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Dividend stocks come in many shapes and sizes. Some traditional areas for equity investors are real estate and financials. However, there are some more unusual stocks that may offer me a very interesting buying opportunity right now. Below are two high-yield options I am considering.
The moment of the light bulb
First there is the SDCL Energy Efficiency Revenue Trust (LSE:SEIT). The trust does what it promises, namely it invests in energy efficiency infrastructure projects. It makes money from these projects as they usually involve contracts with governments or private sector users. In addition, some agreements allow the trust to make money from the sale of electricity or other energy generated.
Over the past year, the stock has fallen by 17%. This has helped push the dividend yield up to 10.23%, making it an attractive company for income hunters.
One of the reasons the share price has fallen over this period is due to a pre-tax loss of £56m for 2024. Although this included £118m of unrealised losses due to “increases the discount rate”remains a success. The president commented on the continuation “market uncertainty”, which constitutes a risk for the future.
However, I am not overly concerned about the dividend being significantly reduced. The dividend declared in March is fully covered by cash. The 6.24 pence per share is an increase from the 6 pence paid the previous year. So it is clear that increasing the dividend is a priority for the company.
Let us also not forget that the transition to cleaner energy is a key long-term issue.
Asset-backed dividends
Another idea is the GCP Asset-Backed Income Fund (LSE:GABI). The stock is up 33% over the past year, but still has an impressive dividend yield of 8.11%.
The fund differs from many others because it only invests in income-generating products that are either asset-backed or have contracting cash flows. In this way, it seeks to reduce the risk of income suddenly being cut or of being left with something that has no value.
The company currently has 32 holdings in its portfolio, including care homes, football-related asset finance and student accommodation. This diversified portfolio is quite unique and should allow cash to continue to flow in the future.
One risk is that even though investments are asset-backed, they may not be liquid. For example, it could take some time to sell a nursing home and get the cash in the event of default.
I like both ideas, and it shows that I can sometimes find gems when I get off the beaten path outside of the FTSE 100 IndexWhen I have more free cash, I will look to purchase both for my income portfolio.
