Here are three high yield shares that have caught my attention:

Dividends are never, ever guaranteed. But if broker estimates are correct, a £30k lump sum invested equally across these FTSE 100 and FTSE 250 shares will provide a £2,190 passive income this year alone.

Here’s why I think they’re worth serious consideration right now, as part of a diversified portfolio.

M&G

M&G is just one of two Footsie shares whose dividend yields for this year sit just below 10%. This reflects in large part its rock-solid balance sheet, which analysts expect to yield more juicy cash rewards.

It Solvency II capital ratio was up 7% in the 12 months to June, at 210%. This is more than double the level that regulators require, and gives the business the confidence and the means to pay large dividends even if earnings get blown off course.

I’m expecting full-year financials next week (19 March) to show the firm’s financial foundations remain rock solid.

M&G’s share price could suffer if tough economic conditions persist, denting demand for discretionary financial services. But I feel the possibility of more mighty dividends still makes it a top stock to consider for 2025.

Urban Logistics REIT

As a real estate investment trust (REIT for short), Urban Logistics has to pay at least 90% of profits from its rental operations out in dividends. This is in exchange for sizeable tax perks.

This doesn’t necessarily make it a dead cert for delivering a large passive income. Theoretically, earnings can suffer if economic conditions worsen, denting property occupancy and hampering rent collections.

But on balance Urban Logistics looks in good shape despite the tough economic outlook. Its tenants are locked down on long multi-year contracts (the weighted average annual lease term (WAULT) was 7.6 years as of September).

On top of this, more than half (56%) of its tenants’ credit ratings are categorised low or low-moderate risk. This further reduces the possibility of earnings turbulence.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Rio Tinto

Mining giant Rio Tinto has, in response to plunging commodity profits, cut annual dividends for three years in a row. Yet with a 6%-plus dividend yield that sails above the Footsie average (of 3.6%), I still think it’s worth a close look.

I actually own the company in my own portfolio. I’m confident that, over the long term, it will deliver robust capital gains and dividend income as metals demand heats up. This will be driven by phenomena including the growing digital economy, emerging market urbanisation, and decarbonisation investments.

In the meantime, a strong balance sheet underpins Rio Tinto’s impressive dividend projections for this year. Its net debt to underlying EBITDA ratio stands at just 0.2.

I think it worth considering despite uncertainty surrounding near-term commodities demand.

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Here are two cheap UK shares I think are worth considering before the £20k annual ISA allowance resets on 6 April. I think it’s a matter of time before the market drives their share prices higher.

Silver surfer

Some disappointing operational news has hammered Hochschild Mining‘s (LSE:HOC) share price in early 2025.

Rising costs are an issue for Argentina’s miners as inflation rockets again. In January, Hochschild predicted a rise of 5-10% in all-in sustaining costs for 2024, above forecast, and suggested further cost pressures ahead.

However, I believe the scale of the sell-off could be unjustified (it’s down 14% since 1 January). At 109.6p, the precious metals miner trades on a bargain-basement price-to-earnings (P/E) ratio of just 5.9 times for 2025.

Its forward price-to-earnings growth (PEG) ratio, at 0.1, is also below the value watermark of 1. This cheapness is especially surprising given the overall robustness of Hochschild’s earnings picture.

Production remains strong at the FTSE 250 firm, with forecast-beating output at its Immaculada asset and maiden output at its Mara Rosa mine resulting in a robust final quarter in 2024.

On top of this, gold and silver prices are buoyant, and are widely tipped continue soaring as worries over trade tariffs and broader geopolitical turbulence grow.

Safe-haven gold hit new peaks around $2,945 per ounce this week, and is up 11% since New Year’s Day.

Fears over its cost base remain high. So signs of further pressure — for instance, if Argentina’s inflation rate worsens — could pull Hochschild’s share price lower again.

But, on balance, I think the silver giant is a top bargain to think about at today’s prices.

Dividend darling

While Hochschild has suffered in early 2025, Warehouse REIT (LSE:SHED) has had no such problems. Its shares have risen 4.3% in value since January 1.

Ye, on paper, the property giant still looks dirt cheap to me. At 82p per share, the real estate investment trust (REIT) trades at a 37.9% discount to its estimated net asset value (NAV) per share.

Its forward PEG ratio is 0.7. It also offers great value from an income perspective with its prospective dividend yield sitting at an impressive 7.8%.

This, in part, reflects rules that state REITs must pay at least 90% of annual rental earnings out in the form of dividends.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Warehouse REIT’s one of many property stocks that have jumped in 2025. They’ve risen on signs from the Bank of England that interest rates could fall steadily, boosting firms’ NAVs and reducing their borrowing costs.

Yet what goes up sharply can also fall if market sentiment changes. Prices here could dip if the interest rate outlook changes (for instance, if inflationary markers tick up again).

I believe though, that this scenario’s already baked into Warehouse REIT’s rock-bottom valuation. For ISA investors, I think it’s a great last-minute buy to consider alongside Hochschild.

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The ETF

The Invesco US High Yield Fallen Angels ETF (LSE:FAHY) doesn’t, unlike most London-listed funds, invest in local or global equities. Instead, its portfolio’s loaded with below-investment-grade bonds.

Today, more than 97% of the fund’s tied up in debt instruments with ratings of BB or B. Some of the corporate bonds it holds are from medical specialist CVS Health, clothing manufacturer VF Corp and media giant Paramount Global.

Why’s this important? A focus on riskier bonds obviously comes with a higher level of risk. But the higher yields these bonds subsequently offer also mean the fund’s dividend yields are substantially above the ETF average.

For 2025, this stands at a very healthy 7%. And with 87 different holdings, the fund’s structured to cushion the impact of potential defaults on overall investor returns.

The FTSE 100 share

Now, BAE Systems (LSE:BA.) doesn’t offer up the same sort of eye-popping dividend yields as this. For 2025, its yield is a healthy-if-unspectacular 2.8%.

Yet I believe the defence giant remains a top-tier dividend stock to consider. As the chart shows, the dividend on BAE Systems shares has risen every year for more than a decade. This has allowed investors to offset the impact of rising inflation on their wealth.

BAE Systems’ progressive dividend policy is thanks to its impressive cash flows and the dependable nature of defence spending. Even during economic downturns, the Footsie firm can expect new orders for its equipment to keep rolling in (its order book was a record £74.1bn as of last summer).

Past performance isn’t always a reliable guide of future returns however. In the case of BAE Systems, a range of problems, from supply chain issues and rising costs to disappointing project execution, could impact future earnings and dividends.

But, on balance, I’m optimistic the blue-chip weapons builder will remain an impressive passive income share.

The FTSE 250 stock

As a real estate investment trust (REIT), Urban Logistics (LSE:SHED) is set up to provide a steady flow of dividends.

Under sector rules, companies of this type must pay a minimum of 90% of annual rental profits out to shareholders. That’s in exchange for the favourable tax environment they enjoy.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

This doesn’t necessarily guarantee a large and stable income over time. The trust’s weighty exposure to cyclical sectors (like parcel services and retail) could leave earnings, and therefore dividends, vulnerable during economic downturns. Higher interest rates also have an impact on profits.

But on balance, I think Urban Logistics is pretty rock solid for dividend income. Like the aforementioned ETF, it’s well diversified to limit the risk of tenant defaults on overall returns (its top 10 tenants account for just 32% of total rents).

On top of this, Urban Logistics has long-term contracts in place to limit the threat of falling occupancy. As of September, its weighted average unexpired lease term (WAULT) was 7.6 years.

For this financial year (ending March), the dividend yield on Urban Logistics shares is 7.5%. This nudges higher to 7.6% for next year.

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Falling prices, rising yields

A dividend yield‘s the most common way to compare stocks that pay out income. The calculation looks at the dividend per share relative to the current share price. So let’s say that a share’s cheap due to a fall in the price. One impact of this (assuming the dividend per share hasn’t changed) is that the dividend yield will have risen. Therefore, targeting cheap stocks can provide a potentially enhanced yield for income investors.

