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Urban Logistics REIT 

What it does: Urban Logistics REIT owns and operates more than 100 warehouses single-occupant designed for ‘last mile’ delivery.

By Royston Wild. Recent panic selling of UK assets has pushed prices of many top property stocks sharply lower. As a result, I believe Urban Logistics REIT (LSE: SHED) is an attractive buy for investors this November. 

At current prices, the FTSE 250 firm’s dividend yields for the next two financial years sit at an enormous 6.1% and 6.5% respectively. 

Property shares often provide investors with solid protection against high inflation. This is because they are usually able to raise rents in order to eliminate (or at least offset) increasing cost pressures.  

With UK inflation at 40-year highs and tipped to go higher, Urban Logistics could therefore be an effective wealth preserver. 

I wouldn’t just buy this REIT for the here and now, however. I’m expecting earnings (and consequently dividends) to grow strongly over the next decade as e-commerce steadily expands. 

Demand for the warehouses and distribution properties it owns appear on course to improve rapidly. And rents will likely stride higher given the weak construction outlook for this particular sector.

Royston Wild does not own shares in Urban Logistics REIT. 

LondonMetric Property

What it does: LondonMetric property is an urban logistics real estate manager with 17 million square feet in its asset portfolio.

By Zaven Boyrazian. LondonMetric Property (LSE:LMP) has been on a roll lately. Despite what the 33% drop in share price would suggest, the urban logistics property manager is seemingly thriving. In fact, as of October this year, occupancy stands at an impressive 99%, with an average lease term of 12 years among its tenants.

Even with e-commerce slowing on the back of reduced consumer spending, demand for urban logistics centres continues to grow – a trend management seems to be capitalising on successfully. As such, the stock offers an impressive 5.5% dividend yield.

With interest rates rising, real estate investment trusts like Londonmetric Property have been hit hard due to their high debt balances. But a closer look at the company’s loans reveals that 80% of its debts are either hedged or on a fixed rate.

In other words, the threat of rising interest rates to this business may not be as disastrous as many think. And that’s why I believe a buying opportunity in this stock has emerged for me.

Zaven Boyrazian does not own shares in LondonMetric Property.

Diversified Energy Company

What it does: Diversified Energy Company owns and operates around 67,000 mature natural gas and oil wells in the US.

By Charlie Carman. Diversified Energy Company (LSE: DEC) shares have climbed nearly 17% this year. The FTSE 250 stock offers a handsome 11% dividend yield.

A key reason I’m bullish is President Biden’s drive for American energy independence. As a domestic producer, the firm should benefit from White House policies designed to combat spiralling commodity prices fuelled by the Russo-Ukrainian war and OPEC+ production cuts.

In addition, I’m encouraged by the company’s recent share buyback scheme to capitalise on sterling’s weakness against the dollar.

Admittedly, DEC posted a $935m net loss in H1 2022, which concerns me. I’m also sceptical about the accounting accuracy of decommissioning liabilities, which assumes its old wells will survive until 2095.

Nonetheless, the business model looks healthy overall. In particular, I like the robust 22% free cash flow yield that underpins DEC’s market-leading dividend. With supportive government policies acting as a tailwind for the foreseeable future, I’d buy this stock in November.

Charlie Carman does not have a position in Diversified Energy Company. 

DS Smith

What it does: DS Smith provides sustainable packaging solutions, paper products and recycling services worldwide.

By Kevin Godbold: Despite all the gloomy economic news around, DS Smith (LSE: SMDS) issued an upbeat trading statement on 10 October.

The company reported “good and consistent” trading. And the directors said overall performance for the year will likely be ahead of their previous expectations. DS Smith is one of many businesses that have been confounding the market’s expectations recently.

I like the company’s robust cash flow record — ideal for supporting its progressive dividend policy. And after prudently skipping a few dividends in the depth of the pandemic, DS Smith has jumped straight back in to the groove of pushing the shareholder payment a little higher each year.

There’s competition in the sector. But DS Smith is well established. And I think the industry has a tailwind. Meanwhile, with the share price near 290p, the forward-looking yield is running at around 6%. I think that’s attractive.

