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Nasdaq An article detailing Mark Cuban's ideas on passive income was recently published. The world-famous investor is known for his role in Shark tank and as owner of the NBA basketball team, the Dallas Mavericks.
He made his fortune selling a tech startup during the dotcom bubble and has become a well-known and respected investor. The article outlines his preferred investment choices, such as private equity, artificial intelligence companies, and the S&P 500 IndexAs a contrarian investor, many of his ideas go against traditional advice.
But his feelings about dividends touched me.
He points out that his regular cash payments amount to real value. The best thing is that these payments can be reinvested to maximize profits through the miracle of compound returns.
With that in mind, here are two UK dividend stocks that I think I'd give a thumbs up to.
Empowering the nation
I am a supporter of investing in companies that have given me good results for a long time. That is why I have shares in Barclays, Tesco, Greggs, and Pay TVThese are companies that I use regularly and as such, I have a vested interest in their success.
National Network (LSE:NG) is another such company. I don't think there are many Britons who don't use its services regularly. As the country's gas and electricity provider, it has kept the lights on and homes warm for centuries.
Earlier this year it announced a planned 15% dividend cut that will reduce the annual payout from 53.1p to 45.3p per share. That will cut the yield from 5.46% to around 4.5%. The cut is part of plans to raise £7bn to support a transition to renewable energy.
I am a fan of renewable energy, but the announcement did not sit well with most shareholders. The share price fell by almost 20% in the five days following the news. However, I firmly believe that renewable energy will be a highly profitable industry in the future. It is a sacrifice today that could end up being very beneficial for the company and the environment.
Housing for the nation
Taylor Wimpey (LSE: TW) is one of the UK's most prolific housebuilders and is seen benefiting from the new Labour government's positive stance on affordable housing.
With the stock up 40% over the past year, the company is already getting ahead of itself. In its latest half-year results, it raised its home completion target to 2024. As for dividends, it has an attractive 6% yield and has increased dividends in recent years.
However, it is still recovering from the 2008 property market crash. Before it suspended dividends altogether in 2008, its annual payout was 15.75p a share. It has managed to climb back to 9.58p, but any further market volatility threatens future payouts.
For now, momentum is good. Dividends have grown at an average of 29% per year over the past decade. With earnings forecast to rise, its forward price-to-earnings (P/E) ratio is 17.5. Its trailing ratio has risen from 14 to 23 this year, so a possible reduction is a good sign.
The property market is always risky in times of economic instability, but now that things are looking up, I like Taylor Wimpey's prospects. I consider its shares to be a great addition to my income-focused portfolio.