Boosting my passive income stream is an important aspect of my investment strategy. Here are two stocks I currently hold positions in to do that. However, I must remember that dividends are never guaranteed.
Both of the stocks are real estate investment trusts (REITs). These are companies set up to yield income from property. I like REITs because 90% of profits must be returned to shareholders.
Stock #1
The first stock is Warehouse REIT (LSE:WHR). It specialises in purchasing, revamping, and renting warehouse space to other businesses for their e-commerce needs specifically.
So what’s happening with Warehouse shares currently? Well, as I write, they’re trading for 150p, which is the exact same amount as this time last year. I noticed that the stock has climbed 8% from 138p to current levels since July. I believe the shares climbed due to an announcement of an acquisition, a dividend declaration, as well as a new warehouse facility in Crewe.
So let’s look at what attracted me towards Warehouse shares. The shares currently still look good value for money on a price-to-earnings ratio of just under 4. And the dividend yield is close to 4.5%.
Finally, Warehouse has a good track record of performance. I’m aware that past performance is no guarantee of the future. However, looking back, I can see it has grown revenue and profit for the past four years. Performance growth underpins dividends that boost my passive income stream.
Despite my position in Warehouse shares, I must note risks that could cause issues. Firstly, Warehouse has benefited from a lack of supply of quality warehousing space. I can’t help but think that if supply and demand were to converge, Warehouse could see performance and dividends fall.
Stock #2
The next stock is Regional REIT (LSE:RGL). It focuses its operations on commercial properties such as office buildings and industrial spaces located outside the M25 motorway.
So what’s happening with its shares currently? They’re trading for 70p as I write. This time last year, the stock was trading for 83p, so that’s a 15% decline over a 12-month period. A number of my passive income stocks have pulled back in recent months due to macroeconomic headwinds, as well as the tragic events in Ukraine.
The bull case for Regional shares comes with the dividend yield at an enticing 9.5%. This is higher than the FTSE 100 average of 3%-4%. And the shares look even better value for money due to the price pulling back. They currently trade on a price-to-earnings ratio of 10.
Finally, Regional also has a consistent track record of performance. I can see it has recorded consistent revenue and profit in the past four years.
So to the bear aspects of Regional shares. I believe the biggest issue it could face is soaring inflation resulting in higher costs for businesses that rent its buildings. Could these costs spiral to a point where businesses close or struggle to pay their rent? If so, performance and any passive income I hope to make could be affected.
Despite any negatives, I purchased shares in both companies to buy and hold for the long term. I believe they’ll provide consistent and lucrative returns for my holdings.