2 of the best UK high-dividend shares

For-long term investors, it’s highly likely returns from dividends will make up a sizeable part of overall returns. That’s why I want to buy dividend shares and today I’m looking at two from the UK.

A high dividend share

First is real estate investment trust (REIT) Primary Health Properties (LSE: PHP). It’s well established and specialises in the rental of primary healthcare facilities within the UK and Ireland.

The group’s portfolio comprises 513 primary healthcare facilities, valued at £2.6bn. Many of the assets are GP surgeries.

Primary healthcare going more digital (a trend accelerated by the pandemic) could be considered a threat and could hold back the share price. Overall, though I think Primary’s assets should rise in value and provide good recurring revenue. An ageing population mean there should still be a big need for physical consultations with a GP in future. 

The REIT structure and the dividend

A pro and a con of the REIT structure is that it must pay out 90% tax-exempt income profits to shareholders. This is good for getting income when markets are steady. The flip side is, it provides fewer reserves and room to manoeuvre when markets become trickier.

Yet with a dividend yield of 4% and clients who have steady state-funded income, I think this is a solid dividend share. That’s why I’ll be happy to add it to my own portfolio when I’m looking for another income stock.

Another share yielding over 4% 

The second dividend share I like is investment trust Murray International (LSE: MYI). The trust invests internationally with top holdings including Taiwan Semiconductor, Grupo Aeroportuario, GlobalWafers, CME and Roche.

It’s one I already hold and happily, it has seen good share price growth in recent times, even though it’s high-yielding. This is probably partly to do with the post-Covid recovery and the preference for value shares at the moment.

The shares come with a dividend yield of 4.5%. Given that the strong recent share price performance will have pushed down the yield, it’s still a strong high-dividend share, in my opinion.

The downsides of this dividend share

The downsides with this trust are that it’s hard for a UK investor to know much about any of the holdings. From the top five holdings I’ve only heard of Roche, for example. As an investor I need to put faith in management to select the right companies.  

Another downside of buying the shares now is that they are at a slight premium to the net asset value. Usually this would put me off, but the shares have good momentum and could continue to benefit from the Covid recovery.

Ongoing charges of 0.68% are competitive for a trust that invests internationally and given the portfolio is very different from any tracker, is a price worth paying, in my opinion. What I mean is it would be hard as a UK investor to replicate what Murray International does, so I think it’s worth paying for the manager.

I like the trust as it provides my portfolio with geographic diversification, as well as holding a wide range of income-producing companies and bonds. For me it’s a very good high-dividend share.