I’m searching for the best high-dividend stocks to buy in September. Here are two such UK shares I think could deliver solid passive income for years to come.
Residential Secure Income REIT
I think REITs can be a great way to secure a reliable second income. In exchange for certain tax advantages, these businesses are obligated to pay 90% of annual profits out in the form of dividends.
Residential Secure Income REIT (LSE: RESI) is one such stock on my radar today. This UK share invests in residential rental properties and shared ownership homes. As a consequence I expect profits to boom as private rents charge higher.
To illustrate this point, estate agent Hamptons thinks rent increases will outpace home price rises over the next four years. It reckons tenant costs will rise 5% in both 2023 and 2024.
Rising construction costs pose a danger to Residential Secure Income REIT’s earnings. But I think the prospect of prolonged and powerful rents growth, driven by Britain’s long-running accommodation shortage, still makes it a great buy in September.
The real estate stock carries a tasty 4.7% dividend yield for the financial year ending September 2022. The dial improves to 4.8% for the upcoming year too.
Vodafone Group
Huge uncertainty surrounds Vodafone Group (LSE: VOD) as activist investor Cevian Capital pushes for change. A range of revolutionary measures, from significant boardroom changes to major consolidation in several European markets, are all reportedly on Cevian’s ‘to do’ list for the telecoms firm.
This could give Vodafone’s share price a welcome jolt after years of underperformance. But the scale the overhaul Cevian is planning also creates extra risks for shareholders.
Consolidation, for example, brings a range of dangers that could erode shareholder value. In fact, a rush for mergers and acquisitions in recent times raises raises the threat of Vodafone paying over the odds to expand.
That being said, there are still plenty of reasons to be optimistic about the FTSE 100 firm. It’s rapidly expanding its position in fast-growing areas like 5G and full-fibre broadband.
Vodafone also has a large footprint in Africa where it provides telecoms and mobile money services to around 238m customers. Africa is widely tipped to be the fastest-growing telecoms market in the world over the next two decades thanks to climbing personal wealth levels and low product penetration.
I especially like Vodafone because of its credentials as an income stock. Its lofty position in the ultra-defensive telecoms sector means that it should deliver solid dividend income during good times and bad.
The company is also a mighty cash generator. As well as giving it the means to invest in its operations for growth, this gives it the financial headroom to dole out large dividend payments year after year.
Speaking of which, Vodafone currently carries a mighty 6.7% dividend yield for this financial year (to March 2023).
