Here’s How This Growth Stock Could Boost My Passive Income!


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I am constantly on the lookout for quality dividend paying stocks that would increase my passive income stream. I own a number of REITs that already do this. Another one that might do the trick for my wallet is Civitas social housing (LSE:CSH). Here’s why I decided to buy the shares for my holdings.

Social housing

Civitas is a real estate investment trust which focuses on providing social housing throughout the UK. To provide additional context, REITs are companies created specifically to provide shareholder returns from income-generating properties. Some others I own focus on warehousing or industrial property, or retail and office space. I like these stocks because as a general rule, they should return 90% of profits to investors.

Civitas shares are trading for 64p at the time of writing. A year ago, the stock was trading at 84p, down 23% over a 12-month period. I am not concerned about this decline in share price as many UK stocks have fallen due to recent economic volatility. It just means stocks are cheaper for me to buy right now.

Why I decided to buy the shares

First of all, I think Civitas will only continue to grow as a business, as demand for accommodation outstrips supply here in the UK. Home builders are looking to make the most of it. With this in mind, Civitas should be able to take advantage of this demand in new homes and, in turn, generate more rental income. This should then result in more dividends for investors.

As for yields, I think Civitas’ current dividend yield of over 8% is attractive. Comparing this level to the current level FTSE100 average of 3%-4% fills me with confidence. I am aware that dividends are never guaranteed and can however be canceled at any time.

Then, due to the fall in Civitas shares, they also seem to have better value for money. They currently trade on a price to earnings ratio of 10. There is a general rule that a ratio below 15 could represent value for money.

Finally, I can see that Civitas has a good track record over the past few years. For example, he has increased his income year after year for the past four years. However, I am aware that past performance is not indicative of the future.

Risks and conclusion

Despite my decision to buy Civitas stock, I have to be wary of issues that could hamper any passive income I hope to achieve. Due to the current economic volatility, a cost of living crisis has emerged. With this in mind, rent collection could become more difficult for Civitas. If this happens, it could have an impact on its balance sheet and level of performance. I believe this is a more short-term problem, however.

Overall, I decided to add Civitas stock to my holdings due to the passive income opportunity, market and stock price growth, and the company’s track record at this time. day. I will be adding the stocks to my holdings shortly and expect them to energize my portfolio over the long term.


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