I’m searching for the best dividend shares for investors seeking a large second income next year. Here are two whose high dividend yields pop off the page right now:
| Dividend share | Predicted 2025 dividend (per share) | 2025 dividend yield |
|---|---|---|
| Primary Health Properties (LSE:PHP) | 7.04p | 7.3% |
| WPP (LSE:WPP) | 39.2p | 4.7% |
To give their yields context, today’s average yield on FTSE 100 shares is way back at 3.6%.
While dividends are never guaranteed, these passive income stocks appear in good shape to meet broker forecasts. Here’s why I think dividend investors should consider them today.
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Healthy dividends
Primary Health Properties shares have fallen sharply in recent weeks, sending its dividend yield for 2025 through 7%.
Real estate investment trusts (REITs) like this are designed to provide income to their shareholders. They’re obliged to pay at least 90% of profits from their rental operations out in the form of dividends, in exchange for certain tax perks.
That aforementioned yield boost now makes Primary Health potentially one of London’s best-paying REITs for next year.
Looking at dividend cover, the predicted payout for next year doesn’t look all that secure. In fact, next year’s assumed dividend per share is higher than expected earnings (7.02p).
But in reality this isn’t a cause for alarm to me. Indeed, earnings-topping dividends have been a regular feature of Primary Health Properties for many years.
This is because REITs like this typically base dividends on cash flow metrics like funds from operations (FFO) rather than accounting earnings, which can be impacted by non-cash charges (such as property depreciation).
Signs of sticky inflation have impacted Primary Health Properties’ share price of late. If this continues and interest rates remain higher, property stocks like this could continue falling.
But on balance, I think the potential benefits of owning the company offset this risk. Over the long term, I think profits could rise strongly as Britain’s ageing population drives demand for healthcare services.
Robust forecasts
An uncertain economic outlook means investing in WPP shares is riskier than usual today. During tough times, many companies tend to significantly scale back ad-related spending.
This may impact the advertising/marketing agency’s earnings in 2025. But I’m confident that it won’t affect its ability to meet current dividend forecasts.
For one, next year’s predicted payout is covered 2.2 times by anticipated earnings of 87.81p per share. Any reading above 2 times provides a wide margin for error, it’s often said.
WPP also has scope on the balance sheet to meet payout projections if profits disappoint. The proposed sale of its majority stake in FGS Global will pull its net-debt-to-EBITDA ratio to 1.6 times. This is well inside the company’s target of 1.5-1.75 times.
A recent trading improvement encourages me to be cautiously upbeat for WPP next year. It returned to growth in the third quarter, and like-for-like-sales rose 4.1% year on year.
With a robust dividend yield and low price-to-earnings (P/E) ratio of 9.7 times, I think it’s an attractive Footsie stock to consider for 2025.
