2 UK shares I own to boost my passive income stream!

This Fool explains how he is making a passive income through two UK shares that pay a regular and consistent dividend.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Passive income text with pin graph chart on business table

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

As a passive income seeker, I look for the best UK shares that are designed to pay out regular and consistent dividends.

Two of the stocks I own are real estate investment trusts (REITs). As a quick reminder, a REIT is a business set up to make money from income-yielding property. They are legally required to return 90% of profits to shareholders.

I must note there are risks to investing in REITs to boost my passive income stream. As with any dividend stock, dividends are paid at the discretion of the business, meaning they can be cancelled at any time. Furthermore, if a REIT cannot rent out or collect rent from its properties, it cannot generate a profit and pay a dividend.

Passive income stock #1

Supermarket Income REIT (LSE:SUPR) invests in supermarket-related property in the UK. One of its core aims is to provide inflation-linked income. In fact, over 80% of the business’s rental income is tied to inflation. With inflation currently rising, Supermarket’s rental income should increase, in turn, increasing my returns.

So what’s the current state of play with the Supermarket share price? Well, as I write, the shares are trading for 127p. At this time last year, the shares were trading for 118p, which is a 7% increase over a 12-month period.

I view the grocery business as a defensive option. Despite the current macroeconomic outlook and cost of living crisis, people need to eat. This tells me that retailers will need the kinds of properties in Supermarket Income REIT’s portfolio.

As well as favourable market conditions, Supermarket shares carry an enticing dividend yield of close to 5%. This is higher than the FTSE 100 average of 3%-4%. The shares also look good value for money right now with a price-to-earnings ratio of just nine.

Finally, Supermarket’s performance historically has been excellent. I do understand that past performance of UK shares are not a guarantee of the future, however. Looking back I can see it has grown revenue and profit year on year for the past four years.

I have owned Supermarket shares for some time now and may add more soon to boost my passive income stream.

Stock #2

The second stock is Primary Health Properties (LSE:PHP). It is a REIT that specialises in the purchase, development, and ownership of primary healthcare premises in the UK and Ireland. An example of this is GP surgeries.

Let’s look at Primary’s share price now. As I write, the shares are trading for 136p. At this time last year, the shares were trading for 157p, which is a 13% drop over a 12-month period.

I believe Primary Health Properties has defensive attributes too. Healthcare demands have only increased in the UK and Ireland due to an ageing and growing population. If Primary Health Properties can continue to provide quality locations, it should continue to yield rental income and boost returns in the form of dividends for passive income seekers like myself.

So what about the dividend yield? Well, the shares have a yield of 4.5% currently, which is also higher than the FTSE 100 average. The shares are a bit more expensive than Supermarket Income, on a price-to-earnings ratio of 14.

Primary also has a good track record of performance. Looking back I can see it has grown revenue and profit for the past three years in a row.

Like Supermarket Income and many of my UK shares that pay a dividend, I intend to hold my position in Primary Health Properties for the long term to boost my passive income stream.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jabran Khan owns shares in Supermarket Income REIT and Primary Health Properties. The Motley Fool UK has recommended Primary Health Properties. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »