There are all kinds of opportunities in the FTSE 100 and the FTSE 250. So here are a few I think are worth investors following closely.

Rentokil Initial

I own shares in Rentokil Initial (LSE:RTO) in my ISA. And it’s fair to say the stock has done pretty well for me since I bought it. 

In an uncertain world. I think it’s one of the FTSE 100’s most predictable businesses. Demand for pest control isn’t going away any time soon.

The company’s balance sheet has been a concern recently. It acquired a big competitor in the US and took on a lot of debt in the process. Things, however, have been moving in the right direction recently. And if this continues, I think the stock could still do very well.

Boring businesses don’t always get the attention they deserve, which is fine. But Rentokil is definitely one investors should keep an eye on.

Target Healthcare REIT

Target Healthcare REIT (LSE:THRL) owns over 90 care homes across the UK. It makes money by leasing these to private operators. 

This is an industry where demand should be strong for some time. Put simply, people are living longer and that’s likely to increase the need for care.

The stock comes with a 6% dividend yield, which is pretty attractive. It means a £1,000 investment could return £60 in cash directly to investors.

Investors should note that regulation means the firm could be forced to incur costs if standards change over time. That’s one of the key risks. While this isn’t under Target’s direct control, it has been trying to prepare for this. And it’s done this by focusing on high-quality assets.

Attempting to stay ahead of any changes is the best thing the firm can do. So I think it’s an interesting business in a promising industry.

Compass Group

Compass Group (LSE:CPG) is a name a lot of investors won’t have heard of. It’s a FTSE 100 contract catering firm. 

While the name might not be familiar, it’s the industry leader. It’s bigger than both of its nearest two competitors combined. That size and scale gives Compass a big advantage. It means the firm has lower costs and can charge customers lower prices.

Despite being the leader, the firm only accounts for 15% of the global food services market. And that leaves plenty of scope for growth. 

Most of the firm’s sales come from the US (which is why its share price is listed in dollars). And that makes a recession over there a real risk.

Despite this, I think this is one for investors to take a closer look at. The more I find out about this business, the more I like it. 

Get it right

I think all three of the companies I’ve listed here are worth considering for a Stocks and Shares ISA. But investors don’t have to rush.

The important thing is to look at the businesses properly and build an informed view of them. That’s the key to investing well.

The post Getting started with investing? Here are 3 UK stocks to take a look at appeared first on The Motley Fool UK.

There could be more volatility to come as the Middle East war drags on. The impact of soaring oil prices on inflation and global growth could be considerable. Yet buying quality shares cheaply today could prove a masterstroke over the longer term.

So which FTSE 250 shares are on my watchlist right now? There are several top contenders I’m considering, and here are a couple of my favourites.

A top REIT

Care home operator Target Healthcare REIT (LSE:THRL) has slumped as hopes of interest rate cuts have faded. Higher rates translate to larger borrowing costs and greater pressure on asset values.

But is the FTSE 250 property stock now too cheap? I think so — it trades on a forward price-to-earnings (P/E) ratio of 10.7 times, while its dividend yield‘s an enormous 6%.

While there’s near-term pressure, the long-term picture is compelling as ever. As Britain’s elderly population rapidly grows, demand for assisted living facilities is tipped to skyrocket. Research suggests demand for care home beds could double over the next 25-30 years.

On balance, I think Target Healthcare’s a top defensive stock to consider for these uncertain times. It operates in a highly defensive industry, for one, where rent collection and occupancy issues rarely spring up.

And for dividend investors, I think it’s especially attractive as a safe haven. At least 90% of annual profits from its rental operations must be distributed to shareholders, irrespective of broader conditions.

Down 18% in 3 weeks!

Lion Finance (LSE:BGEO) was trading at record highs above £12 before the Middle East conflict. It’s since fallen almost a fifth in value, which makes it one of the FTSE 250’s hottest bargains in my view.