Kevin Godbold does not own shares in DS Smith.

Imperial Brands

What it does: Imperial Brands is a multinational tobacco company and is the world’s fourth-largest international cigarette company measured by market share.

By John Choong. The Imperial Brands (LSE: IMB) share price has remained rather robust this year, outperforming its parent index by quite some margin. Not to mention, its excellent dividend yield of 7% paired with a solid history of payment makes it a lucrative income stock to buy for my portfolio.

Luxury goods tend to benefit during times of inflation due to their inelastic demand. Most of Imperial’s products are catered to a niche market, and has been evident in the company’s last couple of results. Although growth hasn’t been stellar, it’s certainly been robust, while dividend payments continue to increase. The company also recently announced a share buyback programme, which should bring more value to shareholders.

With its next ex-dividend date estimated to be later this month, I’m planning on starting a position and capitalising on the ability to generate passive income in the current inflationary environment.

John Choong has no position in Imperial Brands.

Direct Line

What it does: Direct Line provides motor and general insurance in the UK.

By Christopher Ruane. Insurance tends not to be a very exciting business. In fact, it is often rather boring. As an investor, though, that is precisely why I like it. Demand is relatively stable, proven operators have enough experience to price risks at the right level, and the business model does not look like it will stop working any time soon.

Direct Line (LSE: DLG) has those characteristics. It avoids the more exotic corners of the insurance market and is highly profitable.

Right now, Direct Line shares yield 11.4%. That is certainly attractive to me, which is why I own some. It is also high compared to most FTSE 250 peers, though. Does that suggest a cut is coming? Rising vehicle costs pose a threat to profit margins and that could continue in coming years. But the company’s business model, iconic brand and large dividend make it appealing to me.

Christopher Ruane owns shares in Direct Line.

Tritax Big Box

What it does: Tritax Big Box REIT owns, manages and develops logistics real estate in the UK.

By Paul Summers: My pick for November is FTSE 250-listed real estate investment trust (REIT) Tritax Big Box (LSE: BBOX). Having tumbled over 40% in value in 2022, its shares yield a very respectable 4.9%. 

Now, I could shoot for more income elsewhere. However, I’d rather back Tritax for two reasons. First, it’s a relatively low-risk way of tapping into the ongoing growth of e-commerce (the company provides warehouses for some of the biggest retailers around).

Second, the fact that REITs are able to raise rents to cover rising costs without too much fuss makes Tritax a great option for battling inflation. 

Having coveted the stock for so long but been put off by the price tag, now could be an excellent time for me to begin building a position by buying its shares in November. 

Paul Summers has no position in Tritax Big Box.

Aviva 8 ⅜% PF 8 ⅜ CUM IRRD PRF #1

What it does: Aviva is a multiline insurance company. Its preferred stock pays a fixed dividend of 8.375p per year.

By Stephen Wright. My best British income stock for November is Aviva 8 ⅜% PF 8 ⅜ CUM IRRD PRF #1 (LSE:AV.B) Catchy name, but what is it?

In short, it’s Aviva’s preferred stock. Unlike the common equity, the stock pays a fixed dividend of 8.375p per year. 

That dividend has to be paid by management before any dividends get paid to common shareholders. And if it doesn’t get paid in a particular year, it rolls over and all of the outstanding dividends have to be paid to preferred shareholders before any are paid to holders of common stock.

The shares can’t be bought back by the company outside of an Extraordinary General Meeting. So I expect to keep receiving the dividends from these for some time.

In a turbulent market, I’m looking for something relatively predictable. That’s why I’ve settled on this as my choice.

Stephen Wright owns shares in Aviva 8 ⅜ PF 8 ⅜ CUM IRRD PRF #1.

M&G

What it does: M&G is a savings and investment management company, managing shares, real estate and other assets.

By Alan Oscroft. Like others in the investment management business, M&G (LSE: MNG) has fallen out of favour among investors in the current economic crisis.

The share price slumped when inflation started escalating a few months ago. After a modest October recovery, though, M&G is only around 10% down over the past 12 months.

That still leaves the forecast dividend on a hefty 10.5% yield. It’s risky relying on a dividend forecast. But M&G is currently engaged in a share buyback programme, which suggests it has the cash available.

The incoming chief executive and the chairman both bought M&G shares in October, which is also encouraging.

In the first half, its Wholesale Asset Management business achieved net client inflows for the first time since 2018. The second half could prove tougher, and that’s where the short-term risk lies.

But I’ll be considering M&G as the next stock for me to buy as a long-term dividend investment.

Alan Oscroft does not own M&G shares.

BlackRock World Mining Trust

What it does: BlackRock World Mining Trust in an investment trust that runs a diversified portfolio of global mining stocks.

By Ben McPoland. The decarbonisation of the global economy is going to take many decades. And this transition is going to need a lot of raw materials. Whether it’s iron ore to make wind turbines or lithium for the batteries of electric vehicles, decarbonisation is a massive tailwind for mining companies. The BlackRock World Mining Trust (LSE: BRWM) is perfectly placed to capture this demand, I believe, as it has positions in most of the companies mining and selling these vital raw materials.

Some of the trust’s largest holdings include BHP Group, Glencore, and Rio Tinto. It has a dividend yield of 7%, and the payouts have increased substantially over recent years

It should be noted that mining shares can experience much more volatility when compared to other investments. However, I’d be inclined to see dips in the trust’s stock price as opportunities to buy more for my holdings. I intend to start a position myself in November.

Ben McPoland has no position in BlackRock World Mining Trust.

For me, recent market weakness makes it a good time to target passive income from dividend-paying shares. And if I had spare cash I’d buy some more.

For example, I like the look of Moneysupermarket.Com (LSE: MONY). The company operates price comparison websites for insurance, money, home services and other products.

On 18 October, the third-quarter update showed 15% growth in revenue and 6% for the year so far. And as with many businesses, such a positive performance disagrees with the fallen share price.

Ahead of expectations

The directors said the outcome was “ahead of expectations”. And they predict full-year earnings before interest, tax, depreciation and amortisation (EBITDA) will likely come in “towards the upper end of market expectations”.

I see this enterprise as a ‘cash cow’ rather than a growth proposition. And that reflects in the record of steady shareholder dividend payments. Indeed, payments continued even through the pandemic. 

There’s competition in the sector. And that could threaten the progress of the business in the years ahead. However, this is a well-established brand. And that will be hard to replicate for would-be challengers.

Meanwhile, with the share price in the ballpark of 178p, the forward-looking dividend yield is around 6.8% for 2023. I think the stock could make a useful addition to my diversified portfolio.

But I’m also keen on DS Smith (LSE: SMDS). The firm provides sustainable packaging solutions, paper products and recycling services worldwide.

Very good trading

On 10 October, Smith surprised the market with an upbeat trading statement. Performance had been “very good” and the directors said they expect full-year trading to April 2023 to be “ahead of expectations”.

The company skipped dividend payments in the depths of the pandemic. But cash flow held up well. And, since then, the company has made payments and they are set to rise. 

Smith faces competition in the sector, and there’s quite a bit of debt on the balance sheet. Those factors could make life difficult for the business in any severe economic turndown.

Nevertheless, I’d embrace the risks to include this stock in my portfolio. And with the share price around 290p, the forward-looking dividend yield is about 6% for the trading year to April 2024. 

I’d also go for National Grid (LSE: NG), the operator of energy transmission and distribution systems in the UK and the US.

Steady operational progress

On 10 October, the company delivered its pre-close update. And trading had been “in line” with directors’ expectations. We’ll find out more with the interim report due on 10 November.

I think the firm occupies a well-defended niche within the power systems at home and abroad. But there is a lot of debt on the balance sheet. Although that’s not unusual for utility companies that need to plough a lot of capital into maintaining and improving networks.

However, rising interest rates and regulatory demands could make it difficult for the company to keep up its shareholder dividend payment in the future. Nevertheless, the multi-year dividend record is robust. And I’d embrace the risks and aim to hold this stock for the long term.