However, it’s not as simple as that in practice. Investors need to dig deep to understand if the fall in the stock’s due to internal problems that could cause management to cut the dividend. For example, if the share price has fallen and the company’s struggling to pay debts and has poor cash flow, this wouldn’t be a smart purchase.

Yet if the drop’s due to a short-term factor such as slightly weaker results than expected or as part of a wider sector or market drop, the future dividends might not be impacted.

A property example

Urban Logistics REIT‘s (LSE:SHED) a stock to consider. The share price has fallen by 10% over the past year, helping to push up the dividend yield to 7.21%.

I’d call the stock ‘potentially cheap’ due to the fact that the share price trades at a 34% discount to the net asset value (NAV) of the business. What this means is that the managers have a portfolio of logistics warehouses and other commercial property. At any point in time, this portfolio has a NAV. In theory, the share price should be similar to this NAV. However, differences can happen due to investor sentiment or other factors. But in the long run, the current discount should decrease.

Investors will like the fact that it has high-quality tenants, usually large companies in the logistics space. DHL is the biggest tenant. This should prevent large default risks as these are well-established firms. However, one risk is that it’s quite concentrated on this sector. This is unlike some other REITs that are exposed to a wide variety of commercial tenants.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Income potential

If an investor took advantage of cheap shares with an average yield of 7%, income could build over time. If £350 was invested each month, after a decade the pot could be worth £61.3k. In the following year, without adding any cash, this could pay out £357 in an average month.

This isn’t guaranteed and peering this far into the future is definitely not an exact science! But the strategy of buying undervalued income stocks can be a winner.

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• REITs are legally required to distribute at least 90% of rental income as dividends
• Property values and rental income often rise with inflation, providing a buffer against rising costs
• REITs often tie their tenants down onto long-term contracts, resulting in reliable rental flows
• They’re managed by experts who can maximise property value and rental flows

Today, investors can access REITs spanning a variety of sectors and regions. And so they can be a great way for share pickers to balance risk and capture different investment opportunities.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Here are three REITs I’ll consider buying when I next have cash to invest.

Warehouse Logistics

Forward dividend yield: 7%

Warehouse operators like Urban Logistics (LSE:SHED) play a key role in the modern economy. This particular one owns 130 assets spanning 9.7m sq ft, making it one of the UK’s largest in its area.

Over the past decade demand for storage and distribution hubs has rocketed, driving rents skywards. Urban Logistics’ latest financials showed like-for-like rents rose 21% between April and September across 13 ‘lease events’ (such as contracts renewals).

I think the long-term outlook here remains compelling for multiple reasons. These include the rise of online shopping, supply chain restructuring following Covid, and the growing role of robotics.

That said, problems with rent collection and occupancy could occur during any future downturns.

The PRS REIT

Forward dividend yield: 4%

As its name implies, The PRS REIT (LSE:PRSR) specialises in the residential private rental sector.

This can have significant advantages for investors. Residential property’s one of the most stable across the economic cycle and a chronic housing shortage means rental levels continue to soar.

Rents have cooled more recently due to tenant affordability. But they’re tipped to keep rising over the long term due to steady population growth and an exodus of buy-to-let investors. Indeed, estate agency Savills predicts private rents will soar 18% over the next five years.

Government plans to supercharge housebuilding to 2029 could scupper this forecast. Yet, on balance, things continue to look good for landlords like PRS.

This is why the business continues to steadily expand, its portfolio growing 6% year on year — to 5,425 homes — as of September.

Supermarket Income REIT

Forward dividend yield: 9%

Supermarket Income REIT‘s (LSE:SUPR) another safe-haven property stock I like. People need feeding at all stages of the economic cycle, providing the business with dependable rental flows whatever happens.

