2 high-yield dividend shares I’d buy to target a £636,281 retirement fund!

The high forward yields on these dividend stocks are more than double the FTSE 100 average. Royston Wild thinks they are passive income heroes.

| 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.

Senior Couple Walking With Pet Bulldog In Countryside

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.

Buying high-yield dividend shares can be a great way to build wealth for retirement.

By reinvesting any dividends I receive, I can supercharge my eventual returns thanks to the miracle of compounding. And purchasing stocks with large yields — assuming that brokers’ dividend forecasts prove accurate — can give me especially large amounts of cash to buy more UK and US shares.

With this in mind, here are two high-yield income stocks I’d buy today if I had cash to invest. Both of their dividend yields sail above the FTSE 100 average of 3.6%.

Triple Point Social Housing REIT

Forward dividend yield: 9.2%

Created with Highcharts 11.4.3Social Housing REIT Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Investing in real estate investment trusts (REIT) can be a great way for investors to supercharge their dividend income. In return for certain tax perks, REITs must pay a minimum of 90% of annual rental profits out in the form of dividends.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Triple Point Social Housing REIT (LSE:SOHO) is one such company with terrific investment potential. It supplies specialised supported housing (SSH), in other words, homes for adults whose special needs mean they require regular care and support.

It’s a sector that looks poised for rapid growth over the next decade. This reflects chronic underinvestment in suitable homes in the UK, and a predicted rise in the number of vulnerable adults.

Triple Point’s profits are highly sensitive to government health policy. But given that SSH is cheaper than in-patient care or residential care homes, policy makers could be likely to invest heavily here going forwards.

I also like this REIT because of the stability of its income flows. Its rents are inflation linked and indirectly paid by local authorities.

TBC Bank Group

Forward dividend yield: 7.9%

Created with Highcharts 11.4.3TBC Bank PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

TBC Bank Group (LSE:TBCG) doesn’t have the same year-on-year consistency as residential property stocks. During economic downturns, profits can fall as revenues weaken and bad loans rise.

Yet, I believe this FTSE 250 share has capacity to deliver huge long-term returns, including a steady stream of large dividends. This is thanks to its number one position on Georgia’s rapidly growing banking sector.

Earnings here continue to soar as the Eurasian country’s economy booms (GDP grew 7.5% in 2023). TBC’s latest financial update showed pre-tax profits up 14% in the first half of 2024.

Given that financial product penetration in Georgia remains at relatively low levels, the banking giant has significant scope to grow profits. This will be boosted by the company’s massive investment in digital services.

Building a £636k+ nest egg

If I invested £10,000 equally in TBC Bank and Triple Point shares today, I could make a second income of £860 this year. That’s based on an average dividend yield of 8.6%.

And assuming I reinvested my dividends into these two stocks — along with a regular £200 monthly investment — I’d have turned that into an impressive £636,281 after 30 years. That’s assuming that the dividend per share and share price remain stable.

While shareholder payouts are never guaranteed, I’m confident that both stocks will continue to grow dividends over time. And with the potential for long-term share price gains, too, I think I could make even more than that £636,281.

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 no position in any of the shares mentioned. 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

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »

Investing Articles

At a 52-week low but Taylor Wimpey shares are forecast to rise 35% in a year and yield almost 9%!

Taylor Wimpey shares have had a rough ride but Harvey Jones says analyst forecasts are upbeat, while there is also…

Read more »