With the share price near 940p, the forward-looking yield is near 6% for the trading year to March 2024. And that’s attractive to me.

The FTSE 100 index dipped below 6,800 last week. But it’s moved higher since and sits just above 6,900 as I write.

To put those levels in context, the index was around 7,250 a year ago. So, it’s still well down. And I’m still finding a lot of good value among the stocks making up the index.

I’m inclined to hunt in the lower reaches of the index for smaller companies. There’s a fair chance that businesses with a lower market capitalisation will have a longer growth runway ahead of them. But that isn’t always true. And it’s important for me to carry out thorough research into a business before buying any of its shares.

And I have several shares from the FTSE 100 index on my list for further research right now. My aim is to find stocks that I can hold for the long term while the underlying operational progress unfolds in a business over the coming years.

Strong trading

For example, I like the look of DS Smith (LSE: SMDS), the UK-based provider of sustainable packaging solutions, paper products and recycling services worldwide. On 10 October, the company said trading has been strong and above management’s previous expectations. 

Meanwhile, with the share price near 285p, the forward-looking dividend yield is above 6% for the trading year to April 2024. That looks attractive to me. However, it’s always possible for any business to miss its estimates. 

DS Smith carries quite a bit of debt and the business operates in a competitive sector. And any future general economic downturn could adversely affect the company. Nevertheless, I think it’s a good candidate for me to research further with a view to holding some of the shares for the long term.

An agenda for growth

I’m also keen on Airtel Africa (LSE: AAF), the provider of telecommunications and mobile money services to the African continent. In fact, I liked it so much I bought some of the shares recently.

In July, the first-quarter results report trumpeted “double-digit revenue growth, margin and earnings progression and further strengthening of the balance sheet.” And looking ahead, chief executive Segun Ogunsanya said the directors are “confident” the company will continue to deliver on its growth strategy over the long term.

For the shorter term, Ogunsanya acknowledged inflationary pressures. However, Airtel Africa is well-placed to deliver growth “ahead of the market” this year. And cost efficiencies should support profit margin resilience.

We’ll find out more about the firm’s progress with the half-year report due on 27 October. Meanwhile, with the share price near 126p, City analysts are predicting a dividend yield around 6% for the trading year to March 2024. But of course, predictions can miss the mark. 

One potential risk is Airtel Africa has a fair amount of debt on the balance sheet. And that could become problematic if trading conditions deteriorate. Nevertheless, I’m prepared to embrace the risks of share ownership. And I’m thinking of buying more Airtel Africa shares when I next get some spare cash.

Persimmon

Persimmon’s (LSE: PSN) sinking share price has prompted me to consider topping up my holdings. The housebuilder’s fresh descent in recent sessions has sent its dividend yield to an eye-popping 18.5%. Meanwhile, its corresponding P/E ratio has toppled to 4.9 times.

Persimmon has been an excellent dividend-paying stock over the past decade. Due to the UK’s chronic homes shortage and government inaction to boost build rates I think the long-term outlook for shareholder returns looks attractive too.

But with homebuyer demand slipping I’m happy to delay increasing my holdings. Property listings business Zoopla says that enquiries on its website have fallen by a fifth in the past fortnight. This follows the release of the government’s mini-budget that pushed up mortgage rates.

Worryingly for Persimmon, mortgage rates are in danger of further heavy rises in the weeks and months ahead. This reflects ongoing turbulence in bond and currency markets as well as ongoing pressure from runaway inflation.

Barratt Developments underlined the trouble that higher rates are causing last week.

In its latest trading statement, it said reservation rates fell by a third between 1 July to 9 October. It attributed “wider economic uncertainty” and “increased mortgage interest rates and reduced mortgage availability” as the factors behind the slump.

I’m expecting Persimmon’s next market update on 8 November to confirm the turbulence affecting the housing industry. Until the outlook becomes clearer I won’t be building my position in this stock.

DS Smith

However, I am tempted to add to my holdings in DS Smith (LSE: SMDS). The packaging manufacturer has recovered ground in more recent sessions, but I believe it remains heavily oversold in 2022, as recent trading news suggests.

Today, DS Smith’s share price carries a P/E ratio of just 7.6 times for this year. Its dividend yield sits at a healthy 6.2%.

Soaring cost inflation poses a threat to the cardboard box maker. But, so far, the company is being able to effectively navigate the problem.

DS Smith has been increasing prices and introducing cost-saving measures to protect its margins. And the huge success of these measures led to the business hiking its half-year profits forecasts on Tuesday.

It now expects adjusted operating profit “of at least £400m” in the six months to October, it said. That’s up from the £276m it reported in the same 2021 period.

I think the critical role that DS Smith’s products play in e-commerce should deliver exceptional profits growth in the coming years. It’s also my belief that sales should rise following its decision to ditch plastic packaging amid accelerating customer demand for greener solutions.

I bought my DS Smith shares back in 2018. I plan to hold them for the long haul.

I see this as the perfect opportunity to load up on some quality stock at great prices. And one firm looks like a good value pick to me.

DS Smith (LSE:SMDS) shares are currently trading at 267p. They have a price-to-earnings (P/E) ratio of 13.1 times and offer a dividend yield of 5.6%. This looks like a great bargain to me, and the company’s latest financial update has made investors very happy.

DS Smith shares could take off

Dividends stocks are under the spotlight right now. Chancellor Kwasi Kwarteng’s latest plans will see the tax on dividends lowered by 1.25%. This comes after share buybacks by UK firms hit a record of £16.2bn in the second quarter (Q2) of 2022. 

This shows that despite the turbulence in the market right now, investors who buy and hold quality shares will be rewarded. Returns from share price movements are low right now. But if I make smart decisions today and grow my passive income portfolio, I could benefit from higher payouts for decades.

This is where DS Smith shares look like a good option to me. The global packaging firm released a strong trading update this week. For the first half (H1) of 2022 (ended 31 October) operating profits are expected to be at least £400m, beating all previous estimates. To put this in perspective, total operating profits in FY2021 were £616m. 

This is great news for DH Smith’s dividend moving forward. The already sizeable yield could grow in the coming months if H2 performance meets expectations. Current full-year earnings projections will put year-on-year earnings growth at 10.9%.

After the update was released, DS Smith shares jumped over 12% in a day. But it is still trading 42% below its post-pandemic highs of 461p set in September 2021.

Concerns and verdict

With the FTSE 100 struggling to find stability, it is hard to say if this update alone could trigger a share price rise. In fact, the company posted decent results in line with expectations last year. However, its share price continued to fall. DS Smith shares are down over 30% in the last 12 months and 32% in 2022. 

Also, paper prices have remained high after the pandemic and are projected to rise over 2.5% annually for the next five years. DS Smith already has razor-thin margins. The e-commerce surge over the last 24 months has triggered a huge demand for packaging materials like cardboard. And rising paper pulp prices could put a strain on future revenue. 

However, I am optimistic that DS Smith can hit its new targets this year, which would increase investor interest. Given its size and global presence, I think the firm is well-placed to navigate rising raw material costs. I think DS Smith could offer a good mix of value and growth for my portfolio, which is why I am willing to invest if signs of recovery grow stronger. 

Aviva

Aviva (LSE: AV) is a British multinational insurance company. It has millions of customers across its core markets. Aviva is also the UK’s largest general insurer. This week, a non-executive director purchased shares using a proportion of their net director fees.

The insurance giant has suffered a rather tumultuous week, dropping more than 10%. This is due to fears that the company’s pensions and investment management divisions could suffer greatly from the sell-off in gilts. That being said, the purchase from non-executive director Pippa Lambert could hint that insiders don’t think the overall market reaction this week will affect Aviva in the long term.

• Name: Pippa Lambert
• Position of director: Non-Executive Director
• Nature of transaction: Share Purchase Scheme (Partnership Shares)
• Date of transaction: 27 September 2022
• Amount bought: 1,288 @ £4.19
• Total value: £5,393.40

Kingfisher

Kingfisher (LSE: KGF) is an international home improvement company. The firm has over 1,500 stores and numerous household brands under its group. These include the likes of B&Q, ScrewFix, and TradePoint.