On top of this, the company only lets its 73 properties out to the grocery industry’s biggest players. This includes the likes of Tesco, Sainsbury’s and Waitrose in the UK and, more recently, Carrefour in France. As a consequence, the chance of it failing to collect rents is virtually zero.

The growth of e-commerce poses an obvious threat to the company. However, by concentrating on omnichannel supermarkets that service online and face to face customers, Supermarket Income is reducing this danger considerably.

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Here are three of my favourites from the FTSE 100 and FTSE 250 indexes.

Urban Logistics REIT

Property stocks can be a great way to generate long-term passive income. They often have tenants locked down on long-term contracts, which — excluding some corporate catastrophe — means they enjoy a steady stream of income they can then distribute to shareholders.

Real estate investment trusts (REITs) can be especially great property shares for dividends. In exchange for tax perks, these companies must pay out at least 90% of their annual rental earnings to shareholders.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

UK investors currently have around 50 REITs to choose from. One of my favourites is Urban Logistics (LSE:SHED), thanks in part to its giant 6.2% forward dividend yield.

I also like Urban Logistics because of its focus on warehouses and distribution hubs. It’s well placed to capitalise on themes like the growth of online shopping and changes to supply chain models.

I think the stock’s worth considering, even though elevated interest rates continue to affect current earnings.

Bank of Georgia Group

Investing in emerging markets can be risky business. This is no better demonstrated than by Bank of Georgia Group (LSE:BGEO), whose slumping share price reflects political uncertainty in the Eurasian country.

The tug-of-war between legislators could have significant adverse implications for Georgia’s economy, and, by extension, its banks. I’d argue, however, that this is reflected in these companies’ current rock-bottom valuations.

Bank of Georgia, for instance, now trades on a forward price-to-earnings (P/E) ratio of three times.

With the business also carrying a 7.7% dividend yield for 2024, I think it could be a terrific dip buy.

Things are currently still looking good for the bank and its domestic rivals. Loan demand is soaring, and looks set to continue to as personal wealth levels improve. Bank of Georgia’s expansion into Armenia gives it additional opportunities to grow profits, too.

M&G

With a 9.9% forward dividend yield, M&G (LSE:MNG) is tipped to be one of the FTSE 100’s biggest dividend payers this year.

It reflects the company’s cash-rich balance sheet, not to mention its long commitment of delivering market-beating payouts. The company’s Solvency II capital ratio was 210% as of June, up 7% from a year earlier.

As an asset manager, M&G is highly sensitive to movements on financial markets. So issues like a US recession and continued economic slowdown in China pose threats to the company.

Yet as a long-term investor I’m still very optimistic about the company. As Britain’s population ages and financial planning increases, I think M&G stands to win tonnes of new business in the years ahead, helped by its strong brand.

The post Want dividend yields up to 9.9%? Here’s 3 FTSE 100 and FTSE 250 shares to consider appeared first on The Motley Fool UK.

Here’s why I’d buy the shares for my holdings the next time I have some funds to invest.

Last mile delivery

As the name alludes to, Urban is set up as a real estate investment trust (REIT). This means in exchange for favourable tax conditions, it must return 90% of profits to shareholders. This makes it an attractive prospect from a dividend perspective, to me at least.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Urban specialises in warehousing and logistics properties, but focuses on last mile delivery assets. This helps businesses with online and e-commerce stores to cater to their customers, and ensure they can fulfil orders efficiently.

The shares have meandered up and down like a roller coaster. Over a 12-month period, the shares have gained 3%, from 116p at this time last year, to current levels of 120p. Economic turbulence has hurt the commercial property market, but more on that later.

The good stuff

Starting with the positives, I’m buoyed by Urban’s modus operandi, and the fact it caters to the ever-growing e-commerce sector. Warehousing in general has grown exponentially in recent years due to soaring demand. However, online shopping and changing consumer habits have meant the need for such last mile delivery hubs is outstripping supply. There are currently no signs of this slowing either. This could spell good news for Urban’s earnings, and could translate into increased shareholder returns.

