2 Exceptional Dividend Stocks Investors Should Consider Buying This Summer

In my opinion, a great way to grow your wealth is to buy and hold good dividend stocks. However, it’s important to keep in mind that dividends are never guaranteed.

Two choices that I think investors should consider purchasing are Keller Group (LSE: KLR) and Impact Healthcare REIT (LSE: IHR).

Let me explain why!

Building for the future

Keller Group, a company specializing in earthworks, mainly deals with preparing the ground for the construction of buildings. If you are not familiar with construction, this is an essential task in any construction project.

Keller Group shares have had a great 2019, rising 69% over the period from 783p at the same time last year to current levels of 1,330p.

On the optimistic side, Keller is making a lot of money in the United States. This could be critical to its future earnings and its potential continued earnings as the U.S. government plans to spend billions on infrastructure in the coming years. A recent infrastructure bill passed in the U.S. could help with this, and Keller could benefit from it.

Currently, the stock offers a dividend yield of 3.5%. While this is not the highest rate currently, I am more interested in regular payments, as well as a bright future outlook.

The last positive I’ll note is that the shares appear to represent good value, despite the recent run-up in the share price. They currently trade on a price-to-earnings ratio of just 10. However, if the shares continue to climb, this valuation could soon be out of reach.

On the downside, there are also risks. The biggest one for me is that any economic shock could halt infrastructure spending, particularly across the pond in the US. That could have a big impact on earnings, as well as the returns I expect to receive. The other issue is the ongoing battle against inflation, which could squeeze margins in the construction sector due to operating and raw material costs.

Impact Healthcare REIT

Created as a real estate investment trust (REIT), Impact earns its income from renting out healthcare-related real estate. These companies must return 90% of their profits to shareholders, making them attractive dividend stocks to buy.

The story continues

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Unlike Keller shares, Impact shares are down 4% over the past 12 months, from 90p at the same time last year to current levels of 86p.

I think this is due to economic turbulence, such as rising interest rates and inflation, which is causing problems in the commercial real estate sector. The biggest risk is the persistence of problems across the macroeconomic landscape. Higher rates mean that growth, profits and returns are harder to come by. Growth is harder because of the more expensive debt that REITs are using to fund their growth aspirations.

On the other side of the coin, I like Impact for a number of reasons. First, it has defensive characteristics, as healthcare is a basic necessity regardless of the economic outlook. Furthermore, with the UK’s population growing and ageing, demand for healthcare is only likely to increase, which could provide Impact with an opportunity to grow its earnings and reward investors.

Moreover, the fundamentals also look good. The stock appears to offer good value for money with a price-to-earnings ratio of just 8. Finally, a colossal dividend yield of 8.8% is very attractive!

The article 2 Exceptional Dividend Stocks Investors Should Consider Buying This Summer appeared first on The Motley Fool UK.

Further reading

Sumayya Mansoor has no position in any of the stocks mentioned. The Motley Fool UK has no position in any of the stocks mentioned. The opinions expressed about the companies mentioned in this article are those of the author and 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 broad range of ideas makes us better investors.

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