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With October approaching, I’m deciding which stocks to buy in the month ahead. And a couple of dividend shares are catching my attention at the moment.
In both the UK and the US, I’m looking a bit further afield than the main indexes. But I think there’s a lot to be said for the opportunities that are on offer right now.
Primary Health Properties
I’m a big fan of real estate investment trusts (REITs) as passive income investments. And Primary Health Properties (LSE:PHP) stands out for a number of reasons.
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The firm leases a portfolio of GP surgeries and its largest tenant is the NHS. In recent times, that’s meant strong occupancy levels and reliable rent collection – and I think this is set to continue.
PHP is in the process of acquiring Assura – its major competitor. And the firm has used its own stock in the deal, which was trading with a higher dividend yield at the time.
That creates risk – it means the company will have to find additional savings from the combined venture, which can’t be guaranteed. But management has a plan for doing this.
Increased scale and reduced competition should put the business in a stronger position when it comes to both financing and increasing future rents. And I think the optimism here is justified.
On top of this, an 8% dividend yield provides some level of security for investors. I used to own the stock a while ago, but the market’s response to the Assura deal might be my chance to get back in.
Chord Energy
Chord Energy (NASDAQ:CHRD) is an oil company UK investors might not have on their radars. But I think a 5% dividend yield and a focus on share buybacks means it deserves to be.
While other firms prioritise exploration, Chord returns cash to shareholders. Its leverage ratio remains below 0.5 (it’s currently 0.3), but it plans to distribute 75% of its adjusted free cash flow.
This is attractive in terms of passive income, but it limits the firm’s opportunities for expansion. And that creates risk for investors in terms of what happens when its existing reserves run out.
The issue looks more urgent than investors might think. At the start of the year, Chord had 883m barrels of oil equivalent in proved reserves, after extracting just under 85m barrels in 2024.
This makes it seem as though the firm has less than 10 years of production left. But it’s worth noting that the company added almost 64m barrels to its reserves through drilling.
In other words, it replaced around 75% of the oil it extracted. And this, combined with the firm’s capital allocation policy means it’s a stock I think dividend investors should pay attention to.
Dividend-focused
Both Primary Health Properties and Chord Energy are dividend stocks in the strongest sense. Their capital allocation policies focus heavily on returning cash to shareholders.
I’m looking at both as potential investments for my Stocks and Shares ISA in October. And I think investors looking for long-term passive income should consider doing the same.
