Real estate investment trust

Ediston is a real estate investment trust (REIT) that aims to provide shareholders consistent and lucrative returns through investing in commercial property. It targets three main commercial property sectors, which are offices, retail including warehouses, and industrial property.

As a REIT, Ediston must return 90% of profits to shareholders as dividends. I already own a number of REITs as part of my portfolio.

So what’s happening with Ediston shares currently? Well, as I write, they’re trading for 76p. At this time last year, the stock was trading for 68p, which equates to an 11% return over a 12-month period.

A dividend stock with risks

One of the biggest issues that any REIT faces is that of rent collection and vacancy in times of economic volatility. Current macroeconomic challenges, such as soaring inflation, rising costs, and a supply chain crisis are causing problems. A cost-of-living crisis has emerged. This could hurt Ediston as consumer spending could fall and occupancy levels in its properties could fall too.

Ediston has a lot of properties in retail, and a focus on retail parks, which could be negatively affected by the issues noted above. Performance and dividends could be affected by any downturn in rent collection and occupancy.

Next, as with any dividend stock, it is worth noting that dividends are never guaranteed. I know that dividends can be cancelled at any time at the discretion of the business. Typical reasons for this include economic volatility, a financial crash, or a pandemic like in 2020. Cancelling dividends allows businesses to conserve cash.

Why I’m buying the shares

So to the positives then. The first thing I look for when investing in any dividend stock is that of the dividend yield. Ediston’s yield is currently just under 7%, which is enticing. To provide some context, the FTSE 100 average is 3%-4%.

Next, Ediston shares look excellent value for money to me right now on a price-to-earnings ratio of just four.

Alongside these bullish aspects, I like the look of Ediston’s performance track record. For any dividend stock to provide stable returns, performance must be consistent. I am aware that past performance is not a guarantee of the future, however. I can see Ediston has recorded consistent revenue and gross profit for the past four years.

Finally, Ediston’s focus on retail properties could yield great returns for many years to come. I found that this specific property segment is tipped for growth. This is due to the e-commerce boom and rising demand for convenient click-and-collect options.

I believe Ediston could be an excellent dividend stock to boost my passive income stream. The shares look dirt-cheap, the dividend yield is great, and the business is focusing on a potentially lucrative segment for future growth too. I will be buying Ediston shares for my holdings.

Buy-to-let is still a good way that investors can capitalise on soaring residential property prices. But declining tax relief, increasing day-to-day costs, and rising regulatory requirements have all made this form of property investment less attractive.

New rules introduced in recent years mean that landlords have to work much harder to make a decent buck too

Profits halve

The pressure on buy-to-let investors is rising particularly badly as mortgage rates soar. In fact data from Hamptons has revealed a shocking fall in landlords’ profits due to these increased costs alone.

The average landlord paying a higher rate of tax has seen their profits more than halve year on year in the 12 months to June, the estate agent said.

And it warned that the average second property owner could even endure losses if the Bank of England raises interest rates to 2.5%. The benchmark rate was lifted to 1.75% last week to curb soaring inflation.

REIT benefits

I think a better way to get exposure to Britain’s property sector is to invest in real estate investment trusts (REITs). In particular, I think they’re a great way to generate long-term passive income.

To be classified as a REIT a property company must pay a minimum of 90% of their profits to shareholders. This leaves no room for the board to back out of paying a dividend. If the firm is profitable it must make dividend payments to its investors. And this can give an investor a reliable passive income.

There are other big benefits of buying shares in a REIT, such as:

• They’re a tax-efficient way to invest in property.
• They give investors exposure to sectors they wouldn’t usually have (like shopping malls and healthcare centres).
• REITs attract large amounts of international capital that can be used to boost growth.
• They usually have long-term lease contracts that provide supreme earnings visibility.

2 top REITs I’m watching

There are plenty of top REITs I’m considering buying for my own portfolio. Take Primary Health Properties, for instance, a UK share that boasts a healthy 4.5% dividend yield.

