this income stock for juicy dividends with a 6% yield! appeared first on The Twelfth Magpie.

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• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Jabran Khan 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.

One of the primary aims of my investment strategy is to boost my passive income stream through dividend-paying stocks. One exchange-traded fund (ETF) that caught my eye recently is iShares UK Dividend ETF (LSE:IUKD). Should I buy or avoid the shares?

Dividend seeker

As a reminder, an ETF is a type of pooled investment security, and it can be traded on the stock exchange like a normal stock. It tracks a particular index, sector, commodity, or other assets.

The iShares UK Dividend ETF tracks the FTSE UK Dividend+ Index. It holds the top 50 yielding dividend stocks from the FTSE 350, excluding investment trusts. Using specific criteria, it works out which companies to include. One of the primary criteria for iShares is the dividend performance of a company.

As the iShares UK Dividend ETF trades like a normal stock, it has a share price too. Currently, the shares are trading for 628p. At this time last year, the ETF was trading for 717p, which is a 12% drop over a 12-month period.

To buy or not to buy

So let’s take a look at some pros and cons of me buying the iShares UK Dividend ETF shares for my holdings.

FOR: the ETF is managed by Blackrock, which is one of the largest asset managers in the world. It has a reputation for operating with higher liquidity than other asset managers, which I like. In addition to this, I am buoyed by the fact that the ETF has good diversification. Of the 50 companies making up the fund, there are lots of different types of companies that operate in different sectors. This can offer protection against headwinds and volatility, like now.

AGAINST: As with any passive income stock, it is always worth remembering that dividends are never guaranteed. They can be cancelled at any time to help conserve cash. This usually happens during times of volatility, or an unexpected event like a pandemic.

FOR: the ETF’s current dividend yield is extremely enticing. It stands at 7.2%. This is considerably higher than the FTSE 100 average of 3%-4%.

AGAINST: A few other risks to consider are lack of geographical diversification, as well as a heavy exposure to financial stocks. All the stocks in the fund are businesses based in the UK. This means a lot of them are at the mercy of the UK economy, which is experiencing lots of issues such as soaring inflation. As for financial stocks, due to recent headwinds, many of them have suffered. This could hurt the ETF’s level of return moving forward but this is something I will keep an eye on.

A passive income stock I would buy

To summarise, there are clear benefits, and some pitfalls, to buying the iShares UK Dividend ETF for my holdings. Current economic issues will impact it in some form, in my opinion. Despite this, I like the look of this ETF to boost my passive income. Its generally diverse portfolio, as well as the dividend yield on offer are big positives for me. I would add the iShares UK Dividend ETF to my holdings.

The post Here’s 1 passive income ETF to supercharge returns! appeared first on The Twelfth Magpie.

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Jabran Khan 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.

I’m constantly looking for quality dividend paying stocks that would boost my passive income stream. I own a number of REITs that do this already. Another that could fit the bill for my portfolio is Civitas Social Housing (LSE:CSH). Here’s why I decided to buy the shares for my holdings.

Social housing

Civitas is a real estate investment trust that focuses on providing social housing throughout the UK. To provide further context, REITs are businesses set up specifically to provide returns to shareholders from income-yielding property. Some others I own focus on warehousing or industrial property, or retail and office spaces. I like these stocks because as a rule, they must return 90% of profits to investors.

Civitas shares are trading for 64p at time of writing. A year ago, the stock was trading for 84p, which is a 23% decline over a 12-month period. I’m not concerned by this share price drop as many UK shares have fallen due to recent economic volatility. It just means that the shares are cheaper for me to buy right now.

Why I decided to buy the shares

First things first, I believe Civitas will only continue growing as a business, due to the fact that demand for housing is outstripping supply here in the UK. House builders are looking to make the most of this. With this in mind, Civitas should be able to leverage this demand into new homes, and in turn, make more rental income. This should then result in more dividends for investors.

Looking at returns then, I think Civitas’ current dividend yield of over 8% is enticing. Comparing this level to the current FTSE 100 average of 3%-4% fills me with confidence. I am conscious that dividends are never guaranteed and can be cancelled at any time, however.

Next, due to Civitas shares falling, they look better value for money now too. They currently trade on a price-to-earnings ratio of 10. There is a general rule that a ratio of under 15 could represent value for money.

Finally, I can see Civitas has a good track record of performance in recent years. For example, it has grown revenue year on year for the past four years. I am conscious that past performance is not a guarantee of the future, however.

