7 days left! 2 REITS I’m thinking of buying before the ISA deadline

I think these REITs could be great ways to make long-term passive income. Here’s why I’m thinking hard about adding them to my ISA today.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Individuals buying UK shares in a Stocks and Shares ISA have just seven days to use up this year’s allowance. I myself am searching for the best real estate investment trusts (or REITs) to buy before the clock runs out.

I don’t have to actually buy stocks before the 5 April deadline. Just putting money inside this tax wrapper to use at a later date is enough to make use of my £20,000 allowance.

But I don’t feel the need to wait. There are many top London Stock Exchange-listed REITs that look too cheap to miss following recent stock market volatility.

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

2 REITs on my radar

I think REITs in particular are a great way for me to make an extra passive income. In exchange for certain tax advantages, these companies have to pay at least 90% of annual profits from their rental operations by way of dividends.

With this in mind here are two top REITs I’m considering buying today.

The PRS REIT

Paying the rent or the mortgage is one of the few things people must keep paying for even during downturns. This makes The PRS REIT (LSE:PRSR) a dependable dividend payer at all points of the economic cycle.

In fact the outlook for this particular share is improving even as the British economy struggles. That’s because of a growing supply and demand imbalance that’s pushing residential rents rapidly higher.

The number of available residential rental properties has slumped by a third in just 18 months, Zoopla recently told the BBC. This in turn pushed rents for new tenants up by a hefty 11%.

Rents look set to keep climbing as well, as housebuilding activity fails to keep pace with population growth.

The PRS REIT is already capitalising effectively on these favourable market conditions. Net rental income and adjusted earnings rose 20% and 31% respectively in the six months to December.

This UK share carries a meaty 5.2% dividend yield today. I’d buy it even though any changes to rental regulations could hit profits later down the line.

Ediston Property Investment Company

Investing in retail-related shares like Ediston Property Investment Company (LSE:EPIC) carries higher risk than normal. This retail park owner might struggle to collect rents as consumer spending power sinks.

According to Kantar Worldpanel, grocery price inflation hit record highs of 17.5% in the four weeks to 19 March. This equates to £837 less in householders’ pockets each year which, in turn, is smacking shopper demand for non-essential items.

Yet despite this I’m still considering buying Ediston shares for my portfolio. I’m expecting profits here to surge over the next decade as retailers prioritise expansion into retail parks. The rise of click-and-collect, allied with a wider choice of goods and ease of access by car, mean this UK property segment should continue growing rapidly.

I’m also attracted to Ediston due to its huge 7.8% forward dividend yield. In fact I think the business could be a great buy for market-beating, long-term passive income.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild 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.

More on Investing Articles

Investing Articles

Up 26%, can the BT share price really push higher still?

The BT share price has surged on several catalysts in 2024, but there’s evidence to suggest that the stock could…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

What are the best dividend shares to buy right now?

As shares in B&M European Value Retail have fallen, the dividend yield has reached a 10-year high. Should investors be…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »

Investing Articles

The latest growth forecasts suggest the Glencore share price will hit 555p!

Harvey Jones has been disappointed by the performance of the Glencore share price since he bought the commodity stock last…

Read more »

Dividend Shares

A closer look at the 11% dividend yield forecast for Phoenix Group shares

Phoenix Group shares have one of the highest dividend yields in the FTSE 100 index today. Could this be a…

Read more »

Investing Articles

If I’d put £25,000 into the FTSE 350 at the start of 2024, here’s how much I’d have today!

Many FTSE shares have rebounded this year as interest rates look set to keep heading lower and market appetite for…

Read more »

Investing Articles

Up 40%, but experts forecast the easyJet share price could soon hit 664p! Time to buy?

The easyJet share price has been flying lately and stock analysts are predicting more fun to come. But there's only…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Worried about tax raids? Here’s how I’m targeting a £44,526 passive income with shares

Investing in a Self-Invested Personal Pension (SIPP) or Individual Savings Account (ISA) can supercharge one's passive income, says Royston Wild.

Read more »