I’m searching for the best UK dividend shares to boost my passive income in 2023. Could the following income stocks be too cheap to miss?
Greencoat Renewables
Demand for renewable power is set to explode over the next decade. This bodes well for Greencoat Renewables (LSE:GRP) which invests in wind and solar assets across Ireland and mainland Europe.
Renewable energy stocks that operate in the US have long been popular with investors. This is owing to the favourable tax environment designed to stimulate green energy investment.
Encouragingly for Greencoat, lawmakers in Europe are planning to increase their own subsidies too. This week, the European Commission floated initiatives to incentivise clean energy investment directly to member states.
I like Greencoat in particular because of its broad geographic footprint that stretches from Sweden to Spain. Unfavourable weather conditions can hit renewable energy production hard and, by extension, producer profits. But this wide wingspan helps to reduce the risk.
Today, the company’s shares trade on a price-to-earnings (P/E) ratio of just 8.7 times. It also carries a meaty 5.7% dividend yield at current prices. This indicates exceptional all-round value to me.
NatWest Group
The NatWest Group (LSE:NWG) share price looks ultra cheap on paper too. It changes hands on a P/E ratio of 6.7 times for 2023, while its forward dividend yield sits at 5.4%.
The FTSE 100 share’s low valuation reflects the poor outlook for the UK economy. But news has been brighter of late and the Bank of England (BoE) now predicts a “shallower” recession that will be shorter than initially expected. Such a scenario could see profits at Britain’s high street banks outperform forecasts.
That said, the outlook for NatWest and its peers remains highly uncertain. While the BoE has upgraded its forecasts, other organisations (most recently the IMF) have cut their estimates. The prospect of soaring bad loans and weak revenues remains a big possibility.
Further interest rate rises will provide an added boost to retail banks. But, to my mind, the perilous economic environment — added to the increasing competitive pressures it faces — makes NatWest an unattractive dividend stock to buy.
Persimmon
I’d be happier to purchase more shares in Persimmon (LSE:PSN) today. This is because I believe growing long-term demand for newbuild homes will drive the company’s profits steadily higher.
I’m also attracted by its solid all-round value. The FTSE 100 housebuilder carries a vast 6.8% dividend yield for 2023 and trades on a forward P/E ratio of 11.2 times.
But I’m not prepared to increase my stake in Persimmon just yet. Certainly not while news concerning the domestic housing market continues to shock.
Latest data from property listings business Zoopla showed enquiries from potential homebuyers tanked 50% during the final three months of 2022. Conditions could remain tough too as interest rates rise further and the cost-of-living crisis endures. And this could impact the level of dividends of Persimmon and its peers in the short-to-medium term.
I’ll be looking for opportunities to increase my stake in Persimmon. But, right now, I’d rather buy other dividend shares to boost my passive income in 2023.
