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Like a committed fool, I try to only buy stocks that I would like to own for years. Still, I can't deny the appeal of purchasing them just before the dividends expire and securing a lovely passive income from the start.
Here are three that I'm thinking about adding to my portfolio very soon.
On my (income) radar
An increasingly unstable Middle East and the terrible ongoing conflict between Ukraine and Russia have caused a rough patch in earnings for the passive income powerhouse. BAE Systems (LSE:BAE). looked purely From an investment perspective, this should mean that the company will have no problem continuing to distribute dividends to shareholders.
Of course, nothing is guaranteed. For starters, defense spending can be uneven. BAE shares also trade at 19 times forecast earnings. That's well above its five-year average.
On the other hand, the FTSE 100 The beast has the kind of revenue track record that would make most companies (and their investors) green with envy. We're talking about dividends that increase year after year for decades. I just don't see that trend ending anytime soon.
This stock goes ex-dividend on October 24. Therefore, I will have to make a decision soon if I want to receive the interim payment of 12.4 pence per share.
Big dividends
The home goods retailer will also remain ex-dividend. Dunelmo (LSE: DNLM).
Despite the cost of living crisis, shares in the Leicester-based company have risen 16% in the last 12 months. This is almost identical to what was achieved by the FTSE 250 index as a whole. But I wonder if the former might perform better from now on if interest rates continue to fall and consumer confidence improves.
Buying a share of this company before Halloween would entitle me to a final dividend of 27.5p per share. Going forward, analysts have already forecast a 15% jump in the FY25 payout, assuming their earnings projections are correct. If this were to happen, it would mean a strong dividend yield of 5.7% at the current price.
I find it best to treat forecasts with a pinch of salt. A spike in inflation could easily disrupt this momentum.
Fortunately, a commercial update is planned for October 17. I'll give this a read before making any moves.
Back on track?
A final candidate is the real estate investment trust (REIT). Tritax Large Box (LSE: BBOX).
With renowned clients including amazon, tescoand, yes, Dunelm, it was no surprise that this company became very popular with investors during the pandemic as demand for logistics space skyrocketed.
Unfortunately (but somewhat inevitable), the good times couldn't last. As interest rates rose to cope with inflation, everything related to property was eliminated from many portfolios.
Tritax shares have been trading at around 165p to 125p for around two years now. Still, at least investors have enjoyed some payouts in the meantime. Once again, gradually reducing rates could provide a welcome boost to the price and income stream.
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Speaking of which, this stock also goes ex-dividend on October 31 (1.825p per share). Analysts currently predict the company will return just over 5% for FY24, rising to 5.3% in 2025.
Since I already have exposure to properties in my portfolio, I will do some more research over the next few weeks before deciding whether to buy here.
