At the start of each month, most people get paid, myself included. Therefore, it represents a cash injection that usually allows me to look to buy some stocks for my portfolio. As well as trying to find good growth shares, passive income options are also high on my list.
Here are two for the new month I like.
The future’s green
The first stock is Greencoat UK Wind (LSE:UKW). The company shot to popularity during the early stages of the pandemic, as renewable energy became a hot sector that investors focused on.
Greencoat’s a leading listed renewable infrastructure fund, investing and operating UK wind farms. The share price should trade closely to the net asset value (NAV) of the renewable assets that it owns. However, the share price has fallen by 9% over the past year. This has caused a disconnect to the NAV. As of the last update, it was a 13% discount.
Partly due to the share price tumble, the dividend yield’s jumped to 7.63%. This makes it enticing to me for a couple of reasons. Obviously, the high passive income is one of them. Yet the other is based on the opinion that the stock will eventually recover. Renewable energy’s the future, so I’m not really concerned about the short-term price movement.
A risk is the continued high interest rates here in the UK. This makes it more expensive for Greencoat to raise new capital to purchase assets. However, this risk should be easing, as I expect the first UK interest rate cut to come at the end of this summer.
Bank on banking
Another option I like is TBC Bank Group (LSE:TBCG). The Georgian bank’s performed well over the past few years, capitalising on a push to digital banking along with the strong economic recovery of the country.
The stock’s risen by almost 7% over the past year but, impressively, the dividend yield has also been rising. Usually if the share price rallies, the dividend yield falls, given how the calculation works. Yet the yield now sits at 7.96%, thanks in part to the recent dividend declared from the 2023 results.
The profit from last year rose by 13.6%, meaning it has ample funds to pay out to shareholders. Looking forward, I think the bank’s well placed to continue to pay out funds, meaning that I don’t see the income as under threat.
Granted, the 36% increase in total credit loss allowances and the 24.2% rise in operating expenses from last year don’t make for pretty reading. I’ll need to keep a watch on the credit losses to ensure this doesn’t become a larger problem.
Putting it all together, I’m seriously thinking about adding both stocks to my portfolio for dividends going forward.
