Most people have heard of buy-to-let properties. Others have come across the concept of ‘buy and hold’, referring to the lack of desire to sell an asset over time. Yet ‘buy and forget’ is a new one in my books! This suggests the notion of buying something and forgetting about it due to it being able to take care of itself. So when thinking about dividend stocks, are there options out there that I can buy and forget?
Keeping it simple
As a disclaimer, it’s never wise to completely forget about an investment. But as far as putting it to the back of one’s mind, I do think there are some shares that look appealing right now.
The first one is British Land (LSE:BLND). The UK real-estate investment trust (REIT) has £12.7bn worth of assets under management. This includes a broad mix of residential, retail and corporate locations spread around the country.
Over the past year, the stock is up 8%, with a dividend yield of 5.77%. This is higher than the FTSE 250 average yield of 3.25%.
I think this could be a buy-and-forget investment because, as a REIT, it has to pay out a certain threshold of income to benefit from perks exclusive to real estate investment trusts. Therefore, as long as the firm is making money, I’m very confident that some form of dividends will get paid.
The business model of leasing out sites has proven profitability over several decades. British Land isn’t doing anything radical or risky here. Again, that gives me confidence that the business can continue to perform for the long term.
Of course, a risk is that a prolonged downturn in the UK economy could force defaults from tenants. This could be both residential and retail.
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A household staple
Next up on my watchlist is Reckitt (LSE:RCK). The group owns some of the world’s most loved and hygiene, health and nutrition brands.
The stock is down 29% over the past year, although most of this drop has come recently due to two main problems. One was the bad press and compensation paid out to a mother, whose baby died due to taking Enfamil baby formula. This is clearly not a good look for the company. The second was slightly disappointing sales for Q4, with volumes down 7%.
I think the share price has overreacted and see this as a good opportunity to buy the dip. The dividend yield is 4.19%, with a dividend being paid constantly over the past two decades. This track record impresses me.
Looking forward, even with the recent volatility I think it’s a low-risk stock. The brands owned are everyday essentials for many people. This should help to create steady demand. Sure, volumes can rise and fall each quarter. But fundamentally, the business shouldn’t materially struggle to the extent that the dividend should be under threat.
I like both ideas for my long-term portfolio and am thinking about adding them in shortly.
