I’m looking for the best dividend stocks to buy for long-term passive income. In particular, I’m keeping an eye on UK shares trading below value following recent market turmoil.
During this search I am looking for stocks that, for their current financial years, have
- A price-to-earnings (P/E) ratio below the FTSE 100 average of 14 times, either
- A price-earnings growth (PEG) multiple under the bargain watermark of one, either
- A dividend yield higher than the average of 3.8% of the FTSE index.
Here are three that I will look to purchase the next time I have extra money available to invest.
The PRS REIT
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Rising rents in the UK make The PRS REIT (LSE:PRSR) one of the best purchases at the moment. The latest data from estate agency Hamptons shows average private rentals rose 12% in the year to August, to £1,304. This is the largest annual increase on record.
Higher mortgage rates for homeowners are driving up costs for renters. But this is only part of the story. Weak housing construction activity and continued population growth have created a huge supply shortage. And market experts predict that this chronic market imbalance will continue.
Rent collection issues could become an issue as the cost of living crisis persists. However, PRS’s strong performance on this front helps calm any fears you may have. Collected 99% of all rent owed between April and June.
Today the real estate investment trust (REIT) has a strong dividend yield of 5.7%. I think this deserves serious attention from income investors.
Greencoat renewable energies
Clean energy business Greencoat renewable energies (LSE:GRP) is another great value dividend stock on my watch list. Its prospective dividend yield stands at an even better 6.3%. And its forward P/E ratio sits at an undemanding 12 times.
There are plenty of UK renewable energy stocks I can choose from today. However, this one catches my attention due to its wide geographic footprint. It owns wind and solar assets in Ireland and parts of continental Europe (including Spain and France).
The profits of companies like this can be affected when unfavorable weather conditions affect electricity generation. But Greencoat’s multi-country operations reduce the risk of this happening at group level.
Base metal mine Central Asian metals (LSE: CAML) also offers attractive value for money. Not only does it trade at a price-to-earnings ratio of 7.6 times, it also offers a powerful dividend yield of 8.2% at current prices.
This is not the only similarity it has with Greencoat Renewables. It could also be a great way for investors to benefit from the green economy thanks to its copper, lead and zinc mining operations in Kazakhstan and North Macedonia.
Demand for these commodities will skyrocket thanks to the growing demand for electric vehicles and renewable energy. However, a weak development pipeline means that a huge material shortfall could emerge in these markets, which in turn could send metal prices soaring.
Mining metals can be tremendously expensive and problematic. But overall I still believe Central Asia Metals is a great dividend stock to buy.