These income-paying shares could prove excellent buys as 2023 draws to a close. Here’s why I’m thinking of adding them to my own portfolio next month.
Pan African Resources
Buying shares in gold miners can be frustrating business. Metal prices can plummet at the drop of a hat, pulling profits lower and proving catastrophic for share prices and potential dividends.
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But I think things are looking really good for Pan African Resources (LSE:PAF). Gold prices have just struck six-month peaks above $2,015 per ounce. And with the key $2,000 marker taken out, a march to new record highs could be around the corner.
It’s possible that a new landmark could be hit by the end of the year, too. Expectations that central banks could slash interest rates in 2024 to support the weak economy are growing. The US dollar is also tumbling, which makes it cheaper to buy greenback-denominated assets like bullion. And tensions in the Middle East remain high.
As a value investor, I find Pan African Resources shares especially attractive. The stock trades on a forward price-to-earnings (P/E) ratio of just 5.9 times. The miner also carries a healthy 3.5% dividend yield.
Dividends can never be guaranteed. But healthy dividend coverage of 4.8 times suggests this AIM firm is in good shape to pay that predicted dividend. Remember that buying physical gold or a derivative like a gold futures contract pays no income at all.
Tritax Big Box
Purchasing shares in some classic property shares could be another good idea. Tritax Big Box (LSE:BBOX) — a share I already own in my portfolio — is one such stock I’m looking to buy soon.
Hopes of rate cuts from the Bank of England over the spring have helped this FTSE 250 company rise 27% in value in the last month. Yet at current prices the real estate investment trust (REIT) looks pretty cheap.
Tritax trades on a forward P/E ratio of 19.1 times, well below its historical average. And it carries a chunky 4.7% dividend yield for this financial year. Such a huge yield reflects rules that state REITs must pay at least 90% of annual profits out in the form of dividends.
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It’s just speculation that interest rates will drop soon, of course. And signs to the contrary could prompt Tritax’s share price to fall again.
But I believe it could still be a great safe-haven to buy in December. Its tenants are tied down on multi-year contracts, meaning that rental income should keep flooding in even if the UK economy struggles in 2024, as many expect. The weighted average unexpired lease term (WAULT) for its storage and distribution assets stood at 12.1 years as of June.
This is a share I plan to hold for the long term. As e-commerce grows, demand for its big box assets should also continue marching higher.