Risks and conclusion

Despite my decision to buy Civitas shares, I must be wary of issues that could hinder any passive income I hope to make. Due to current economic volatility, a cost-of-living crisis has emerged. With this in mind, rent collection may become tougher for Civitas. If this does happen, it could impact its balance sheet and level of returns. I believe this is a shorter-term issue, however.

Overall I’ve decided to add Civitas shares to my holdings due to the passive income opportunity, growing market, and share price, as well as the company’s track record to date. I will be adding the shares to my holdings imminently and expect them to boost my portfolio for the long term.

The post Here’s how this growth stock could boost my passive income! appeared first on The Twelfth Magpie.

More reading

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Jabran Khan 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.

I already own a number of stocks that pay a regular and consistent dividend in order to boost my passive income stream. Another stock I am considering is British Land (LSE:BLND). Here’s why I like the look of the shares, as well as the potential pitfalls.

Real estate investment trust (REIT)

British Land is a REIT that specialises in London-based property that it calls ‘campuses.’ At present, it manages a total of £13bn worth of assets, owning almost £10bn of these. Income-yielding property provides stable returns to shareholders, and REITs must return 90% of profits to shareholders. I own a few REITs already as a part of my holdings.

So what’s happening with British Land shares currently? Well, as I write, they’re trading for 395p. At this time last year, the stock was trading for 477p. This equates to a 17% decline over a 12-month period.

Passive income stocks have risks

I believe the biggest issue that could affect British Land currently is the economic outlook. Due to soaring inflation, a cost-of-living crisis has emerged. Because of this, rent collection could become a problem for British Land. This, in turn, could then impact performance as well as shareholder returns.

In addition to this, British Land currently has a diverse portfolio of properties, some with potentially uncertain futures ahead. An example of this is office buildings. Due to the pandemic, working habits have changed as companies adopt remote working. Could demand for office space fall and affect performance and returns?

British Land also has many retail outlets too. With the rise in e-commerce, there is a chance performance and returns could be negatively affected by dwindling demand for retail space too.

Why I like British Land shares

Away from the negative aspects, here’s why I like British Land shares. Firstly, the dividend yield on offer is close to 5.2%. This is higher than the FTSE 100 average of 3%-4%. I am conscious that dividends are never guaranteed, however. They can be cancelled at the discretion of the business at any time.

Secondly, British Land shares look good value for money right now on a price-to-earnings ratio of just four. A ratio below 15 is generally thought to represent value for money.

In addition to these two points, I’m buoyed by British Land’s historic track record, profile, and presence. In fact, it is one of the UK’s oldest property businesses with roots stretching back to the 1850s. This tells me it has the experience and knows how to navigate uncertain times, as well as unexpected events. Furthermore, it has moved with the times in the years gone by to continue evolving.

To summarise, I am aware of the risks involved when it comes to British Land, especially with the current economic climate and changing work and retail landscape. Despite these issues, I am always looking to optimise my portfolio, even if I can’t buy every stock I like the look of. British Land is a stock I would be willing to buy to boost my holdings.

The post Here’s why this 5.2% yielding stock is ideal to boost my passive income! appeared first on The Twelfth Magpie.

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Jabran Khan has no position in any of the shares mentioned. The Motley Fool UK has recommended British Land Co. 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.

Boosting my passive income stream is an important aspect of my investment strategy. Here are two stocks I currently hold positions in to do that. However, I must remember that dividends are never guaranteed.

Both of the stocks are real estate investment trusts (REITs). These are companies set up to yield income from property. I like REITs because 90% of profits must be returned to shareholders.

Stock #1

The first stock is Warehouse REIT (LSE:WHR). It specialises in purchasing, revamping, and renting warehouse space to other businesses for their e-commerce needs specifically.

So what’s happening with Warehouse shares currently? Well, as I write, they’re trading for 150p, which is the exact same amount as this time last year. I noticed that the stock has climbed 8% from 138p to current levels since July. I believe the shares climbed due to an announcement of an acquisition, a dividend declaration, as well as a new warehouse facility in Crewe.

So let’s look at what attracted me towards Warehouse shares. The shares currently still look good value for money on a price-to-earnings ratio of just under 4. And the dividend yield is close to 4.5%.

Finally, Warehouse has a good track record of performance. I’m aware that past performance is no guarantee of the future. However, looking back, I can see it has grown revenue and profit for the past four years. Performance growth underpins dividends that boost my passive income stream.

