Forget the FTSE 100! Here are 3 dividend shares to consider for a great passive income

If searching for ways to supercharge a passive income portfolio, these non-Footsie dividend shares are worth a closer look, says Royston Wild.

| 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.

The FTSE 100‘s a great place for investors to go hunting for dividend shares. However, those that confine themselves to the UK’s flagship index may be missing excellent opportunities elsewhere.

Here are three great passive income stocks I think share pickers should consider today.

Dividend share2025 dividend yield
ITV (LSE:ITV)8.1%
Inchcape (LSE:INCH)4.8%
Care REIT (LSE:CRT)8.7%

As you can see, their dividend yields for next year smash the Footsie’s 3.5% forward average to smithereens. I’m confident that these companies can pay a large and growing dividend for years to come too.

Should you invest £1,000 in Vodafone right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Vodafone made the list?

See the 6 stocks

ITV

ITV’s had a tough few years due to evaporating advertising sales. But with marketing budgets improving, now could be the time to consider buying the broadcasting giant.

Taking a longer term view, there are other reasons why I like ITV shares. The company’s bet big on the fast-growing streaming sector, and it’s paying off handsomely. Third-quarter financials showed streaming hours at its ITVX platform soar another 14%.

Remember though, that high competition from the likes of Netflix poses a threat to future growth.

I also like the huge investment ITV’s made to create a world-leading production arm. Organic revenues at ITV Studios are tipped to rise, on average, by an industry-topping 5% through to 2026.

For 2025, the predicted dividend is covered two times over by expected dividends. This is bang on the widely-regarded safety benchmark.

Inchcape

As a major car distributor, Inchcape’s profits are vulnerable during economic downturns. Sales of big-ticket items are usually the first thing to go when people feel the pinch.

Yet despite these threats, dividends over the next few years look secure, in my book. For 2025, the predicted dividend is covered 2.4 times by expected earnings, providing a wide margin for error.

With operations in 40 countries, the firm enjoys broad geographic distribution that helps reduce risk of profits and dividend turbulence.

Speaking of distribution, I like the Inchcape’s decision to sell its UK retail operations earlier this year and become a pure-play distributor.

Doubling down here — which the firm has described as “higher-margin, more capital‐light, higher return, more cash-generative, compared to retail-only businesses” — bodes well, in my opinion. Improved cash flows could certainly give dividend growth a big boost.

Care REIT

Care REIT — which was until last month known as Impact Healthcare REIT — also enjoys healthy dividend cover, at 2.1 times.

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.

This adds extra strength to an already-robust dividend stock. As an operator of care and residential homes, it operates in a defensive sector where rent collection’s broadly unaffected by broader economic conditions.

That’s not all. All of its contracts are 100% inflation linked, protecting profits from rising costs. And Care REIT has its tenants locked down on ultra-long contracts (the weighted average unexpired lease term is above 20 years).

Real estate investment trusts (REITs) like this must pay at least 90% of profits from their rental operations out in the form of dividends. While earnings are being dented by higher interest rates, I think it’s worth serious consideration from dividend investors.

Should you invest £1,000 in Vodafone right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Vodafone made the list?

See the 6 stocks

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 ITV. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

I was wrong about the Tesla stock price!

Tesla stock's been affected more than most by ‘Liberation Day’. But our writer has other concerns about Elon Musk’s company.

Read more »

Investing Articles

What’s happening to the Rolls-Royce share price now?

The Rolls-Royce share price has taken a knock from US trade tariffs, but it's still gained more than 50% in…

Read more »

Investing Articles

10 UK shares that are 50% or more off their 52-week highs

These UK shares have been hit hard. And Edward Sheldon believes there could be some opportunities for those with a…

Read more »

Man smiling and working on laptop
Investing Articles

Could IAG’s share price surge over the next year? These analysts think so!

IAG's share price has sunk, reflecting growing concerns over the impact of trade wars on airline profits. Is this a…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

£10,000 invested in Apple shares last week is now worth…

Apple shares are down 18% over the past week. It’s a truly phenomenal downward movement, but investors may want to…

Read more »

Investing Articles

Are shares like Tesco a safe haven for investors?

Christopher Ruane sees a lot to like about Tesco shares. But does he see them as a safe heaven in…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

The 2025 stock market sell-off could be a once-in-a-decade opportunity to build wealth in an ISA

If a long-term investor has cash sitting in an investment ISA, now could be a good time to put some…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Is now a good time to start buying shares?

Stock market turbulence can be alarming, but it can also offer opportunity. Our writer considers whether now could be the…

Read more »