Boxing clever

Investor appetite for Tritax Eurobox (LSE:EBOX) shares has spiked as expectations of interest rate cuts have risen. Many commentators now believe that rate reductions from the European Central Bank could come as soon as Q1.

This would give net asset values (NAVs) at Europe-focused property stocks like this a big boost. It may also bolster demand for the real estate investment trust’s (REIT) properties.

On the downside, economic conditions in Continental Europe remain extremely challenging. Latest Ifo Institute data showed business sentiment in Germany weakened further in December, raising fears of a regional recession still further.

Yet a huge supply/demand imbalance in the warehouse and logistics property market could still support solid trading at the investment trust. City analysts agree — they expect annual earnings to edge 3% higher this financial year (to September 2024).

Rents are still heading higher as the supply of new properties continues to lag demand growth. Weighted average prime rental growth in Europe stood at a healthy 10.8% during Q3, according to real estate services company Jones Lang LaSalle.

This was down from 15.6% in 2022 but still way above the 5.9% five-year average. A vacancy rate of just 4.3% in Q3 further underlines the size of the supply crunch in Europe.

Demand for large scale logistics assets is underpinned by strong structural drivers as customers look to fulfil their e-commerce sales, secure economies of scale and efficiencies and add resilience to their supply chains.

Tritax Eurobox

This robust backdrop means that dividends at Tritax Eurobox are tipped to remain at 5 euro cents per share. This translates to a healthy 7.1% forward yield.

REITs like this are required to pay at least 90% of annual rental profits out in the form of dividends. This bodes well for shareholder payouts beyond the short-term, too: as demand rapidly increases so should shareholder payouts.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Another European heavyweight

I’m also considering adding shares of abrdn European Logistics Income (LSE:ASLI) to capitalise on this part of the property sector.

Like Tritax Eurobox, its operational footprint stretches far and wide. Its presence in multiple countries reduces risk and provides exposure to fast-growing Eastern European territories.

In fact, both companies own assets in some of the same countries including Germany, Poland, Belgium and The Nethelands. abrdn European Logistics’ geographic coverage can be seen below.

This investment trust could be an even-better selection for passive income than Tritax Eurobox. This is because of its superior dividend yield of 8.2% for 2024.

Companies like this aren’t just vulnerable during tough economic periods. Changes to property planning rules can significantly impact their construction goals. Earnings can also be impacted by other building-related issues like cost overruns and project delays.

But on balance, I still think both stocks are top buys for passive income in 2024 as well as over the long term.

The post 7%+ dividend yields! 2 top UK dividend shares I’d buy for long-term passive income appeared first on The Twelfth Magpie.

I think they could be great sources of long-term passive income.

St James’s Place

People are more active than ever before when it comes to financial planning. Years of poor returns from traditional savings products means demand for investment managers like St James’s Place (LSE: STJ) is rising strongly.

Growing fears over the future of the State Pension are also encouraging people to become savvier with their money. St James’s Place says there are 12m potential customers in the UK, around half of whom are yet to seek advice. This provides a huge amount of business for it to win.

Of course the business operates in a highly competitive marketplace. But it’s steadily expanding to exploit its huge market opportunity. It had 4,626 advisers on its books as of last June, an increase of 70 from the start of the year.

Today it offers a healthy 4.8% dividend yield. The business had a strong record of annual payout growth leading up to the pandemic. And City brokers expect dividends to increase strongly this year and next as profits continue improving.

abrdn European Logistics Income

As the chart below shows, e-commerce is tipped to grow strongly in Europe over the short-to-medium term. So I’m considering buying abrdn European Logistics Income (LSE: ASLI) shares for my portfolio.

This investment trust owns a growing portfolio of warehouses and distribution hubs in mainland Europe. Such assets play a crucial role in getting products from manufacturer and retailer to the consumer. Yet supply is failing to keep up with demand, meaning rents continue to rise strongly.

High construction costs could impact the company’s bottom line in the nearer term. But on balance I think property shares like this are great ways to protect oneself against inflationary pressures. This is because operators can effectively raise rents to pass on rising operating costs.

The forward dividend yield at abrdn European Logistics Income sits at 6.2%.

Vodafone Group

Huge uncertainty surrounds Vodafone Group (LSE: VOD) following chief executive Nick Read’s decision to step down. There will be no shortage of experienced candidates for the job. But a likely change in direction always creates risks for investors.

Despite this, I still believe the FTSE 100 firm is an attractive stock to own. As the world becomes more digital, telecoms companies have an increasingly important role to play in our day-to-day lives. This could lay the groundwork for strong long-term earnings growth.

I like Vodafone specifically because of its operations that straddle Europe and Africa. This gives it exposure to both stable/mature and fast-growing markets. I’m also excited by the huge investment the company is making in 5G and ultrafast broadband, two white hot growth areas.

The telecoms firm carries a huge 10.1% forward dividend yield today. I think it’s a great share to help me boost my passive income.

The post 2 FTSE 100 stocks and 1 investment trust I’d buy for passive income! appeared first on The Twelfth Magpie.

Regional REIT

Property stocks like Regional REIT (LSE:RGL) can be great investments to own during economic downturns. Their dependable rental incomes can allow them to provide better dividends than those offered by the broader market.

Buying real estate investment trusts (REITs) can be a particularly good idea for passive income too. This is because such stocks are required to pay out at least 90% of annual profits in the form of dividends.

This means, for example, that Regional REIT carries a huge 11.3% dividend yield for 2023.

Yet despite this, I’d much rather buy other REITs for my own shares portfolio. This is because of the stock’s overwhelming focus on the office sector.

I’m concerned about the prospects of long-term dividend growth here as the UK economy struggles. Post-Brexit troubles and major structural issues (like low business investment and weak productivity) are huge threats over the next decade.

On top of this, I think demand for Regional REIT’s properties could slip as remote and hybrid working practices become ever more popular. A whopping 22% of all British workers operated from home at least once a week in September, latest government data shows.

The company’s focus on regional centres could help it perform more resiliently than other office space providers. Investment outside London is tipped to improve strongly over the next decade. But, on balance, I think there are more attractive investment trusts for me to buy today.

abrdn European Logistics Income

The growth of working from home is a possible threat to Regional REIT then. But I think it provides abrdn European Logistics Income (LSE:ASLI) investors with a chance to turbocharge their returns.

As its name implies, this investment trust is focused on logistics and warehouse assets on the continent. In total, it owns 27 assets across Germany, France, Spain, The Netherlands and Poland.

Buildings like these play a critical role in allowing companies to get their products to customers. Demand for such distribution hubs is set to grow strongly as e-commerce goes from strength to strength.

At the same time, the construction pipeline for these assets remains weak. This means the rents the trust can charge its tenants could keep rising strongly for years to come.

I also like abrdn European Logistics Income because of its wide geographic footprint. This reduces its dependency on strong economic conditions in one or two territories. It also gives the trust exposure to fast-growing Eastern Europe.

However, a lack of acquisition targets could damage its growth strategy. But at the moment the business isn’t suffering from a shortage of quality options. It snapped up three French assets and one Dutch warehouse in the three months to September alone.

I feel this property investment trust could be a good buy for me in 2023, helped by its enormous 7% dividend yield.

The post Yields of 7% and 11.3%! Should I buy these investment trusts for 2023? appeared first on The Twelfth Magpie.