This property stock invests in primary healthcare facilities like GP surgeries and larger multi-use medical centres. Demand for these sorts of new properties is booming due to the crumbling condition of existing facilities. And I expect them to keep rising as Britain’s population ages and the nation’s healthcare needs consequently rise.

I’d buy Property Health Properties even though it faces intensifying competition for acquisitions. And I’d snap up Ediston Property Investment Company too, a stock with a mighty 6.4% dividend yield.

This REIT specialises in operating retail parks. It’s a property segment that’s tipped for strong growth due to its convenience, growing choice of stores and as  e-commerce boosts demand for ‘click and collect’ services. I’d buy Ediston despite the short-term threat of rising store vacancies as consumer spending weakens.  

#1: Central Asia Metals

I’ve recently tipped penny stock Steppe Cement as a top stock to buy because of its pivotal role in Kazakhstan’s urbanisation programme. Demand for the building material is likely to surge as construction in towns and cities picks up. For the same reason I’d buy Central Asia Metals (LSE: CAML), too, a copper miner in the transcontinental country.

Thanks to its high conductivity, malleability and resistance to disintegration copper is a popular material in the construction industry. And Central Asia Metals pulls this red metal from its Kounrad project in Kazakhstan, putting the business on the doorstep of this urban revolution.

Riding the electric vehicle craze

I also like Central Asia Metals because it’s a great way to play another twenty-first-century phenomenon: the electric vehicle (EV) boom. Copper demand is exploding as adoption of these low-emissions vehicles takes off. But this is not the only way Central Asia Metals is exploting the EV market. It can expect the zinc and lead it pulls from the Sosa mine in North Macedonia to soar as well. These materials are essential in the manufacture of car batteries.

Central Asia Metals is packed with potential, then. However, it’s also not without risks and any production problems at its Asian and European operations could hit profits hard. It’s also worth noting that political instability has risen in Kazakhstan in recent months and could ignite again at any moment.

Disruption to Central Asia Metals’ operations could follow, whilst fresh turbulence could hit construction activity in the country too and consequently demand for the miner’s metal. That being said, as things stand right now I think the rewards of owning this stock outweigh the risks.

#2: Ediston Property Investment Company

Inflation is heading through the roof and is something I as a share investor need to be prepared for. The tragic war in Ukraine has supercharged already-elevated levels of inflation in the UK as supply chain issues have worsened. The stalemate in Eastern Europe has raised the prospect that extreme price rises could persist too.

Reflecting this chilly outlook the Bank of England now warns that inflation here could beat its prior forecast of 7.25% by “several percentage points”. So I’m considering adding Ediston Property Investment Company (LSE: EPIC) to my portfolio. Property stocks have long proven to be a great hedge against inflation as the rents they charge tend to rise in line with broader prices.

Playing the retail revolution

I wouldn’t just buy this penny stock to protect me from the ravages of inflation, though. I think it’s a great way to capitalise on the changing way that we do our shopping in the post-pandemic age. You see Ediston operates retail parks up and down the country. The large shopping units these are home to are becoming increasingly popular as people prefer spacious shopping outlets over cramped high streets.

Retail parks also play a critical role in the online shopping industry, a quality that Savills says is attracting brands to consider their expansion in these retail destinations. The estate agency says that

“[these] large and comparatively low-rented units, combined with good car parking provision and accessibility means that retail park assets are suitable for servicing click-and-collect orders, customer returns and home deliveries.” Savills adds that this means shopping parks are essentially “functioning as last-mile fulfilment centres.”

A dirt-cheap penny stock

The Ediston share price has slumped despite that aforementioned boost that inflation will provide to its rent rolls. This fall is due primarily to fears that the cost of living crisis could hit its tenants hard, in turn prompting requests for rent reductions and resulting in empty lots as retailers go bust.

However, I think the scale of recent selling is over the top. At 78p per share the property giant is trading at an 11% discount from January’s two-year closing highs. I think this represents a juicy dip buying opportunity for me.

