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I do not have unlimited reserves of capital that I can use to invest. But here are two great dividend stocks, one of which is a rising small-cap stock, which I’ll buy for my portfolio if I have money to spare.
I think they could provide a healthy second income for years to come.
Central Asian metals
Investing in mining stocks can be a wild ride. Even the best-run commodity producer can suffer profit declines when commodity prices fall. He Central Asian metals (LSE:CAML), for example, the share price plunged last summer due to pressure on industrial metal prices.
But I would still buy this mining company for my stock portfolio today. This business, which is listed on the London Stock Exchange Alternative Investment Market (AIM) — produces copper from Kazakhstan. It also owns a lead and zinc producing asset in North Macedonia.
I like this business in particular because of its impressive production history. The mining giant again beat 2022 production estimates at its Kounrad copper project after another record year. Central Asia Metals also produces metal at extremely low cost.
I think the gains here could skyrocket later this decade if a probable supply shortage arises and base metal prices rise. The chart below from Wood Mackenzie illustrates how demand for copper, for example, could be on track to exceed future production. Trends such as increased urbanization and the energy transition will drive demand for the red metal.
I also think Central Asia Metals is one of the top stocks in terms of dividend income. Today it has a dividend yield of 7%. I think this is too big to ignore.
Brickability Group
Investing in small-cap stocks can be a great idea for investors eager for growth. But many smaller UK stocks can also be great investments for passive income. This is where the manufacturer of construction products Brickability Group (LSE:BRCK) comes in.
As the name suggests, this AIM stock makes its money primarily from the sale of bricks. Sales volumes of these critical components are expected to soar as UK homebuilding activity picks up (the government targets 300,000 new homes each year).
In fact, trading on Brickability is already very impressive. Last week he announced that “continued to deliver strong performance across all of its business divisionss” and raised its earnings forecast for the year. That’s even as the housing market suffers short-term weakness from rising mortgage costs.
I also expect a strong repair, maintenance and improvement (RMI) market to underpin strong earnings growth at the company. The UK has some of the oldest houses in the world. This means that constant upgrading is required to prevent country houses from falling apart.
Now let’s look at Brickability’s dividend forecast. For the years until March 2023 and 2024, the dividend yield stands at a juicy 4.5% and 4.7%, respectively.
Brick making is an energy intensive process. Therefore, Brickability’s earnings could suffer if oil and gas prices rise again. But overall, I think this small-cap stock could be a great way to get some great dividend income.
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