I think November could be a great time to buy shares – especially for passive income. Prices have been falling since the start of the year and I see some opportunities in the stock market that look good to me.
I’m not expecting these to be around forever, though, and signs of recovery are just starting to emerge. So I’m looking to take advantage while I still can.
The PRS REIT
Top of my list is The PRS REIT (LSE:PRSR). The company buys houses from builders, leases them to tenants, and distributes its rental income to shareholders in the form of dividends.
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Rising interest rates have been weighing on UK house prices recently. As a result, the company has seen the value of its assets fall – and its share price is down 10% since the start of the year.
There is a genuine risk here – the UK’s construction output is down this year and this is a significant headwind for the company’s growth. And a full recession would make this worse.
The 5% dividend yield looks like a good opportunity to me. For an investor prepared to invest at today’s prices, I think this could be a good source of passive income for the long term.
Earlier this week, though, the Bank of England announced a decision to stop increasing interest rates. Shares in the PRS REIT jumped 7% on the news.
I therefore don’t think the stock – or the dividend yield – is going to remain at these levels indefinitely. That’s why it’s on my list of shares to buy in November
Kraft Heinz
In general, US stocks have fared much better than their UK counterparts lately. Since the start of the year, the FTSE 100 is down 1.4%, compared to a 13% gain for the S&P 500.
This makes the US an unlikely place to look for bargain stocks. But the relative outperformance is mostly due to strong performances from seven big tech firms, driven by optimism around AI growth.
Beyond this, though, US and UK equities have put up largely similar results. And I’m looking to take advantage of what I see as an unusually good opportunity in Kraft Heinz (NASDAQ:KHC) shares.
Inflation is a constant risk with Kraft Heinz and investors ought to be aware of the potential impact on margins. In the US, this has been creeping up since June and has reached 3.7%.
That presents a threat to margins, but the company has been handling it well so far. Its most recent earnings report announced increased revenues, wider margins, and higher (adjusted) profits.
The stock is down 18% since the start of the year and I think it looks cheap at a price-to-earnings (P/E) ratio of 13. But the price has started to rally, so I intend to add to my investment before it’s too late.
Time to buy
Central banks in both the UK and the US have stopped raising interest rates as their priorities shift from fighting inflation to avoiding recession. That’s positive news for share prices.
The result of this, though, is that the bargains that investors have been enjoying in 2023 are unlikely to be around for much longer. As such, I see November as a time to be buying.