Despite my position in Warehouse shares, I must note risks that could cause issues. Firstly, Warehouse has benefited from a lack of supply of quality warehousing space. I can’t help but think that if supply and demand were to converge, Warehouse could see performance and dividends fall.

Stock #2

The next stock is Regional REIT (LSE:RGL). It focuses its operations on commercial properties such as office buildings and industrial spaces located outside the M25 motorway.

So what’s happening with its shares currently? They’re trading for 70p as I write. This time last year, the stock was trading for 83p, so that’s a 15% decline over a 12-month period. A number of my passive income stocks have pulled back in recent months due to macroeconomic headwinds, as well as the tragic events in Ukraine.

The bull case for Regional shares comes with the dividend yield at an enticing 9.5%. This is higher than the FTSE 100 average of 3%-4%. And the shares look even better value for money due to the price pulling back. They currently trade on a price-to-earnings ratio of 10.

Finally, Regional also has a consistent track record of performance. I can see it has recorded consistent revenue and profit in the past four years.

So to the bear aspects of Regional shares. I believe the biggest issue it could face is soaring inflation resulting in higher costs for businesses that rent its buildings. Could these costs spiral to a point where businesses close or struggle to pay their rent? If so, performance and any passive income I hope to make could be affected.

Despite any negatives, I purchased shares in both companies to buy and hold for the long term. I believe they’ll provide consistent and lucrative returns for my holdings.

The post 2 stocks I own to boost my passive income with dividends! appeared first on The Twelfth Magpie.

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Jabran Khan has positions in Regional REIT Limited and Warehouse REIT. The Motley Fool UK has recommended Warehouse REIT. 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.

One of my primary aims when buying shares for my holdings is to boost my passive income stream. I’m currently considering adding Triple Point Social Housing REIT (LSE:SOHO) to my holdings. Should I buy or avoid the shares?

Social housing REIT

As a quick introduction, Triple operates as a real estate investment trust (REIT). This means it invests in, and yields income from, operating property — social housing projects, specifically. It focuses on supported living housing for vulnerable people with complex care needs. As a REIT, it must return 90% of profits to shareholders in the form of dividends. This is what makes it attractive to me as a potential stock to boost my passive income stream.

So what’s happening with Triple shares currently? Well, as I write, they’re trading for 84p, making it a penny share. At this time last year, the stock was trading for 97p, which is a 13% decline over a 12-month period.

A passive income stock with risks

I believe that Triple’s performance and investment viability could come under threat due to the impending care reforms in the UK. The reforms coming in next year could put a cap on social housing amounts for adults in need, which could negatively affect Triple’s demand and the amount of money it could make. In turn, this could affect the return to shareholders. Furthermore, as a result of the current economic climate, the government is looking to cut costs across the board. Social housing budgets could be slashed, which would also affect firms like Triple.

Finally, as with any dividend stock, I must remember that dividends are never guaranteed. They can be cancelled at the discretion of the business at any time. This can particularly occur during times of economic volatility, like now, to conserve cash.

The bull case and what I’m doing now

So let’s take a look at some positives. Firstly, I can see that Triple’s dividend yield currently stands at 6.3%. This is higher than the FTSE 100 and FTSE 250 averages of 3%-4% and 1.9%, respectively. I am also buoyed by the fact that it has paid all dividends since the company formed in 2017. In addition to this, the shares look decent value for money right now on a price-to-earnings ratio of just 11.

Next, I can see Triple has a good track record of performance. I do understand that past performance is no guarantee of the future. However, looking back, I can see it has increased revenue for the past four years in a row. This will have supported its consistent dividend for this period. Furthermore, its most recent trading update was positive. This was a full-year report for the year ended 31 March 2022. It reported that revenue, rental income, profit, and dividend all increased compared to 2021.

Finally, I believe Triple could benefit from surging demand for homes, including social housing, in the UK. Demand is outstripping supply currently. Triple could leverage this demand to boost performance as well as returns moving forward.

To summarise, based on the positives noted above, I believe Triple Point Social Housing REIT could be a great stock to boost my passive income stream. I already own a number of REITs as part of my holdings and would happily add Triple shares to this too.

The post Should I buy this REIT to boost my passive income with its 6%+ yield? appeared first on The Twelfth Magpie.

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Jabran Khan 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.