I like the regular passive income streams I can earn by owning even a small portfolio of dividend shares. Although the income may be small, receiving a dividend each month feels good! On my list of income shares to buy now for my portfolio, here are three I like because of their long-term cash generation potential.
While dividends are never guaranteed, at the moment these three shares each pay four dividends per year, all in different months. So if I owned these three shares, I would hope to receive a dividend from one company in every month of the year.
Assura
The healthcare property operator Assura (LSE: AGR) is set to benefit from long-term demand for healthcare facilities. It builds or buys doctors’ surgeries, ambulance depots, and the like, then rents them out. Healthcare tenants can often sign long leases. I like the fact that they should typically be able to pay rent, even if there is an economic downturn that pushes up the default risk among other commercial property tenants such as retailers. One risk is rising interest rates adding costs.
Assura has increased its dividend annually in recent years and the shares yield 4.5%. The company currently pays dividends in January, April, July, and October.
Unilever
Consumer goods giant Unilever (LSE: ULVR) has been battling rising cost inflation, which threatens to eat into profits. But its portfolio of premium brands such as Domestos and Dove give it pricing power. I think that could help to offset at least some of the negative impact of inflation on profit margins.
The company’s global reach spans around 190 countries. Its presence in everyday products like soap and mayonnaise should mean enduring customer demand for the company’s brands even when the economy is weak. A phenomenal 3.4bn people use Unilever products on any given day. That is over two in five of the world’s population! The business generates substantial free cash flows that can help support its dividends.
Unilever yields 4.0% and pays out in March, June, September, and December.
British American Tobacco
Another multinational company that benefits from a premium brand portfolio is British American Tobacco (LSE: BATS). Historically the company has been a license to print money, thanks to the juicy profit margins on cigarettes.
But what of the future? A risk here is that declining cigarette sales will hurt revenues and profits. The company has mastered the art of making profits even as volumes decline in some markets, for example, by raising prices. Its range of non-cigarette products is also expected to start turning a profit in 2025. Meanwhile, the British American Tobacco dividend yield stands at 6.2%.
Dividends are paid in February, May, August, and November.
Income shares to buy now
I would happily buy all three of these shares for my portfolio. Indeed, I already own two of them.
If they continue to pay dividends on their current timetables, I could hopefully receive a dividend from one of the trio every month of the year. That could be pleasing — but it is not my main reason to consider owning these shares. More than the timing of the dividends, I like the underlying cash generation qualities of the businesses. That is what funds the dividends, after all — now and hopefully in the future, too.