Do you have a stack of money sitting in a savings account? Now could be the time to consider investing in high-yield dividend shares as rates on cash accounts fall.
Here are three passive income stocks that have grabbed my attention:
| Dividend share | Dividend yield |
|---|---|
| Dowlais Group (LSE:DWL) | 7.9% |
| Tritax Big Box REIT (LSE:BBOX) | 5.8% |
| Greencoat UK Wind (LSE:UKW) | 8.2% |
Dividends are never, ever guaranteed. But if broker forecasts are accurate, a £9,000 investment spread equally across these shares would produce a £657 passive income just in 2025.
I’m confident that each of these stocks could provide increasing dividends over time, too. Here’s why.
Bumpy road
First off, it’s important to say that Dowlais Group — which builds parts for auto makers — isn’t for the faint of heart. Its share price has plummeted 55% since it listed last spring. It could continue falling too if pressures in the car industry persist.
But looking longer term, I believe the engineer has significant rebound potential. This is because of its focus on the high-growth electric vehicle (EV) segment. Comprising parts of former FTSE 100 stock GKN, it is a leading light in areas like electric powertrain technology.
In the near future, too, Dowlais’ share price could receive a bump if it manages to sell its Powder Metallurgy unit which it put up for sale in August.
With that near-8% dividend yield and low price-to-book (P/B) ratio of 0.2, I think the company merits serious attention at today’s prices.
Boxing clever
I already own Tritax Big Box REIT shares in my Stocks and Shares ISA. As a real estate investment trust, or REIT, it’s designed to provide a steady stream of income to investors.
This is because, in exchange for tax advantages, it must pay out at least 90% of annual rental profits in the form of dividends.
There are almost 50 REITs listed on the London Stock Exchange. Tritax is one of my favourites because of its focus on the chronically undersupplied warehouse and distribution centre market. Like-for-like annualised rents at Tritax rose 5.1% on leases subject to rent review in the first half.
Like other property stocks, its share price could fall if interest rates fail to fall significantly from current levels. But a healthy long-term outlook makes this dividend stock worth serious consideration.
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.
Green machine
Renewable energy stocks have fallen sharply following the US Presidential election. This includes Greencoat UK Wind, which could have further to fall if Donald Trump makes things tougher for green energy providers, souring the broader sector.
I’m confident, however, that renewable energy stocks could bounce back sharply over a longer time horizon. As the climate crisis worsens, I think demand for wind energy and other clean sources might still explode, whoever is in the White House.
Greencoat UK Wind owns wind assets worth £3.6bn across the country, both onshore and offshore. This wide footprint reduces the risk that unfavourable weather conditions in one or two regions pose to group profits.
From a dividend standpoint, I also like the firm’s pledge to raise shareholder payouts in line with retail price inflation (RPI). It’s a policy that ensures my passive income keeps pace with appreciating living costs.