The FTSE 100 company reported that its CCO sold a rather substantial number of shares earlier this week. That being said, it’s worth noting that these shares were, in fact, sold on 21 September 2022. Still, the director dealing doesn’t help shore up investor confidence after Kingfisher posted earnings that saw profits slump by 30% on an annual basis.

• Name: Sebastien Krysiak
• Position of director: Chief Commercial Officer
• Nature of transaction: Sale of shares
• Date of transaction: 21 September 2022
• Amount sold: 20,132 @ £2.35
• Total value: £47,346.44

DS Smith

DS Smith (LSE: SMDS) is a multinational packaging business. It manufactures sustainable corrugated case materials and specialty papers. In addition to that, it also provides recycling and waste management services along with plastic packaging that is reusable and recyclable.

This week, a couple of huge director dealings were reported by the FTSE packaging company. Among this, a group finance director as well as a non-executive director opted to buy and sell shares in large volumes. It’s worth noting that the following transactions occurred in the previous week and were only reported this week.

• Name: Adrian Ross Thomas Marsh
• Position of director: Group Finance Director
• Nature of transaction: Deferred Share Bonus Plan
• Date of transaction: 23 September 2022
• Amount vested: 79,617 @ Nil
• Total value: N/A

• Name: Adrian Ross Thomas Marsh
• Position of director: Group Finance Director
• Nature of transaction: Sale of shares
• Date of transaction: 23 September 2022
• Amount sold: 38,493 @ £2.64
• Total value: £101,429.06

• Name: Alan Johnson
• Position of director: Non-Executive Director
• Nature of transaction: Purchase of shares
• Date of transaction: 23 September 2022
• Amount sold: 12,596 @ £2.62
• Total value: £32,999.84

Types of shares

To provide context, there are a few types of shares that can be purchased by directors. Some directors opt to purchase shares via the open market. Having said that, directors also have the option to purchase and receive shares via a share incentive plan (SIP).

A SIP is an employee plan for companies within the UK to flexibly award shares to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

On this occasion of FTSE director dealings, Aviva’s Lambert purchased over a thousand Aviva shares using a proportion of her net director fees. Evidently, this is paid on a quarterly basis with the goal of acquiring Aviva shares on a continuing basis.

Meanwhile, the Kingfisher CCO opted to sell his shares after a dismal report from the company last week. DS Smith’s Group Finance Director also opted to follow in his footsteps by selling a number of his shares. This comes following the director’s decision to exercise the option to redeem almost 80,000 shares that were granted on 15 July 2019 under the company’s Deferred Share Bonus Plan. He subsequently sold approximately 38,000 of those shares. Having said that, the sale of shares conducted were for tax purposes, rather than a decline in confidence. On the other hand, Johnson decided to purchase DS Smith shares direct from his pocket.

Safe as houses

One that I think could help me perform well is Land Securities Group (LSE:LAND). The FTSE 100 real estate investment trust (REIT) has a large portfolio in central London. Over the past year the share price is down 24%, with the current dividend yield at 6.91%.

The fiscal help from the Government in recent weeks should help to support the property sector. Granted, the cut to stamp duty won’t be of much benefit for the business. But the support on energy bills for corporates will. This should allow tenants within the commercial properties to be able to pay rent on time as cash flow issues ease.

Cuts to income tax should have an indirect benefit too. The company owns some leisure and retail parks. If people have more take-home pay, some of this could be spent on holidays and shopping. This boosts revenue for the tenants that pay rent to Land Securities. As a result, occupancy levels should increase, with defaults decreasing.

One concern I do need to be mindful of is the risk of a deeper recession in the UK if the fiscal packages don’t help. In this case, I’d expect to see lower demand for prime central London office space, hurting revenue.

The dividend stock I never knew I needed

The second stock I like is DS Smith (LSE:SMDS). The packaging and recycling business isn’t one of the snazziest companies in the FTSE 100. But with a dividend yield of 5.83%, it’s one that has caught my eye.

