As the new month begins, many, including myself, receive a paycheck, providing an opportunity to invest in stocks. Alongside growth shares, I am also keen on securing stocks that offer substantial passive income. Here are two promising options for June.
Greencoat UK Wind: Harnessing the Power of Renewable Energy
The first stock on my list is Greencoat UK Wind (LSE: UKW). This company gained popularity during the early stages of the pandemic as renewable energy became a focal point for investors. Greencoat UK Wind is a prominent listed renewable infrastructure fund that invests in and operates UK wind farms. Typically, its share price should align closely with the net asset value (NAV) of its renewable assets. However, the share price has dipped by 9% over the past year, resulting in a 13% discount to the NAV as of the latest update.
This decline in share price has caused the dividend yield to rise to 7.63%, making it an attractive option for a couple of reasons. Firstly, the high passive income is appealing. Secondly, I believe the stock will eventually rebound, given that renewable energy is the future. Therefore, I am not overly concerned about the short-term price fluctuations.
One potential risk is the persistently high interest rates in the UK, which make it more expensive for Greencoat to raise new capital for asset purchases. However, I anticipate that this risk will diminish, expecting the first UK interest rate cut by the end of this summer.
TBC Bank Group: Capitalizing on Digital Banking and Economic Recovery
Another stock I find appealing is TBC Bank Group (LSE: TBCG). This Georgian bank has performed well in recent years, benefiting from a shift towards digital banking and the country’s robust economic recovery. Over the past year, the stock has risen by nearly 7%, while the dividend yield has also increased, now sitting at 7.96%, partly due to the recent dividend declaration from the 2023 results.
Last year, TBC Bank’s profit increased by 13.6%, providing ample funds for shareholder dividends. Looking ahead, I believe the bank is well-positioned to continue its payouts, making the income seem secure. However, it is worth noting the 36% increase in total credit loss allowances and the 24.2% rise in operating expenses from last year, which are concerning. I will need to monitor these credit losses to ensure they do not escalate into a more significant issue.
