Does it make sense to build up a retirement portfolio with lots of high-yield shares in it, aiming to pile up loads of dividends before retiring?
The answer depends on a few factors. Every investor is different and so the objectives and indeed timeframe for their retirement portfolio will likely reflect that.
When a company pays out a dividend, it does so at the opportunity cost of spending that money on other things.
For a company in a mature industry like tobacco, other strategic spending opportunities may be limited. But a growth stock with huge untapped business potential is in a very different position.
If someone was looking for high-yield shares for their retirement portfolio, here are five that I think merit consideration.
A classic dividend share in a mature industry
An example of the sort of mature industry I mentioned above is tobacco.
British American Tobacco yields 5.6%. It has also grown its payout per share annually for decades and aims to keep doing so.
Declining volumes of cigarette sales threaten that goal. But the firm’s premium brand portfolio and pricing power mean it remains massively cash generative, for now at least.
High-yield financial services shares
When it comes to shares with juicy yields, the UK’s financial services sector can be a promising area to look right now.
Asset manager M&G yields 7.4%. With its large customer base and strong brand it could keep doing well. But there is a risk that any sudden deep market downturn could lead policyholders to withdraw funds, hurting profits.
Insurer Phoenix Group is the parent of Standard Life, among other insurance firms.
Its business model may sound dull: helping millions of people prepare financially for later life, through savings and pensions. But dull or not, this can be lucrative stuff.
Phoenix yields 8%. Like M&G, it aims to grow its dividend per share annually. One risk I see is any property market turbulence causing prices to fall. That could hurt the profitability of Phoenix’s mortgage book.
A business in the doghouse
Pets at Home Group (LSE: PETS) has had a mixed 2025 so far. Its share price has edged up 3%, thanks in part to strong growth from its group of vet practices.
But the retail side of the operation has fared less well.
The first half of this year saw its revenue decline 2% year on year, while underlying profit before tax crashed 84%.
A positive free cash flow in the prior year was replaced by negative cash flows this time.
Clearly, ongoing weakness in the retail division is a risk. But with the market for pet products both large and fairly resilient, I believe it is fixable.
Meanwhile, the vet side of the business has helped mitigate the poor performance of the retail operation.
At the moment, the share yields 6.2%.
A broadcaster – and a production business
ITV yields 6.1%. The broadcaster has been seen as a potential takeover target, underlining how its legacy broadcast business spooks some stock market investors.
There is a risk that advertising revenues decline further as legacy media dwindles. But they remain substantial – and ITV has been ramping up its digital offering too.
Meanwhile, the studios and production wing of the business has benefitted, not suffered, from a wider pool of broadcasters seeking to create shows.
