I’m searching the FTSE 250 for the best stocks to buy for long-term passive income. Here are two high-yield dividend shares I have plans to buy when I have spare cash to invest.
Urban Logistics REIT
Providers of commercial property could suffer in the short-to-medium term as Britain’s economy splutters. They may struggle to collect rent, and vacancies could rise as businesses feel the strain.
Yet I’d still buy shares in Urban Logistics REIT (LSE:SHED) to boost my dividend income. I believe the outlook for the warehouse and logistics hub market remains highly attractive. It’s why I already own shares in industry rival Tritax Big Box.
Properties like this are an essential cog in the e-commerce machine, a market tipped for strong growth over the next decade. They’re in high demand from product manufacturers, retailers and couriers alike.
Analysts at Ascential believe Britain’s e-commerce market will be worth £220bn by 2026, up considerably from £142bn in 2021. By then virtual shopfronts will account for 41% of all retail sales by chains.
Urban Logistics is rapidly expanding to capitalise on this opportunity, too. In January it paid £48m to acquire five properties whose tenants include corporate giants Amazon and Volvo.
Its status as a real estate investment trust (or REIT) makes the FTSE 250 company a solid buy for income investors, too. This is because this requires 90% of annual profits to be paid out in the form of dividends.
This means that Urban Logistics carries large yields of 5.4% and 5.9% for the financial years to March 2023 and 2024 respectively. Both readings trounce the FTSE 250’s 2.9% forward average.
Target Healthcare REIT
The social care sector is another industry tipped for steady growth as the domestic population rapidly ages. Research suggests there will be 13m people aged 65 years and over in the UK by 2032. That’s an increase of 2m from current levels.
I bought shares in care home operator Target Healthcare REIT (LSE:THRL) during the autumn to capitalise on this demographic opportunity. And following recent share price weakness I’m considering adding to my holdings.
Today Target Healthcare trades on a forward price-to-earnings growth (PEG) ratio of 0.4. Any reading below 1 indicates that an equity is undervalued by the market.
Furthermore, at current prices the REIT carries a jumbo 8.3% dividend yield for the next two financial years (to June 2023 and 2024).
I also think buying this property business could be a great idea in the current climate. This is because it enjoys solid rental flows even during economic downturns. Rental collection here stood at 96% in the October to December quarter.
Target Healthcare currently owns around 100 assets. And at the start of 2023 it acquired a care home development in Malvern, Worcestershire to increase its portfolio. I think it’s a top buy despite the threat that nursing staff shortages could pose to future profits growth.
