Here are the dividend forecasts for 2 passive income stocks to consider this December

These passive income stocks offer some of the highest dividends on the FTSE at almost double the market average! Is it time to consider them?

| 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.

Passive income text with pin graph chart on business table

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.

As the year rapidly draws to a close, I’m checking the dividend forecasts of high-yield stocks for 2025 and beyond.

I already hold shares in the following two companies and explain here why other investors may want to consider them for passive income.

For comparison, the average yield in the UK is currently around 3.5%. That makes the potential returns on these shares well above average. 

Should you invest £1,000 in Aviva 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 Aviva made the list?

See the 6 stocks

But the yield alone is not the only factor to consider. Since dividends are never guaranteed, it’s important to assess how well-positioned the business is and if it can continue paying dividends.

Aviva

Created with Highcharts 11.4.3Aviva Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Aviva (LSE: AV.) has a long track record of consistent dividends, forecast to continue through 2025. The 7% yield is set to reach 8% by the end of next year, with the dividends rising from 33.4p per share to 42p by 2026.

Earnings per share (EPS) are forecast to rise faster than dividends, from 42p to 53p per share by 2026. As earnings improve, the company’s price-to-earnings (P/E) ratio is forecast to decrease from 11.6 to 9.1. This is comfortably below the UK insurance industry average of around 16, suggesting the current price represents good value.

Keep in mind that the economy is fickle and the insurance industry is at its whim. Interest rate fluctuations present an ever-present risk. While lower rates threaten investment income, higher rates can lead to fewer contributions and a decrease in business.

If one (or more) of Aviva’s many competitors can afford to undercut the market, it could steal away customers, threatening the company’s profits. It’s currently attempting to buy out smaller rival Direct Line, although its bids have so far been rejected. 

It has long been one of the most consistent dividend-payers on the Footsie. Forecasts seem to indicate that will continue and I think recent performance supports that theory. I don’t have the cash to buy more shares today but I would if I could!

Primary Health Properties

Created with Highcharts 11.4.3Primary Health Properties Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Primary Health Properties (LSE: PHP) has long been a favourite real estate investment trust (REIT) of mine, paying consistent dividends. Due to a rule that enforces a 90% return of profits as dividends, REITs can be a great option for passive income.

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.

Sadly, the rules can’t ensure share price growth and Primary Health has fallen 7% since July, negating a big chunk of the dividend returns. The promise of falling interest rates gave the property market a boost this year but the October budget threw a spanner in the works. While interest rates remain high, it’ll be a tough market to crack.

However, since I have a long-term view of my passive income goals, the dividend forecast is more my concern. 

And that looks good.

Dividends are forecast to rise to 7.1p per share next year, up from 6.9p. The growth is not spectacular but reliable, with dividends rising 4% yearly for almost a decade. Strong cash flows ensure dividends remain well-covered even when the share price struggles. 

Coincidentally, the current 43% price decline is equivalent to that experienced during the 2008 financial crisis. In the decade following, it recovered at an annualised rate of 9.29% per year. If it can do that again, the returns would be significant.

As such, I plan to drip feed my cash into this one as time goes by.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p 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 10%, 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

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 positions in Aviva Plc and Primary Health Properties Plc. The Motley Fool UK has recommended Primary Health Properties 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.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »