Some UK shares are yet to return dividend payouts to their previous levels. Others continue to offer a relatively high passive income.
Certainly, there’s no guarantee dividends will ever be paid by any company. And, with the global economy’s outlook being very uncertain at the present time, this risk is perhaps amplified.
However, these two UK stocks could offer growing dividends over the coming years. As such, they could be among the best stocks to buy now. They could generate a worthwhile and rising income stream in the long run.
A high passive income relative to other UK shares
Financial services company Legal & General (LSE: LGEN) recently laid out its plans to deliver a rising dividend over the coming years. It estimates it’ll be able to deliver a rise in its passive income in the low to mid-single digits in the period between 2021 and 2024.
This could mean its payout grows at a faster pace than inflation. And that may make it increasingly attractive should a loose monetary policy prompt a faster-rising price level.
With a dividend yield of over 7%, the stock is already one of the highest-yielding shares in the FTSE 100. When coupled with its dividend growth rate, as well as a forecast dividend cover of 1.5 times in the current year, its passive income investing potential seems to be high.
Certainly, Legal & General’s passive income prospects could be dealt a blow by a weak economic performance. This means that its future payouts are by no means guaranteed. However, its high yield suggests there’s a wide margin of safety on offer. And could lead to impressive income returns for investors in the long run.
One of the best UK stocks to buy now?
Another FTSE 100 stock that could offer a strong outlook when it comes to making a passive income is Berkeley (LSE: BKG). The housebuilder recently updated the market on its performance. It added four new sites to its development pipeline in the first half of the year.
Meanwhile, it remains on track to return £280m per year through dividends and/or share buybacks.
In the current year, Berkeley’s dividend yield is forecast to be around 4.4%. Its financial position is relatively secure, owing to its net cash position of £954m. This should mean it’s able to maintain its dominant market position in London through the market cycle. This could lead to a more robust and reliable passive income than many of its sector peers can offer.
Of course, the company’s future prospects are very dependent on those of the UK economy. As such, it could produce disappointing returns at times. However, with a generous passive income and a solid market position, it appears to offer a relatively attractive passive income for the long term.
Peter Stephens owns shares of Berkeley Group Holdings and Legal & General Group. The Motley Fool UK has no position in any of the shares mentioned. 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.