2 UK dividend shares I’d love to buy for a growing second income!

I think these FTSE 100 and FTSE 250 shares are a great way for investors to make a second income. Here’s why I want to buy them when I have spare cash.

| 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.

Smiling senior white man talking through telephone while using laptop at desk.

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.

I’m searching for the best dividend stocks to provide me with a second income. It’s a quest that involves more than picking shares with the highest yield, which can be tempting for new investors.

I’m on the hunt for companies that look in good shape to grow dividends steadily over time. This way I can reduce (or even eliminate) the impact of rising inflation on my purchasing power.

Nobody knows what the future holds, and even companies with strong dividend growth records can suddenly disappoint. Shell raised the yearly payout every year since World War 2 until the pandemic smashed earnings in 2020.

But some careful analysis can seriously improve an investor’s chance of growing their dividend income. This involves identifying stocks with a proven record of operational excellence in growing markets. It’s also important to find businesses that generate decent amounts of cash that they can then return to shareholders.

With this in mind, here are two shares from the FTSE 100 and FTSE 250 I’d love to buy to try and grow my passive income.


Britain’s growing population means that demand for rental properties will steadily increase. This bodes well for Grainger (LSE:GRI), the country’s largest-listed residential landlord.

The company operates almost 10,000 build-to-rent homes. And with a development pipeline comprising another 5,000+ homes, it has ambitious expansion plans to supercharge profits growth.

The possible introduction of new rent reforms could bite into earnings here. But a long-term trend of rising rents means the outlook is extremely promising for investors.

Like-for-like rental growth sped up to 7.1% in the eight months to May. And occupancy of its privately rented homes rose to record levels of 98.7%. I’m expecting trading numbers to remain impressive given the weak outlook for homes supply.

As for dividend growth, City analysts expect Grainger’s annual payout to rise 9% this financial year. This results in a healthy 2.6% yield.


Safety equipment supplier Halma (LSE:HLMA) is one of the FTSE 100’s greatest dividend stocks, in my opinion. It’s lifted the annual payout by at least 5% for an astonishing 43 straight years.

And (perhaps unsurprisingly) City analysts expect the firm’s proud record to continue. A 7% hike is tipped for the current financial year, resulting in a 1% dividend yield.

Halma is a very cash-generative business. Not only does this allow it to pursue its ultra-progressive dividend policy. It also gives the firm the financial firepower to make acquisitions, giving long-term earnings a considerable boost.

Just last week the company spent £23m to acquire Australia’s Lazer Safe, a manufacturer of protection systems for press brakes. A net-debt-to-EBITDA ratio of just 1.4 times is well within target, and gives the firm ample room to grow dividends and keep making acquisitions.

The drawback with Halma shares is its high valuation. A forward price-to-earnings (P/E) ratio above 26 times leaves it vulnerable to a share price correction if trading suddenly worsens.

But encouragingly, the company has an excellent performance history. It has racked up a staggering 20 consecutive years of record profits. I believe rising safety standards across the globe should continue to power the FTSE firm’s earnings higher.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Halma Plc. 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

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Could the FTSE 100 be set to soar in 2024?

The FTSE 100 keeps threatening to go off on a growth spree. And weak sentiment keeps holding it back. But…

Read more »

Investing Articles

Is this FTSE 100 stalwart the perfect buy for my Stocks and Shares ISA?

As Shell considers leaving London for a New York listing. Stephen Wright wonders whether there’s an undervalued opportunity for his…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

3 things I’d do now to start buying shares

Christopher Ruane explains three steps he'd take to start buying shares for the very first time, if he'd never invested…

Read more »

Investing Articles

Investing £300 a month in FTSE shares could bag me £1,046 monthly passive income

Sumayya Mansoor explains how she’s looking to create an additional income stream through dividend-paying FTSE stocks to build wealth.

Read more »

Investing Articles

£10K to invest? Here’s how I’d turn that into £4,404 annual passive income

This Fool explains how using a £10K lump sum can turn into a passive income stream worth thousands for her…

Read more »

Investing Articles

1 magnificent FTSE 100 stock investors should consider buying

This Fool explains why this FTSE 100 stock is one for investors to seriously consider with its amazing brand power…

Read more »

Rainbow foil balloon of the number two on pink background
Investing For Beginners

2 under-the-radar FTSE 100 stocks under £2

Jon Smith identifies two FTSE 100 stocks that he believes are getting a lack of attention from some investors but…

Read more »

Investing Articles

£8,000 in savings? I’d use it as a start to aim for £30k a year in passive income

Here's how regular investing in the UK stock market, over the long term, could help us build up some nice…

Read more »