The share formerly known as Bank of Georgia trades on a forward P/E ratio of 5.9 times. Its price-to-earnings growth (PEG) multiple, too, has slipped to a jaw-droppingly low 0.2. For reference, a PEG below one is often considered to be in bargain territory.

Finally, Lion’s dividend yield for this year is now 3.5%, just above the index average and providing an added sweetener for value lovers.

So why is the Georgian bank slipping? After all, surely the prospect of higher interest rates is encouraging for retail banks’ margins?

The trouble is that higher interest rates could slow economic growth. And when combining slower growth with more expensive debt, businesses and consumers tend to borrow less, resulting in slower growth for Lion Finance’s loan book. And if things get really dire, existing borrowers could also start defaulting, leading to impairments.

While this risk is high, over the long term, the outlook for Georgia’s economy remains bright. GDP growth has averaged 6% over the last decade, as economic reforms in this key regional hub have paid off. With banking product penetration in the country still low, I expect Lion Finance’s profits (and share price) to keep soaring during the next decade.

The post After the FTSE 250’s slump, I see beautiful bargains everywhere! appeared first on The Motley Fool UK.

Of course, it takes money to make money. So just how much does an investor need to put into the stock market to earn the equivalent of £1,000 a month?

Crunching the numbers

The required size of a portfolio to generate £12,000 a year ultimately depends on the yield the portfolio generates. If an investor’s following the basic strategy of relying on diversified index funds, the amount needed is quite substantial.

Looking at the FTSE 100 today, the UK’s flagship index generates a yield of just 2.9%. At this rate, someone will need to invest a staggering £413,793. The FTSE 250‘s currently a bit more generous with a yield of 3.3%. But that still means £363,636 is needed invested in the stock market.

However, the story could be very different for stock pickers.

A custom-crafted portfolio consisting exclusively of top-notch income stocks that yields 5.5% would only have to be worth £218,182 – almost half what FTSE 100 index investors need. And while that’s certainly still not pocket change, drip feeding a small lump sum every month and letting it compound could enable a portfolio to gradually build to this threshold over time.

Earning a 5.5% yield

Finding UK shares that offer a sustainable elevated yield is often far easier said than done. Don’t forget, higher yields can be a reflection of higher investment risk. But in some instances, taking a contrarian stance can lead to lucrative gains.

With that in mind, let’s take a look at Target Healthcare REIT (LSE:THRL) and its 5.7% payout.

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.

The company owns and leases a portfolio of 93 modern care homes across the UK, renting exclusively to professional care home operators using long-term, inflation-linked leases.

As a result of this deal structure and client profile, the average duration of a lease is an industry-leading 25.9 years. And when zooming in on the tenants, most of their elderly occupants are privately funding their stay rather than relying on support from local authorities.

That’s a crucial distinction. Why? Because it means Target Healthcare’s rent roll is largely immune to government benefit budget cuts. It also grants management exceptional revenue visibility and explains why rent collection stands incredibly strong at 97%.

It also means that the firm’s generating sufficient cash flow to cover its dividend obligations to shareholders – a terrific sign of sustainability.

So what’s the catch?

What to watch

Even though Target Healthcare’s property portfolio is private-pay, weakness from local authority underfunding can nonetheless spill over. At the same time, rising regulatory restrictions and staffing shortages are making care homes increasingly expensive to run.

Needless to say, if tenant profitability deteriorates, Target Healthcare’s rent collection could face defaults or requests for rent reductions – something that has happened throughout its history.

Nevertheless, while there’s undoubtedly risk, long-term structural demand paired with robust cash flows makes this income stock worth investigating further, in my opinion. And there are other dividend-paying UK shares on my radar right now as well.

The post How much do you need to invest in UK shares to earn a £1,000 monthly passive income? appeared first on The Motley Fool UK.

Lloyds’ share price has rocketed 73% since 1 January. And so its forward dividend yield has dropped to 3.8%, way below the 10-year average of 6%.

This figure is also just a shade above the 3.2% for the broader FTSE index.