Let’s start with the bad news. The share price is down 42% in the past year. This is mainly down to financial results that have highlighted much greater costs associated with transportation and energy. This is a clear risk, but I feel a lot of this is a medium-term issue that will get resolved.

On the flip side, demand is increasing. The full-year results from June showed that revenue increased by 21% from the previous year. Operating profit also jumped by 23%. This gives me confidence that if cost inflation pressures can ease in the coming year but demand stays high, profits will increase. In turn, this should give way to a higher dividend per share.

I’m also a fan of the business because of the resilient demand I expect even during a recession. Recycling will remain a focus whatever the state of the economy is. Even packaging solutions should be strong. Only if we see a material fall in the demand of the goods being packaged would this knock-on to DS Smith.

I’m looking to cut back on some spending over the next month and use these funds to buy both of the above dividend stocks.

While it’s not a guaranteed safe haven, the large size and established nature of FTSE 100 stocks could make them perfect additions to a defensive portfolio. With that in mind, I’ve spotted two shares that I believe can help protect and grow my wealth through an inflationary environment, even if I only have £100 to invest.

One of the best FTSE 100 stocks to buy now?

Regardless of what the economy is doing, people still need to eat and drink. And for consumer staple retailers, sales may even pick up as more people avoid expensive restaurants and takeouts.

A popular FTSE 100 stock in this space is Unilever. But lately, it seems the pricing power of its brands may have reached its limit. And suppose the UK falls into a severe recession. In that case, store-brand products could see increased sales volumes versus premium brands from Unilever’s collection.

That’s why today, I think Tesco (LSE:TSCO) is the better buy for my portfolio. As a reminder, the company is the largest supermarket chain in the UK, controlling 42.2% of the British grocery market.

Looking at its latest quarterly results, like-for-like sales are on the rise, primarily thanks to the performance of its Bookers wholesaler division. However, the firm is facing increased pressure from discount retailers like Aldi and Lidl.  And the introduction of price-matching schemes has hit profit margins.

But, it’s important to remember that Tesco is in the sales volume business. Therefore, even this hurdle hasn’t stopped management from boosting dividends. While I doubt my portfolio will enjoy any explosive growth here, the long-term income prospects remain solid in my eyes.

Stock pick #2

DS Smith (LSE:SMDS) is another boring FTSE 100 stock that hasn’t been as lucky lately. In fact, the stock has tumbled by over 40% in the last year. That’s quite the opposite of what I’d generally expect from a stable cardboard manufacturer.

With the drop off in consumer spending on discretionary items, the e-commerce sector is undoubtedly facing some strong headwinds. And since DS Smith provides the packaging materials used by online retailers, it’s not surprising to see the share price suffer.

In its September trading update, management confirmed the group is enduring inflationary pressures. And that sales volumes for corrugated boxes have taken a hit. However, these figures are being compared to 2021, which was an exceptional year for e-commerce.

Moving forward, the firm’s outlook for 2023 remains unchanged, even with all these external factors bearing down on the business. And with multiple directors recently going on a £168,000 shopping spree buying up shares, there appears to be a lot of internal confidence.

Pairing this with a 5.7% dividend yield courtesy of the price drop in 2022, I think a buying opportunity for this FTSE 100 stock has emerged for my portfolio.

However, not all of the companies in the FTSE have benefited from this strong support. Today I want to look at three unloved companies I think could be bargain buys at current levels.

#1: DS Smith promises 6% yield

Shares in packaging group DS Smith (LSE: SMDS) have fallen by 40% over the last year as investors have priced in the risk of higher costs and a slowdown in demand.

However, CEO Miles Roberts recently said that trading since May has been in line with broker forecasts, despite rising raw material costs and higher gas prices.

According to Roberts, the company has been able to pass on most increases by raising its packaging prices. Hedging arrangements have also helped to limit the impact of high energy costs.

Roberts says that he remains confident in the outlook for this year and expects “a significant improvement in performance”.

Broker forecasts currently price DS Smith shares on just eight times forecast earnings, with a 6% dividend yield. Although falling demand is a risk, I think this could be a good time to buy.

