2 high-yield dividend stocks to consider for a possible £1,350 passive income this year!

Considering a lump sum in these UK dividend stocks could unlock an enormous second income in 2025 and beyond, reckons Royston Wild.

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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.

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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.

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Dividends from UK stocks are never, ever guaranteed. So putting all an investor’s eggs in a single basket can decimate passive income when disaster strikes.

As we saw during Covid-19, even companies with rock-solid business models and strong balance sheets can cut, cancel, or postpone dividends at a moment’s notice.

Share pickers can reduce this threat by having exposure to a diversified selection of dividend-paying shares. An investor who has a large wad of cash can spread that across multiple shares instead of parking it all in a single choice.

Diversification doesn’t mean investors need to settle for sub-par returns either. Indeed, if current broker forecasts prove accurate, a £15k lump sum invested equally on these two shares would provide £1,350 in dividends in 2025 alone.

There’s good reason to believe these stocks are worthy of further research as they could provide an excellent long-term passive income too.

Phoenix Group

Dividend yield: 10.4%

Today, Phoenix Group‘s (LSE:PHNX) the only FTSE 100 share with a double-digit dividend yield. But unlike many ultra-high-yielding shares, I think predicted dividends here look pretty secure.

You see, as a major life insurance provider and asset manager, it collects vast amounts of cash via policy premiums and management fees that it can distributes by way of dividends.

It generated £950m of cash in the first six months of 2024 and is on course to achieve cash generation of £4.4bn in the three years to 2026. With a Solvency II capital ratio of 168%, it has a good buffer to at least meet this year’s predicted dividends should earnings come in on the low side.

There’s a danger Phoenix’s share price could fall if interest rates remain at current levels, hitting overall shareholder returns. But rising long-term demand for financial planning services — combined with its cash-rich balance sheet — still makes it worth close attention among patient investors, in my book.

The Footsie firm’s heavyweight brands SunLife and Standard Life give it added strength to capitalise on this rapidly growing market too.

Risk reducer

Dividend yield: 7.6%

A lump sum investment in the iShares World Equity High Income UCITS ETF (LSE:WINC) is an effective way that investors can diversify their portfolios while still only directly holding only one or two shares.

As an exchange-traded fund (ETF), it’s designed to hold a basket of different assets and thus spread risk. In this case, the fund — which was created in March 2024 — focuses on 276 dividend-paying stocks from across the globe.

What’s more, these equities span a multitude of sectors including information technology, financial services, healthcare, telecoms and consumer goods.

On the downside, a chunky 71% of the fund is invested in US companies. As a consequence, it may be more vulnerable to a regional downturn than a more globally diversified fund.

Yet on the other hand, its large portfolio of US shares also provides enormous opportunities, like the growing digital economy (through the likes of Nvidia) and rising global healthcare spending (tapped through Novartis shares).

Its 7%-plus dividend yield’s one of the largest among all UK-listed ETFs. I think it could prove to be a brilliant buy to consider for long-term passive income.

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 Nvidia. 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.

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