On the plus side, 2025’s full-year dividend is tipped to rise an impressive 14% from last year’s levels. Yet I’m doubtful the bank can keep supercharging cash payouts as the UK economy struggles, margins drop as interest rates fall, and competitive pressures increase.

In my opinion, investors should think about avoiding Lloyds shares and buying other dividend stocks instead. Two great passive income stocks that I currently own are Target Healthcare (LSE:THRL) and Legal & General (LSE:LGEN).

But what makes them top dividend shares to consider? Let me explain.

Take care

Real estate investment trusts (REITs) like Assura are among the most dependable dividend payers out there.

They’re not bulletproof, as profits are sensitive to occupancy levels and rent collection. Both can deteriote sharply when economic conditions worsen.

Yet sector rules limit the company’s decision making on payouts, which can lead to better dividend visibility for investors. REITs have to pay at least 90% of annual rental profits out in dividends.

Target is one of my favourite property trusts right now. Operating in the ultra-defensive care home industry helps limit the possibility of rent defaults and vacant properties. It also provides enormous growth opportunities as the UK’s elderly population rapidly expands.

The FTSE 250 company’s forward dividend yield is 6.2%. Dividends are paid quarterly — these rose 2.5% for July to September, and were fully covered by adjusted earnings.

I’m hoping to buy more Target shares when I next have cash to invest.

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.

Another Lloyds beater

I’ve made Legal & General my single largest holding for passive income. I don’t regret making this decision: at 8.9%, the company has the largest forward dividend yield on the FTSE 100.

For 2026 and 2027, too, the yield rises above 9%. Annual dividends are expected to keep rising through the end of the period (Legal & General’s raised payouts in 12 of the last 13 years).

That’s pretty awesome in my view. But everything’s not been perfect for dividends in recent times.

Legal & General has trimmed its dividend growth targets for the next few years to 2%. This is down from 5% in recent times, and reflects a pivot towards delivering greater share buybacks.

Yet this hasn’t deterred me as a dividend chaser, and not just because its dividend yields remain enormous. Long term, I’m expecting reliable — and potentially accelerating — payout growth as ageing demographics and State Pension worries boost demand for financial products.

Its strong cash generation should also underpin steady payouts even during tough periods. Its Solvency II capital ratio is a stunning 217%, latest financials show.

I’m hoping to hold my Legal & General stock indefinitely, even though its share price could dip when the economy weakens.

The post Meet the dividend stocks tipped to outshine Lloyds shares for passive income! appeared first on The Motley Fool UK.

Doing my homework

I was researching the Target Healthcare REIT (LSE:THRL) as a potential income option. It owns and manages care home properties across the UK, with around 100 in its portfolio at present. The business generates revenue from rental income, as well as potentially achieving long-term capital appreciation.

Over the past year, the share price is up 12%, with a generous 5.99% dividend yield. It’s the sustainability of the yield that had me interested, as I think the UK base rate will be cut again in December. As a result, I’m looking for more dividend stocks to help my money work harder than it would in a savings account.

Although the business had to readjust the dividend per share payments last year, I feel this was ultimately a good move. The dividend cover now stands at 1.08, indicating that the current earnings per share can more than cover the amount being paid out 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.

Where I disagree with ChatGPT

When I asked my AI companion if I should stay away from the stock, it told me to avoid it. In terms of reasoning, it said it’s vulnerable to changes in interest rates, property sector dynamics, and regulatory risk. It added that in an environment where yields are rising and financing is more expensive, property income stocks tend to get hit. Finally, if occupancy rates or tenants’ financial strength weaken, the rent streams could be under threat.

Although the company is vulnerable to rising interest rates and yields, I don’t think that’s relevant right now. The Bank of England committee is in a cutting cycle, meaning that rates are expected to become lower over the next year. Regarding concern around tenants’ finances, I’d argue that care home operators have the strongest finances out of various property types. I’d much rather have retirees in a property than students!

Acknowledging risks

The REIT does indeed have risks associated with it. But I think ChatGPT focused on the wrong ones. In my opinion, the primary concern is potential markdowns in property value. The share price should be closely correlated to the net asset value of the portfolio. Given that the commercial market’s currently strong, any revaluations would likely lower the NAV and potentially the share price.

Despite this, I think the quarterly dividend looks attractive from a stock with a stable rent collection record. As a result, I think it’s worth considering for investors. A good lesson is always to incorporate a human element into any research.

The post ChatGPT told me to stay away from this FTSE 250 stock but I disagree appeared first on The Motley Fool UK.

These often tend to have strong competitive positions with economies of scale or entrenched customer relationships. But this doesn’t always come with a correspondingly high share price. 

Size matters

There are a lot of advantages to owning shares in businesses that have been around a long time. One of the most obvious is that they often benefit from strong reputations. 

Take Legal & General as an example. The main thing anyone buying life insurance wants to know is that the company’s going to be able to pay out if they ever need to make a claim.

Another big difference is dividends. Smaller businesses often look to use their cash for growth, but many switch to returning cash to shareholders as they become larger over time.

This isn’t for everyone – some people might prefer greater growth potential and there’s nothing at all wrong with that. But for income investors, big companies can be attractive.

Target Healthcare REIT

Target Healthcare REIT‘s (LSE:THRL) a FTSE 250 stock that I’ve had my eye on for a little while. I think it’s in a really interesting sector with a lot of long-term potential.

The company’s a real estate investment trust (REIT) with a portfolio of 93 care homes. And an ageing UK population should mean there’s plenty of demand for its properties in future.

Source: Target Healthcare REIT Q2 Investor Presentation

It’s worth noting that the care home business isn’t the most straightforward. Regulations keep changing and this has the potential to create future costs, which can weigh on returns.

A share price of 97p though, implies a dividend yield of 6%. And with inflation-linked rents protecting this from higher costs, this is a stock that could be a great addition to my portfolio next month.

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.

Vodafone

After climbing almost 25% so far this year, Vodafone (LSE:VOD) shares are now priced at around 89p. And the business might be in a much stronger position than it was in January.

The company’s merger with Three UK in May could be the start of something exciting. The deal both boosts the firm’s scale and reduces the number of competitors in the market.

All of this is very positive. But it’s still quite early to tell whether the move is going to be a success and there’s a lot to be done in terms of integration and capital investments. 

That’s not really what I look for in a big company – I prefer established firms with clear strengths, rather than transformation potential. So I’m going to pass on this one for now.

Blue-chip bargains?

I’m always interested in owning shares in businesses that have developed strong reputations over time and I like the look of Target Healthcare REIT very much. Since Care REIT was acquired back in May it’s the only care home stock available on the UK market.

The stock might just offer me some valuable exposure to a market that’s likely to grow. And for less than £1, I can’t think of too many things I want to buy more.

The post 2 blue-chip UK stocks below £1 for me to buy right now? appeared first on The Motley Fool UK.

An easy way to do it

One of the easiest ways to invest in property these days is via real estate investment trusts (REITs). These are companies that own different types of property assets (eg residential buildings, office buildings, hospitals, shopping centres, hotels, storage facilities, etc).

These companies trade on the stock market like regular stocks do. And they can usually be held inside a Stocks and Shares ISA or a SIPP, meaning that they can be far more tax-efficient than buy-to-let investments (where you typically pay Capital Gains Tax and Income Tax).

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Looking beyond the tax-efficiency, one big advantage of REITs is that they tend to be cash cows for investors. In the UK, regulations stipulate that they must pay out a large proportion of their rental income to investors so they often have very attractive yields.

Another advantage is that you can start investing with a very small amount of money. In theory, you could get started with just a few pounds.

A £1 REIT

An example of a REIT on the London Stock Exchange is Target Healthcare REIT (LSE: THRL). It invests in care homes across the UK and currently has around 100 properties in its portfolio.

At present, its shares cost just £1. So with £1,000, investors could pick up 1,000 shares (assuming zero trading commissions).