#2: Berkeley should be a long-term winner

My next pick is upmarket housebuilder Berkeley Group (LSE: BKG). This business has an impressive record of timing market cycles successfully, so I tend to pay attention to its trading reports.

In its latest update, Berkeley said sales were running ahead of the same period last year. Strong demand for the firm’s new homes — which sold for an average of £600k last year — has allowed the company to raise its selling prices to cover higher costs.

Berkeley’s pre-tax profit is expected to hit £600m in 2022/23. This should continue to support the company’s policy of returning £282m to shareholders each year through share buybacks and dividends. That’s equivalent to a 7% return at the current share price.

The big risk here is that the UK housing market will suffer a more serious downturn than expected. If housing transactions slow right down, then Berkeley’s profits could slump.

Personally, I’m comfortable with this risk. I think this FTSE 100 share offers good value at current levels.

#3: ABF’s household names look safe to me

My final pick is family-controlled food and fashion group Associated British Foods (LSE: ABF).

This unusual business owns the Primark fast-fashion chain, as well as a wide range of food businesses. Popular ABF grocery brands include Twinings, Silver Spoon, and Blue Dragon.

Food sales are performing well this year, with profits ahead of expectations.

However, profits from Primark are expected to be lower, despite a recovery in sales. High energy costs and the strong dollar are causing costs to rise. Rather than hike prices, ABF has opted to accept lower profit margins in order to protect its market share.

This news caused ABF’s share price to fall to a 10-year low. However, my feeling is that this is probably a buying opportunity.

ABF has plenty of cash and can afford a short-term hit to profits. With the stock trading on just 10 times forecast earnings, I see this FTSE 100 share as a long-term buy.

Boxing clever

Soaring inflation is delivering a hammer blow to the UK economy. And things are looking grimmer and grimmer as economists increase their inflation forecasts.

I think investing in property stocks is a good idea to protect myself against this threat. Real estate businesses are usually able to raise rents to offset the impact of surging inflation on their cost bases. It’s why I’m considering buying more shares in Tritax Big Box REIT (LSE: BBOX).

I first bought Tritax to capitalise on growing e-commerce activity during the 2020s and beyond. The business operates a portfolio of warehouse and distribution assets across Britain. And its assets are let to global blue-chip companies like Amazon, Tesco, Ocado and Marks & Spencer. This gives me added confidence that rental income will remain stable during good times and bad.

In fact, internet giant Amazon is by far the company’s largest customer by contracted rent. In 2021, it accounted for 16.4% of total rental income.

A top REIT to buy

Construction of so-called big box storage and distribution assets continues to lag demand by a large distance. It’s a phenomenon that is expected to persist, even as e-commerce growth slows from Covid-19 levels too. So the market in which Tritax operates is tipped to keep growing strongly.

I also like REITs like this because they’re required to pay 90% of annual profits out to shareholders by way of dividends. It’s why the business sports a 4% dividend yield for 2022 and an 4.2% one for next year.

Sure, there are dividend shares with larger yields out there today. And Tritax could suffer some growth problems if it fails to identify suitable acquisitions.

But Tritax’s robust, inflation-resistant operations provides me as an investor with excellent peace of mind. All things considered, I think it’ll prove a top buy for long-term passive income.

6.4% dividend yield!

DS Smith (LSE: SMDS) is more likely to be impacted by the tough economic landscape than Tritax. This business manufactures packaging products that are used widely by e-retailers like Amazon. So trading is likely to suffer as consumer spending power falters.

However, I believe DS Smith’s cheap valuation reflects this risk. The FTSE 100 firm trades on a forward P/E ratio of 7.7 times following heavy share price weakness in 2022.

In fact, I’m thinking of buying more of its shares as a way to boost my passive income. Recent share price weakness leaves its dividend yields at a gigantic 6.1% and 6.4% for 2022 and 2023 respectively.

I believe DS Smith has a very bright long-term future. E-commerce has plenty more room for growth as the digital revolution continues. And I like the company’s commitment to growing its global footprint and improving its environmental credentials. Last year, it announced plans to double R&D spend to capitalise on soaring demand for more sustainable packaging.