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Income stocks that pay regular dividends are a great way to generate a second source of income. Although dividends are never guaranteed, I believe some stocks are defensive, meaning their income and payouts are more likely to remain stable regardless of the economic outlook.
Two stocks that I think investors should consider purchasing are BBGI Global Infrastructure (LSE: BBGI) and UK Wind Greencoat (LSE: United Kingdom). This is why!
Invest in key infrastructure
BBGI is set up as an investment trust and invests in infrastructure projects in the UK, Europe, North America and Australia. Typical projects include highways, schools, fire stations, toll roads and more. The income you earn by investing in these is then distributed to investors in the form of dividends.
In my opinion, the defensive capacity of the BBGI is linked to two things. First of all, these types of projects are essential. For example, roads, schools, and other public services are essential regardless of the economic outlook. This brings me nicely to my second point. BBGI's partnerships are typically with government agencies. This is positive as it means a long-term contract as well as stable income as you partner with organizations critical to the running of core day-to-day services.
In terms of yield, BBGI's forward dividend yield of 6% is attractive. Plus, it has a healthy balance that always helps provide a security blanket.
From a bearish perspective, continued economic problems could hurt BBGI and its share price, as well as the value of its assets. On top of this, if geopolitical tensions continue, this could affect interest rates and inflation figures just as they start to decline, causing the company problems with its share price and investor sentiment.
Overall, it looks like BBGI stock could be great for boosting passive income. In my opinion, above-average performance, as well as defensive traits and a large footprint make him an interesting prospect.
Renewable energy
As the world looks for energy alternatives away from fossil fuels, wind energy production is increasing. Greencoat owns several onshore and offshore wind farms. Sells electricity to larger energy companies, including ESS and Centralto mention a couple.
The beauty of Greencoat is that it is set up as a real estate investment trust (REIT), which means it must return 90% of the profits to investors.
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With this in mind, Greencoat's investment case seems solid to me. Energy is a basic requirement for everyone, no matter what is happening in the world. Additionally, the push by world governments to move away from fossil fuels will help companies like Greencoat grow.
Currently, the stock appears to be good value for money with a price-to-earnings ratio of seven. In addition, a dividend yield of 6% is also attractive.
As for risks, planning rules are strict when it comes to new wind farm locations. This could hamper Greencoat's growth aspirations. Additionally, the company borrows money to finance new locations. In the current high-interest environment we find ourselves in, it could be more complicated and expensive to finance growth.
Overall, Greencoat is one of several renewable energy stocks that I believe will soar over the long term and also provide solid returns to investors.
