Looking for top dividend shares to buy? Here are two offering excellent payout growth and large yields to consider.
In recovery
The housing sector’s steady recovery suggests that Springfield Properties (LSE:SPR) may be an attractive dividend share to think about. Helped by recent interest rate cuts and a mortgage market price war, buyer affordability is steadily improving and boosting demand for newbuild homes.
The pace of interest rates cuts remains uncertain. On the one hand, policymakers may feel compelled to cut interest rates to stimulate the weak UK economy. But their appetite to cut could be tempered by the problem of rising inflation.
Despite this uncertainty, Springfield Properties’ perky dividend forecasts merit serious attention in my book. Boosted by land sales in Central Scotland, revenues rose 5.3% in the 12 months to May, while pre-tax profits leapt 95.9%.
Critically for dividends, this recovery pulled the Scottish housebuilder’s net bank debt down to £20.9m at the end of the period from £39.9m a year earlier. So it doubled the full-year cash payout to 2p per share in financial 2025 from a year earlier.
City analysts are expecting further healthy dividend growth, to 2.3p per share this year and 4.5p in fiscal 2027. These figures yield 2.4% and 4.8%, respectively.
Bright forecasts
But how realistic are these forecasts? In my opinion, they’re pretty strong. Dividends for this year and next are covered between 2.1 times and 3.8 times by anticipated earnings. This leaves a wide margin of error in case the housing market recovery weakens.
Balance sheet repairs also put it in a stronger position to weather fresh market volatility, with a net bank debt to EBITDA ratio of just 0.8 as of May.
I’m confident Springfield’s in great shape to capitalise on rising housing demand as the local population grows. It is a leading UK housebuilder. And its new strategy of refocusing on the Highlands, Aberdeen, and Morayshire — where a renewable energy boom is driving jobs creation — could prove especially lucrative.
6% dividend yield
Tritax Big Box REIT (LSE:BBOX) is another dividend share that’s sensitive to interest rate movements. Not only this, but the prospect of a prolonged economic downturn could impact its property occupancy and rent collection.
Yet, City brokers aren’t expecting such risks to impact the real estate investment trust’s (REIT’s) strong recent record of dividend growth. Last year’s reward of 7.66p is tipped to rise to 8p in 2025. Another hike, to 8.4p in 2026, is also anticipated.
As a result, the dividend yield on Tritax shares is 5.7% and 6% for these years.
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Shareholder payouts from REITs are sensitive to broader economic conditions. But these property stocks still provide better dividend visibility than most other UK shares, thanks to unique sector rules. At least 90% of rental profits each year need to be returned to investors in the form of dividends.
I’m confident Tritax’s earnings and dividends will steadily rise over the long term, driven by hot growth trends like the growth of e-commerce and booming data centre demand.
