Looking for the best high-yield dividend shares to buy? I’ve got you covered. Here are three to consider whose forward dividend yields comfortably beat the FTSE 100 average of 3.6% average.
Murray’s mint
Dividends are never, ever guaranteed. As we saw during the Covid-19 era, even the most financially stable Dividend Aristocrat can slash, postpone or cancel shareholder payments at short notice.
Fossil fuel giant Shell, for instance, cut dividends for the first time since 1945 during the pandemic.
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Investing in an income-focused trust doesn’t eliminate this threat. But their diversified holdings mean the danger of dividend disruption can be greatly reduced. Murray Income Trust (LSE:MUT), for instance, has managed to grow annual dividends for 51 straight years.
In total, the trust has holdings in dozens of companies in the UK and overseas. Major holdings here include AstraZeneca, Diageo and National Grid. And today, its forward dividend yield is a healthy 4.7%.
Be aware however, that only a maximum of 20% of Murray Income Trust can be allocated to international shares. This could leave its share price vulnerable if broader appetite for UK stocks weakens.
Euro star
Real estate investment trusts (REITs) like Segro (LSE:SGRO) can also be great sources of passive income. This is thanks to sector rules requiring at least 90% of a firm’s rental profits to be distributed to shareholders. It’s the price they pay for breaks on corporation tax.
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Property shares like this can be reliable dividend stocks for other reasons. They often lock their tenants into ultra-long-contracts which, in turn, provides a reliable stream of income. Segro’s weighted average lease term (to earliest break) was a reassuring 7.3 years as of June 2024.
With a geographic footprint spanning the length and breadth of Europe, Segro’s able to withstand localised shocks and continue paying a reliable dividend.
The FTSE 100 company’s lifted annual dividends every year since 2013. And today it carries an index-beating forward dividend yield of 4.5%.
Its share price may fall further if interest rate cuts fail to match market expectations. But over the long haul, I expect Segro to deliver strong overall returns.
Green giant
Greencoat UK Wind‘s (LSE:UKW) another beaten-down property stock that’s worth a close look. Recent share price falls have supercharged its forward dividend yield to a stunning 8.4%.
As well as interest rate risks, this renewable energy stock faces a more long-term problem that it can’t control. When the wind doesn’t blow or the sun hides, energy generation (and by extension profits) can slump.
However, Greencoat — whose portfolio of wind farms spans England, Scotland, Wales and Northern Ireland — does smooth out this risk with its wide geographic footprint.
Unlike in the US, the political landscape in Britain remains extremely favourable for energy providers like this. One of the government’s first actions was to lift the ban on new onshore wind farms last July, giving a boost to the likes of Greencoat UK.
Given the stable nature of energy demand, the FTSE 250 business can also be expected to pay a healthy dividend at all points of the economic cycle. That can’t be said for most stocks.
