Income stocks are those that provide a relatively stable income to shareholders, normally in the form of dividends. Dividends are by no means guaranteed, but some stocks offer a more secure dividend than others.
So, today I’m looking at five dividend-paying stocks to supercharge my passive income generation in 2023.
Lloyds
Lloyds offers a dividend yield around 4.2%. That’s above the index average, and I’m content with it. The dividend coverage ratio in 2021 was 3.8. That means earnings could cover stated dividends 3.8 times — almost twice the threshold of what most investors would consider healthy.
Passive income stocks: our picks
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City analysts are forecasting a full-year dividend of 2.4p in 2022, rising to 2.7p and 3p in 2023 and 2024, respectively. That’s why I’m buying more.
Naturally, a downturn in the economy isn’t great for Lloyds or other banks — they tend to be cyclical. But higher interest rates are a huge boost to revenue generation.
Sociedad Química y Minera de Chile
Sociedad Química y Minera de Chile is a Chile-based speciality chemicals company focused on the mining and production of iodine, lithium, and other industrial chemicals.
Lithium has been core to its success over the past two years, sending revenue soaring. The US-listed stock has an 8% dividend yield, and coverage is around 2.2 — that’s pretty healthy.
A downturn in the global economy will put downward pressure on lithium demand. But with China’s reopening largely considered a success, I don’t see that happening. I recently bought this stock.
Unilever
Shares in Unilever have dipped in recent weeks. The London-based firm is a stalwart of the FTSE 100, offering investors defensive characteristics and international reach.
The 3.5% dividend yield is attractive but doesn’t blow me away. However, I’ve recently topped up on this stock because of the aforementioned defensive characteristics and international reach.
With the UK set to go into recession and a global economic slowdown, I want companies that will outperform in these conditions. This is because, when the economy slows, customers tend to stick with the brands they know and love. That will help protect the dividend in 2023.
Greencoat UK Wind
I love this stock at the moment. Greencoat UK Wind is a trust investing in UK wind farms. It owns or has shares in 45 farms across the country, providing enough power for 1.5m homes.
Wind is temperamental, and that’s a challenge that battery storage will need to overcome. But the future for UK wind is bright, especially if there’s an end to the moratorium on onshore wind farms.
Greencoat offers a 4.8% dividend yield and promises to increase it in line with inflation. Coverage was an impressive 3.2 times in 2022. I’m buying more.
The Renewable Infrastructure Group
The Renewable Infrastructure Group is a stock that’s on my wish list, and one I intend to buy in the coming weeks. The firm invests in a portfolio of assets in the renewable energy space across the UK and Europe.
Currently, it offers a 5.2% dividend yield and trades at a slight discount versus its net asset value. The Electricity Generator Levy may prove a hinderance in 2023, but time will tell here. In the long run, I find the exposure to this highly-promising industry and the dividend very attractive.
