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As a committed fool, I try to only buy stocks that I would like to own for years. Still, I can't deny the allure of snapping them up just before they go ex-dividend and getting some passive income from the liquidation.
Here are three that I am currently thinking of adding to my portfolio in the near future.
On my (income) radar.
An increasingly unstable Middle East and the ongoing, terrifying conflict between Ukraine and Russia have led to the passive income powerhouse's purple profits. BAE Systems (LSE: BAE). He looked in innocence from an investment perspective, this should mean that the company will have no problem continuing to distribute dividends to shareholders.
Of course, nothing is guaranteed. Defense spending may be lumpy at first. BAE shares also trade at 19 times earnings. That's well above its five-year average.
On the other hand, the FTSE 100 The beast has the kind of revenue record that would turn most companies (and their investors) green with envy. We are talking about benefits that increase year after year for decades. I don't see that trend going away anytime soon.
This stock will be ex-dividend on October 24th. Therefore, I will have to make a decision soon if I want to accept the interim payment of 12.4p per share.
Chunky assignments
Another dividend is the homewares retailer Dunelm (LSE: DNLM).
Despite the cost of living crisis, shares in the Leicester-based business have risen by 16% in the past 12 months. That is almost identical to what was found by FTSE 250 overall index. But I wonder if the former is likely to pass here if interest rates continue to fall and consumer confidence improves.
Buying a piece of this company before Halloween would entitle me to a final dividend of 27.5p per share. Going forward, analysts have already penciled in a 15% jump in earnings for FY25, assuming their earnings projections are correct. If this happens, that would mean a dividend yield of 5.7% using today's price.
I find it best to treat predictions with a smidgen of salt. Inflation can easily disrupt this momentum.
Fortunately, the trading update is scheduled for 17 October. I will give this a read before making any moves.
Back on track?
A final candidate is a real-estate investment trust (REIT). Tritax Big Box (LSE: BBOX).
With big-name clients including Amazon, Tescoand – yes – Dunelm, it is not surprising that this company became very popular with investors over the pandemic as the demand for space for goods increased.
Unfortunately (but inevitably), the good times couldn't last. As interest rates were raised to deal with inflation, anything related to property was dropped from most policies.
Tritax shares have now been trading between 165p and 125p for almost two years. Still, at least investors are enjoying some payback for now. Also, a gradual decline in rates may provide a welcome boost to prices and income.
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Speaking of which, this stock is also ex-dividend on October 31 (1.825p per share). Analysts currently have the company yielding just over 5% in FY24, rising to 5.3% in 2025.
Given that I already have some exposure to the property in my portfolio, I will do some more digging over the next few weeks before I decide whether to buy here.
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