Looking to boost passive income streams, I’ve been hunting for UK dividend shares to buy now for my portfolio. Here are five I would consider. With £5,000, I would think about investing £1,000 in each to benefit from diversification.
Dividend shares to buy now: Income & Growth VCT
The Income & Growth venture capital trust may not be a household name, but I still like it for its dividend paying properties. As the name suggests, it invests in many companies that are in their early stages. While it tries to benefit from capital growth, such investments also provide a substantial though unpredictable stream of income. That helps Income & Growth pay dividends. They can move around a lot from year to year. This year’s interim dividend is 5p, compared to a current share price of 87p. So even if no further dividends are declared this year, the yield would be 5.7%.
I consider these as dividend shares to buy now for my portfolio, with the added bonus of possible capital growth. The shares are up 32% over the past year. But there are risks – the portfolio of holdings could disappoint, leading to a lower share price.
Financial services leader
Second among my dividend shares to buy now for my portfolio would be insurer and financial services brand Legal & General. The well-known company has a long history and iconic brand. That should help it continue to attract new customers. It is highly profitable, recording a profit after tax of £1.6bn last year.
That helps fund a generous dividend. The shares yield 6.6% and the company has set out plans to grow the dividend, although dividends are never guaranteed. What could go wrong? One risk is price competition in the insurance market eating into profit margins.
Every little passive income helps
While Morrisons shares have surged lately thanks to a bid, Tesco hasn’t attracted any suitors. It strikes me as an attractive option to consider for my portfolio, however. As the Morrisons bid showed, UK supermarkets currently seem to trade cheaply. They have strong cash flows, powerful customer loyalty, and entrenched positions in many shopping areas. While competition is intense – and could eat into profits – Tesco is the biggest of the bunch. I like its wide reach and well-oiled operation.
Yielding 3.9%, Tesco makes my list of shares to buy now I would consider adding to my portfolio.
Dividend shares to buy now: British American Tobacco
American tobacco giant Altria has just raised its dividend again. Its competitor, British American Tobacco, did the same earlier this year. The company’s huge cash flows help support one of the UK’s leading dividend payouts. The current yield is 7.8%.
But declining cigarette demand in many markets could hamper the future viability of the dividend.
Regular dividend raiser
The fifth of the dividend shares to buy now for my portfolio I would consider is DCC. This company operates businesses spanning areas such as energy sales, healthcare, and technology. It is well run and has a long growth runway ahead. It’s been growing its dividend annually for over 25 years. Currently it yields 2.6% – not as high as my other choices, though still attractive to me. But one risk is environmental regulations reducing demand for domestic gas. That could lead to lower sales.
