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2 of my best dividend stocks to buy now

I’ve been looking at companies I can buy to diversify my passive income. Here are two that I think are some of my best dividend...
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I think dividend stocks are a great way to earn passive income. It’s important I look for reliable dividend-paying companies, but with high yields, too. So with this in mind, here are two of my best dividend stocks to buy now.

A financial stalwart

I’d first top up my position in financial services company Legal & General (LSE: LGEN). It’s diversified across investment management, retirement solutions, and also insurance. This should mean it has more reliable revenue streams.

Legal & General has been a dependable dividend payer for a number of years now. In fact, it didn’t miss a payment during the pandemic, nor even the financial crisis. It’s average dividend yield over the past 10 years has been a punchy 5.8%, too. Looking ahead, City analysts are expecting a dividend yield of 7.1% in 2022. Dividends are never guaranteed, of course, as anything can affect the profitability of the company. Nevertheless, Legal & General’s robust dividend history does give me confidence of receiving my income in the years ahead.

Although the dividend yield is high, I don’t expect huge returns from the share price. Earnings per share is only forecast to grow by 6% in 2022, and by 7% in the following year. Also, there’s always risk of a stock market crash. This would reduce Legal & General’s assets under management, and hence the fees that it earns.

Beyond the risks though, I’m confident in the prospects of the company over the long term. The UK is facing an ageing population, too, which should help Legal & General’s retirement solutions business. I think the dividend yield is more than high enough to compensate for the risks, so I’d buy more of the shares today.

Another of my best dividend stocks to buy

The next company I’d buy is the investment trust The Renewables Infrastructure Trust (LSE: TRIG), or TRIG for short. It specialises in making investments across renewable infrastructure assets, such as wind and solar farms.

TRIG has also been able to pay sustainable dividends over the years, and has an average 10-year dividend yield of 5.2%. City analysts are expecting the yield to rise to 5.3% this year.

I’m bullish on renewable energy stocks as we look to transition away from using fossil fuels. TRIG’s infrastructure assets should be in increasing demand as the world uses more renewable energy. Its portfolio is spread across wind and solar assets right now, but with a concentration in wind turbines. This does increase risk as any income depends heavily on whether the wind keeps blowing. Having said this, TRIG did just recently increase its exposure to solar assets in Spain, so it recognised the need to diversify its portfolio.

Forecasts for earnings growth do look attractive, too. For the year 2022, net income is expected to rise by an impressive 28%. In the following year, this is expected to rise again by 12%. Looking much further ahead, I think earnings can carry on rising due to the increasing demand for renewable energy. Therefore, I’d buy the shares today to pick up what I think will be a healthy dividend stream in the years ahead.

The post 2 of my best dividend stocks to buy now appeared first on The Motley Fool UK.

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Dan Appleby owns shares of Legal & General. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.





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