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I’ve been looking for the best UK stocks to buy and hold for the long term. But I’ve also been seeking dividend shares that could provide tasty passive income in the new year.
Here are three companies I think offer the best of both worlds.
Mega miner AngloAmerican (LSE: AAL) produces copper, nickel, iron ore and other everyday essential commodities. I therefore expect its revenues to soar as the world embarks on a new commodities supercycle.
Take copper alone. Analysts at Fitch expect metal demand for the green energy revolution to surge 13% each year over the next 10 years.
Anglo American’s profits could take a hit next year as the global economy cools. Commodities consumption could also suffer badly if the Covid-19 crisis in China worsens.
But, pleasingly, the FTSE 100 miner’s predicted dividend for 2023 is covered 2.4 times by predicted earnings. This gives a wide margin of safety in case of disappointing profits.
Anglo American’s dividend yield for next year sits at a mighty 6.1%.
Triple Point Social Housing REIT
Real estate investment trusts (REITs) can be great ways to generate passive income. This is because their classification under this banner obliges them to pay a minimum of 90% of annual profits are in the form of dividends.
Triple Point Social Housing REIT (LSE:SOHO) is one of my favorite dividend stocks for next year. Its dividend yield for 2023 stands at 8.3%.
Property stocks have a great ability to raise rents to protect profits from increased costs. This is a huge advantage given that inflation is tipped to remain high in 2023.
I also like the fact that rental income from residential property is usually more predictable than that of other classes. So Triple Point could be well-placed to weather a prolonged downturn in the UK economy.
I’d buy the business even though a lack of attractive acquisitions could dent its growth plans. The supported social housing (SSH) segment in which it operates is tipped for rapid growth.
US Solar Fund
Renewable energy stocks offer terrific investment potential as the transition to green power sources accelerates. It’s why I invested in The Renewables Infrastructure Group earlier this year.
US Solar Fund (LSE:USF) is another attractive low-carbon share I’d buy today. The business owns more than 40 solar farms in North Carolina, Utah, California, and Oregon. Thanks to hefty tax credit awards in 2022, these territories have become even more profitable places for renewable energy stocks to do business.
Electricity use remains broadly constant at all points of the economic cycle. So profits at the fund might hold up better than those of other UK shares as conditions worsen. That’s assuming it doesn’t endure crippling costs to keep its panels in operation (solar power is notoriously expensive to produce for now).
For next year, the US Solar Fund carries an enormous 6.7% dividend yield.