#3: Springfield Properties

A stream of positive trading updates have continued to flow in from Britain’s listed housebuilders. A number of encouraging home price reports have also flowed in, suggesting that Britain’s housing market remains rock solid since the turn of 2022. This makes me believe that ‘nearly’ penny stock Springfield Properties (LSE: SPR) remains an attractive buy.

In fact Scottish housebuilder Springfield (which trades at 146p) may be one of the savviest ways to play the housing market. This is because residential property prices north of the border are rising particularly quickly. Latest HM Land Registry data showed average prices in Scotland rise 11.2% year-on-year in December. That’s around half a percentage point higher than the UK average.

Record order books

The strength of market conditions can be seen in Springfield Properties’ private housing order book. This rose to record levels at the end of 2021.

The business is taking aggressive steps to capitalise on the favourable marketplace, too, and it recently entered the thriving private rented sector. Furthermore, Springfield also remains committed to expansion through acquisitions and in recent months snapped up Highlands-focussed developer Tulloch Homes for £56.4m.

I think the main danger facing housebuilders is that of raw materials shortages. It’s a problem that could send costs through the roof and even disrupt its construction plans. However, as of right now house price inflation continues to outpace the rate at which building product prices are increasing. And whilst I can’t be sure, I expect this to remain the case long into the future. So I’d happily buy Springfield Properties for my portfolio this April.

That said, I think the long-term outlook for Ediston is highly attractive. And I’d use a 13% decline in its share price during the past month as a chance to buy it at a discount.

This property stock specialises in operating shopping parks, a part of the retail market which is performing strongly as e-commerce takes off. More specifically, Ediston’s properties have enough warehouse space and surrounding land to enable the business to ride soaring demand for ‘click & collect’ services from online shoppers.

Ediston’s share price is, despite heavy weakness more recently, up 12% over the past year. I expect the business to start to head higher again sooner rather than later.

Too cheap to miss?

Motor retailer Pendragon (LSE: PDH) could also suffer if shopper budgets continue to fall. It also faces some near-term peril as supply chain problems hit auto production and the prospect of stock shortages loom.

However, following recent share price weakness — Pendragon has just fallen to its cheapest since December — I think this penny stock could be too cheap for me to miss. Today, Pendragon trades on a rock-bottom price-to-earnings (P/E) ratio of just 6.8 times for 2022.

As a long-term investor, I think the car retailer has plenty of appeal. And I think it’s a great way to exploit rocketing demand for electric vehicles (EVs) in particular. Latest Society of Motor Manufacturers and Traders data shows sales of battery and hybrid vehicles leap 92.5% year-on-year in January. It’s a trend I expect to continue as fears over the climate crisis steadily increase.

Pendragon’s share price is up 46% during the past 12 months. I expect more robust increases over the long term as well.

Another top penny stock for the EV boom

I’d also snap up Phoenix Copper (LSE: PXC) shares to ride the EV revolution.

The red metal is a critical component in these low-emission vehicles, due its high connectivity. This is why analysts at ING Bank think copper loadings in cars and buses will likely leap to 3.2m tonnes a year from 440,000 tonnes in late 2021. They also believe copper demand in charging infrastructure will rise almost fivefold over the period, to 47 tonnes per annum.

Phoenix Copper, which owns the Empire metal mine in Idaho, should be well-placed to capitalise on rising copper consumption. That’s notwithstanding any revenues-hitting problems the business may encounter in developing its US asset.

Phoenix Copper’s share price has dropped 14% in the past week. This has eradicated all gains it has made over the prior 12 months. And, in my opinion, this makes the penny stock a highly attractive dip buy for me.

All hail the King

I think profits at Kingspan Group (LSE: KGP) could soar as the fight against climate change revs up. The building materials business is perhaps best known for the insulation products it supplies. I think sales of such materials will soar as housebuilders use larger amounts in their homes and people retrofit their existing homes.

A study by the Royal Institute of British Architects reveals the huge positive impact insulation materials have on reducing emissions. It says that improved insulation, better windows and gas boiler replacement in 3.3m UK suburban homes could cut the country’s carbon footprint by 4%.