Speaking of returns, a dividend yield of 6.2% is attractive. For context, the FTSE 100 average is 3.5%. However, I do understand that dividends are never guaranteed. Plus, the firm possesses what looks like a strong balance sheet, as mentioned in its recent FY24 report. This can help with future growth and shareholder return initiatives.

Let’s break down the key takeaways I took from the report, released in June. Net rental income increased compared to the previous year by over 8%. Crucially, the business managed to turn a profit, compared to a loss last year. A dividend of 7.6p per share was the same as last year.

Potential risks

From a bearish view, I must admit economic turbulence is still a concern for me. As we’ve seen recently, higher interest rates present a problem. They can impact rent collection, increase the chances of defaults, and make debt management costlier. Plus, net asset values (NAVs) have been driven down too. We aren’t out of the woods yet, and I’ll keep an eye on developments.

Another issue I’ll be watching closely is Urban’s propensity for acquisitions to boost growth. Acquisitions are great when they work out. However, when they don’t, they can have untold financial damage and hurt investor sentiment too.

Overall, there’s lots to like about Urban Logistics, in my view. A thriving sector with growth ahead, an enticing level of return on offer, and excellent results recently have helped me make my investment decision today.

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Today, I’m looking for the best shares with large dividend yields to buy for my portfolio. But this isn’t all I require. I’m also seeking businesses that can provide a sustainable and growing payout over the long haul.

With this in mind, here are three I’m seriously considering adding to my Stocks and Shares ISA today. Each carries a dividend yield that comfortably beats the FTSE index’s 3.5% average.

If broker forecasts are correct, a £15,000 lump sum invested equally across all three companies could net me £1,110 in passive income this year alone.

Dividends are never guaranteed, but I’m confident these shares will meet current dividend forecasts. Here’s why I think they could be top stocks to buy for long-term dividend income.

M&G

Buying shares whose predicted dividends are covered less than 2 times by expected earnings can be risky. This is certainly the case with M&G, where anticipated payouts and earnings are level for 2024.

However, a strong balance sheet can help cushion the blow of lower-than-expected earnings. And this financial services giant certainly has a lot of cash on its books to aid its dividend policy. Its Solvency II capital ratio was 203% as of December, up four percentage points year on year.

I think strong cash generation and growing sales will drive dividends higher over the long term too. Demand should increase as demographic trends raise demand for savings and investment products.

ITV

Broadcaster ITV’s dividend cover also falls below that safety watermark of 2 times. But at 1.8 times, the firm has a good cushion in case profits disappoint. Disappointing ad sales remains a threat as the UK economy splutters.

On top of this, the Love Island maker also — like M&G — can use its financial robustness to help it pay large dividends. Its net-debt-to-adjusted-EBITDA ratio keeps falling, and was just 0.9 times as of June.

The success of ITV’s fast-growing streaming business is an encouraging omen for profits and dividends in the coming years. Monthly active users leapt 17% in the first half, latest financials showed. I also think expansion at the ITV Studios unit bodes well for future shareholder returns.

Urban Logistics REIT

Urban Logistics REIT, as the name implies, is a real estate investment trust. This has a significant benefit for dividend investors. In exchange for certain tax advantages, these firms pay a minimum of 90% of yearly rental profits out to shareholders.

This doesn’t guarantee a large and growing dividend. Falling occupancy levels and missed rents can compromise a REIT’s ability to provide a passive income.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

However, I’m confident Urban Logistics will steadily increase dividends over the next decade. This will be supported by increasing demand for warehouse and distribution space as e-commerce expands and supply chains shift.

With a loan-to-value (LTV) ratio of 29.3% in March, this business also has low gearing which supports near-term dividend forecasts.

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The following three FTSE 250 shares have grabbed my attention. Their tantalising dividend forecasts and yields can be seen in the table below.

Dividends are never guaranteed. But if broker forecasts are correct, a £25,000 lump sum invested equally across them would provide me with a £1,750 second income over the next 12 months.

I’m confident too these high-yield shares will steadily increase shareholder payouts over the long term. Here’s why I think they might be great buys for dividend investors.

Wind warrior

Renewable energy stocks like Greencoat UK Wind have significant earnings potential for long-term investors.

Adverse weather conditions can impact power generation from time to time, putting a drag on revenues. But over an extended time horizon, wind farm operators could enjoy exceptional growth as the world switches from fossil fuels to cleaner energy sources.

Labour’s plan to lift the onshore windfarm ban should also boost UK operators like this. On top of this, there’s a chance the government will classify large-scale farms as nationally significant infrastructure, thus eliminating the possibility of local authorities vetoing their construction.

Property giant

Real estate investment trusts (REITs) can also be a great way to source an income over the long term. They are required to pay a minimum of 90% of their annual rental profits out to shareholders.

Urban Logistics REIT is one I expect to thrive as e-commerce steadily grows. As an operator of storage and distribution hubs, it provides an essential service that allows manufacturers, retailers and delivery companies to get product to online consumers.

In fact, this part of the property market is experiencing a huge shortage. And so like-for-like rents (which grew 19% here last year) look set to continue growing strongly.

High interest rates pose an ongoing problem for its net asset values (NAVs). But on balance, I think Urban Logistics is worth a close look.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

A riskier pick

Growing political and social turbulence in Georgia threatens to derail the country’s banks like TBC Bank Group.

Financial product penetration’s low in the Eurasian country. And it’s been soaring in recent years as the economy there has boomed.

TBC’s own profits have jumped 111% over the past five years. But it’s performance could slow sharply if turbulence in Georgia continues.

However, I believe this threat is reflected in the company’s rock-bottom valuation. Following a recent share price slump, it now trades on a forward price-to-earnings (P/E) ratio of just 4.5 times.

I think it might be a top stock to buy for contrarian investors.

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Ideally, I want to buy these stocks when they’re trading at a cheap level. That way, I can lock in a higher dividend yield than would be the case if their share prices were very high. Here are two ideas I’m looking at right now.

Rallying but still cheap

The first stock is NatWest Group (LSE:NWG). The UK banking group has a dividend yield of 6.44%. Over the past year, the stock’s jumped by 24%.

Some might think that this can’t be a cheap stock if it’s jumped by so much over the past year. I don’t accept this, mostly because my view is the stock’s still cheap. For example, the price-to-earnings ratio is still just 6.53. This is well below my benchmark figure of 10 that I assign for a fair value.

In my eyes, I should have bought the stock last year when it was even cheaper, but this doesn’t mean it can’t have value now.

The business is really starting to motor, with news earlier this week that it’s acquired J Sainsbury‘s bank. This adds £2.5bn of gross customer assets.

It’s also continuing to enjoy the financial benefits of high interest rates. In the Q1 results, the net interest margin hit 2.05%, which was 0.06% higher than Q4 2023.

Lower interest rates could be a hit to profitability over the coming year, and the margin could fall. This is a risk, but I don’t see rates falling anywhere near as low as we had during the pandemic.

A property play

Another option is the Urban Logistics REIT (LSE:SHED). The stock’s down 1% over the past year but has a dividend yield of 6.11%.

Again, I’m not flagging it up as cheap, based on the recent absolute share price performance. Rather, I’m comparing this to the net asset value (NAV). The real estate investment trust (REIT) owns a portfolio of property. Therefore, I can get a good feel for the NAV of the overall portfolio. The share price should track this fairly closely over the long term.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

At the moment, the share price is at a 26% discount to the latest NAV figure. I think this is partly due to the negative sentiment around commercial properties over the past couple of years. The warehousing and logistics units in the portfolio are used by businesses, but in the tough climate we’ve been in recently, demand has been lower than usual. This sluggishness is a risk going forward.

I don’t see this as a long-term problem, hence why I think it’s cheap right now. With the UK economy doing much better with inflation back at 2%, I think the next couple of years will have further economic recovery.

As a result, the income from the REIT should increase, helping to fuel dividend payments. Both income ideas are on my watchlist to buy when I have more free cash.

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