3 high-yield dividend stocks to consider for my passive income portfolio in 2024

I want to build a portfolio of dividend stocks that pay enough passive income to retire comfortably. Here are my three latest considerations.

| 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.

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 aim to retire early with a reliable stream of passive income to live comfortably well into old age. 

I believe one of the most effective ways to do that is with a portfolio of high-yield dividend stocks.

Dividends are a portion of profits that companies pay shareholders as an incentive to invest. A dividend yield represents the annualised percentage, usually paid in increments throughout the year.

I’ve spent a lot of time researching the UK stock market to discover dividend-paying companies that are likely to provide me solid returns for years to come. 

Today, I’m considering one FTSE 100 and two FTSE 250 companies that I think offer some of the best dividend-paying shares on the market currently.

Burberry Group

Famous for its luxury bags and coats, Burberry Group (LSE:BRBY) is one of the UK’s most well-known and beloved fashion brands.

Recently, however, it’s struggled to reach the highs of previous years. In January 2024, shares hit a four-year low of £12.30, down by almost 50% over the previous 12 months.

But things are looking up and Burberry is proving its value in the dividends department. 

The company’s balance sheet is solid, with a debt-to-equity (D/E) ratio of 35% and a relatively good net profit margin of 14.5%. This makes it a profitable company that’s unlikely to default on loans any time soon.

With a 4.8% dividend yield, it’s the lowest on my list – but a more established company than the others. When building my dividend portfolio, I must strike a balance between high-yield and reliable stocks, so I’d consider it a good addition.

Plus500

Plus500 (LSE:PLUS) provides online trading services via an internet platform and mobile app. The FTSE 250 listing has a moderate £1.4bn market cap at the time of writing.

It sports a higher-than-average dividend yield of 7.3%, with the next dividend scheduled to be paid out on 11 July this year. Although dividend payments have been unstable in the past, the company has enjoyed consistent growth with low volatility.

This means it could be a reliable addition to my portfolio, with less chance to incur a sudden price drop. However, analysts forecast an 8% decline in profits over the coming years. That’s a risk, because Plus500 may choose to skip some dividend payments if profits are too low.

But with no debt and a near-flawless balance sheet, I’m confident that Plus500’s high yield dividends would provide me decent returns over the long run. 

Dunelm Group

Speciality homewares retailer Dunelm Group (LSE:DNLM) is a £2.3bn FTSE 250 company that offers a decent 6.7% dividend yield. The share price enjoyed consistent growth over the past 16 years, rising almost tenfold from £1.18 in 2008 to £11.50 today.

The next dividend is due on 9 April, with the ex-dividend date set for 14 March. Dividends are paid out on all shares purchased prior to the ex-dividend date.

Although I like Dunelm’s dividend yield, payments have been volatile and sporadic over the past few years. Furthermore, its earnings are forecast to grow slower than the UK market, likely limiting returns beyond the dividend.

This would make it a less reliable addition to my portfolio, and probably one I would skip over for now.

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.

Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry Group 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

Investing Articles

Would Warren Buffett buy BP shares, as oil excitement grows?

Warren Buffett is a big investor in the oil business, and BP's performance has been attracting investor attention in results…

Read more »

Cropped shot of an affectionate young couple posing with a bunch of flowers in their kitchen on their anniversary
Investing Articles

Here’s how long-term loyalty to UK shares can lead to dazzling returns!

The most successful UK and US share investors buy shares to hold for the long term, as this report shows.

Read more »

Investing Articles

NatWest has just smashed brokers’ dividend forecasts!

After NatWest delivered a Valentine’s Day surprise to investors, our writer thinks the experts may have to raise their dividend…

Read more »

Investing Articles

The NatWest share price slips in early trading despite positive FY 2024 results. What’s the deal?

The NatWest share price is down slightly this morning after the bank released its final results for 2024. Our writer…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

My Legal & General shares have climbed just 7% — so how come I’m sitting on a 20% gain?

Harvey Jones' trading account is showing only a modest return on his Legal & General Shares, but on drilling down…

Read more »

Investing Articles

Prediction: the BP share price could rise in 2025 (or it might fall!)

Following this week’s release of the energy giant’s 2024 results, our writer reviews the prospects for the BP (LSE:BP.) share…

Read more »

many happy international football fans watching tv
Investing Articles

What’s gone wrong with the FTSE 100’s ‘King of Trainers’?

Feeling the pain of a 28% drop in the JD Sports share price over the past three months, our writer…

Read more »

Investing Articles

Is it too late for investors to consider buying these outstanding FTSE 100 shares?

Stephen Wright wonders whether now's the time to consider buying shares in the FTSE 100’s outstanding companies, despite some high…

Read more »