The government’s Green Homes Grant is due to end at the end of next month. This could have a big near-term effect on Kingspan’s revenues in the UK. But it’s my view that fresh measures could be resurrected as fears over the environmental emergency inevitably rise.

Besides, it’s important to remember too that Britain accounts for just 16% of Kingspan’s revenues. The business sources almost 60% of sales from other European territories, regions where legislation to help the planet is a very hot topic.

The downside is that Kingspan’s operations are highly cyclical. So any fresh weakness in the global economy could severely damage its revenues. Still, as the fight against climate change intensifies, and housebuilding rates rise to match growing populations, I think this penny stock could still deliver big shareholder returns over the long term.

Another top penny stock to buy

Increasing my exposure to e-commerce is something I’ve strived to do in recent years. Packaging manufacturer DS Smith and warehouse operator Tritax Big Box REIT are a couple of stocks I’ve bought as online shopping volumes continue to increase.

Penny stock Ediston Property Investment Company (LSE: EPIC) is another I’m thinking of buying for the digital revolution too. The property giant specialises in operating retail parks. These are the sort of spaces which are perfect for the ‘click and collect’ age.

The retail units this penny stock lets out tend to be larger than the usual high street or shopping mall space. This gives retailers the space to store products that people order online. It’s also often simpler for customers to pick up goods from shopping parks as they can slip their purchases straight into the back of their car after collection.

The main threat to Ediston is the potential for fresh economic downturns that could hit consumer spending. This may in turn result in retail tenants asking for rent discounts or possibly even vacating.

Still, this is a risk I’d be prepared to swallow. I think the company’s long-term outlook — combined with its bulky 6% dividend yield — make it too good to miss.

The property powerhouse

Large parts of the retail sector are under the cosh as internet shopping explodes. But while the high street is feeling the strain, the outlook for retail parks remains quite solid. This makes Ediston Property Investment Company (LSE: EPIC) arguably one of the best property stocks to buy right now.

The boom in ‘click and collect’ means Ediston could be an indirect winner from the e-commerce surge. Retail units with more space and with better accessibility by car are likely to be in increasing demand as companies try to latch onto this theme.

Additionally, it’s thought that retail park stores are more popular with shoppers than crowded shopping centres and high streets following the Covid-19 outbreak, and that they’ll continue to be preferred.

I also like the fact that rents at retail parks tend to be much lower than other retail locations. This is especially important at a time when retailers’ margins are being crushed by business rates and rising labour and input costs. It provides another reason to expect demand for Ediston’s properties to pick up considerably.

Rent rolls and, consequently, earnings at Ediston could take a smack in the immediate future however. Rising Covid-19 cases in the UK mean that restrictions on non-essential retail could be reimposed. Furthermore, falling consumer spending power in the wake of soaring inflation could also indirectly hit the penny stock’s profits.

That said, as a long-term investor the threat of such temporary turbulence doesn’t put me off. I’d happily buy this cheap UK share now or in the near future.

Another penny stock on my radar

I also believe Topps Tiles (LSE: TPT) is a highly attractive, cheap UK share to buy. That’s even though its operations are highly cyclical and so it could suffer considerably if the British economy skids lower.

First of all, I’m encouraged that the robust housebuilding sector should keep sales at the retailer rising solidly. Latest Office for National Statistics data showed average property prices soar 10.6% year-on-year in August. This was up from the 8.5% increase the prior month.

All this illustrates the massive homes shortage on these shores that I believe will persist for years to come. In this climate major housebuilders should continue busily building and demanding Topps Tiles’ product in massive quantities.

I’m also expecting sales there to remain strong as the country’s DIY craze continues following recent Covid-19 lockdowns. The retailer’s huge investment in its e-commerce channel should help it to win customers in the years ahead too.

Like Ediston Property, this is a top penny stock I’d buy in November and hold for years.

