Prioritising dividend growth stocks can be a great way for investors to generate a terrific long-term passive income. Here are two UK income shares I think merit close attention today.
Begbies Traynor Group
Buying shares in Begbies Traynor (LSE:BEG) could be a great way for share pickers to protect their wealth as the economic landscape worsens.
Unfortunately the number of corporate insolvencies in the UK is booming. Such failures leapt 57% in 2022 to a whopping 22,109. This was also the highest total since 2009.
Trading conditions will remain tough for British business as the country embarks on what could prove a long recession. So insolvency specialists like Begbies Traynor should continue to report elevated levels of demand. Revenues here jumped 12% in the six months to October.
I think the FTSE 250 firm could prove a top buy for the longer term as well. This is thanks to its aggressive acquisition strategy that has delivered a long record of robust annual earnings growth.
Begbies Traynor is the country’s biggest operator in the fields of business recovery and financial advisory. It has a market share of around 14% in terms of appointment volumes. I believe its healthy balance sheet and acquisition pipeline should allow it to keep growing its share too through additional M&A activity.
Strong liquidity also means it should continue strongly increasing the yearly dividend. It raised the full-year reward 17% to 3.5p per share in the 12 months to April 2022. City analysts predict further growth, to 3.8p and 4p, in financial 2023 and 2024 respectively.
These forecasts yield 2.7% and 3%, figures that are in-and-around the FTSE 250 forward average.
NextSolar Energy Fund
That said, investors seeking dividend growth and big yields today might prefer NextSolar Energy Fund (LSE:NESF) shares. I expect earnings here to grow strongly as demand for clean energy surges.
As its name implies, this FTSE 250 business invests in renewable energy assets. And like Begbies Traynor it has a strong track record of raising dividends, culminating in the 7.16p per share reward of last year.
City brokers expect dividends to continue moving northwards as well. Payouts of 7.52p and 8.36p per share in the financial years to March 2023 and 2024 respectively are expected. So dividend yields for the next two years sit at a juicy 6.8% and 7.6%.
NextEnergy owns around 100 assets spread across Europe, the US and Asia. This wide geographical wingspan is good for investors as it protects the group from adverse weather in one or two places. Cloudy conditions can have a significant impact on power generation.
Like any UK stock, these investments pose an element of risk to investors. Profits at NextEnergy Solar Fund could suffer if inflation in the construction industry continues to soar.
Meanwhile, Begbies Traynor might struggle to grow earnings when economic conditions pick up. But on balance, I think both shares are great buys for long-term dividend growth.