I used to own Cineworld shares but I sold out last autumn during the then-height of the health crisis. I originally bought the leisure share because the conveyor belt of ticket-moving Hollywood blockbusters was speeding up with franchises that pushed the global box office to repeated record peaks before the pandemic struck. The onset of the pandemic forced me to revisit my bullish take, however, as Cineworld’s gigantic debt pile made me fear for its very existence as it closed its doors.

The cinema operator is clearly in better shape than it was in late 2020. Its cinemas are open again and it’s taken steps to bolster its balance sheet too. This is all reflected in Cineworld’s share price surge since then. There’s still a possibility that Cineworld could make UK share investors terrific returns from Tinseltown’s endless stream of sequels and reboots of popular movie franchises. Its expensive entry into the gigantic US market could still pay off in the long term.

But I’m afraid the stock still carries too much risk for my liking. The ongoing Covid-19 crisis still puts it in great danger regarding that mountain of debt. And its long-term future is in danger as the US streaming giants ramp up investment in programming and technology. Just today Netflix announced a deal that will see it make a raft of films and shows from the family-friendly Roald Dahl canon.

A better penny stock to buy

I’d much rather buy penny stock Ediston Property Investment Company (LSE: EPIC) over Cineworld right now. The outlook for many UK shares involved in retail is bleak as e-commerce batters the bricks-and-mortar segment. But I think retail park operator Ediston could actually thrive during the digital shopping revolution.

As the Local Data Company explains: “Demand for space on retail parks is increasing as brands search for larger spaces to fulfil online sales and facilitate click and collect services.” It expects vacancy rates for retail parks to decrease in the 12 to 18 months “as more deals are done by occupiers looking to invest in this type of asset” following the carnage caused to the sector by Covid-19.

Naturally a prolonged fight against the coronavirus could hit retail park tenants and consequently profits at Ediston. But I’d still buy it because I think its long-term outlook remains extremely bright. The penny stock’s shopping parks account for more than 70% of its total property portfolio. And pleasingly the business plans to focus future investment in retail warehouse spaces.

A high-risk penny stock

Could oilfield services provider Lamprell (LSE: LAM) be another top penny stock to buy in August? Well, a raft of strong results from oil majors such as BP and Shell have raised hopes of a bounceback in fossil fuel investment. A positive outlook for crude prices (in the short-to-medium term at least) suggests the good news could keep coming too.

That said, Lamprell is a UK share that’s far too risky for my liking. It’s just a few months since the company was warning about a severe cash crisis. Latest financials this week showed net cash slipped to just $81.1m too, down around $30m from the end of 2020. The business is looking to issue shares to raise up to $60m later in 2021. And it might not be the last time it’s forced to tap investors if talks will lenders fall flat.

I’m also concerned about Lamprell’s long-term future as the green energy revolution gathers pace. Sure, the penny stock is taking steps to improve its exposure to the renewables sector. But uncertainty over what beckons for what are (for now) its ‘bread and butter’ operations doesn’t exactly fill me with confidence.

A UK share I’d buy in August

The growth of e-commerce has been devastating to the high street over the past decade. And things look to go from bad to worse as Covid-19 has given online shopping an extra big push. This however, doesn’t mean all UK shares exposed to physical retail are bad buys. I’d happily invest in Ediston Property Investment Company (LSE: EPIC), for example.

This penny stock operates retail parks the length and breadth of the UK. So it also stands to gain from changing consumer habits brought on by the pandemic. Why? People are shunning shopping centres and the high street in favour of more spacious out-of-town locations that can be accessed by car.

I also think Ediston should be a beneficiary from the rise of e-commerce. This is because click and collect is booming among consumers who don’t want to pay delivery costs and who don’t (or can’t) sit at home waiting for the doorbell to ring. According to Insider Intelligence, a whopping 59% of Britons are set to buy something via click and collect in 2021.

This significantly benefits retailers located in retail parks. Their stores are easily accessible by car for goods to be carted back home. These parks also have more space for click and collect bases to be installed than inner-city retail spaces. I think this is a top penny stock to buy despite the threat the ongoing pandemic poses to non-essential retail in the short-to-medium term.