There are a number of things I like about this particular pick. One is that the long-term backdrop looks very supportive. In the UK, the number of people aged 85 or older is projected to balloon over the next 20 years. So demand for care homes should increase.

I also like that its rental contracts are very long term in nature. The latest trading update showed that the company had a weighted-average unexpired lease term of 26 years.

The yield on offer’s another great feature. Currently, it’s about 5.9%. That translates to annual income of around £60 on a £1,000 investment. On a £10,000 investment, it equates to annual income of around £600 (tax-free if held inside an ISA).

Another thing key point is that if UK interest rates continue to fall, REITs should benefit as the cost of servicing debt will decrease. This could lead to price gains and attractive total returns (share price gains plus income).

Income potential

Of course, if rates were to rise again, it would be bad news for REITs like Target Healthcare. In this scenario, share price losses could offset any income generated.

All things considered though, I like the set-up here. I believe this one is worth considering today for income.

The post Here’s a UK property investment that costs just £1 (and can be held inside a Stocks and Shares ISA) appeared first on The Motley Fool UK.

Now, when most people think of property investments, they think of buy-to-let. But there are other ways to invest in UK property, and the good news is that you can get started with just a few hundred pounds (unlike with buy-to-let).

An easier way to invest in property

One really easy way to invest in property – and potentially build a second income – is via real estate investment trusts (REITs). These are companies that invest in different types of real estate (offices, hospitals, shopping centres, storage, etc).

These property investments are listed on the stock market meaning that they trade like regular stocks. So compared to buying a buy-to-let property, it’s far more straightforward to invest – all you need to get started is a brokerage account with the likes of Hargraves Lansdown or Trading 212.

From an investment perspective, REITs have several advantages. One is that they typically pay big dividends as they’re required to pass on a large chunk of their income to investors.

Another is that you can hold them in a Stocks and Shares ISA, meaning all income can be tax-free (note that buy-to-let investors face a ton of taxes today).

Additionally, you can start investing with a small amount of capital. Only have £1,000 to invest? That’s more than enough to get started in this area of the property world.

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

A £1 REIT with lots of potential

An example of a REIT is the Target Healthcare REIT (LSE: THRL). It owns a range of care homes across the UK.

I think it looks interesting from an investment perspective as in the UK, the number of people aged over 85 is projected to increase significantly over the next two decades. So the company should benefit from some powerful demographic tailwinds.

In terms of income, analysts expect the REIT to pay out 6.01p per share for this financial year (ending 30 June 2026). Given that it’s currently trading for around £1, that translates to a yield of about 6%.

In other words, invest £5,000 and you could be looking at income of £300 a year. This could be tax-free if the REIT was held inside a Stocks and Shares ISA.

Now, a risk with this REIT – and all others – is interest rates. If they were to move higher from here, the company’s profits could take a hit, meaning less income for investors (note that the share price took a hit when rates climbed in 2022).

All things considered however, I think it has potential and is worth considering as a long-term property investment. Other REITs that could be worth a look include Tritax Big Box, which is focused on e-commerce storage, and Primary Health Properties, which owns a range of healthcare facilities across the UK.

The post How to create a second income from UK property without purchasing a buy-to-let appeared first on The Motley Fool UK.

Here are two such dividend heavyweights I think deserve serious consideration. As you can see, their dividend yields comfortably beat the FTSE 100‘s prospective average of 3.4%.

Here’s why I think they could be among the best dividend shares for investors to consider right now.

Top trust

Under real estate investment trust (REIT) regulations, Primary Health Properties has to pay at least nine-tenths of yearly profits from its rental operations out in 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.

This can make REITs more dependable than other UK shares for a large and consistent dividend income. But it doesn’t guarantee it, as occupancy and rent collection issues can still strike shareholder returns.

However, Primary Health’s focus on an ultra-defensive industry greatly reduces such risks. It owns and operates first-contact properties like GP surgeries and community health centres, sites that remain busy at all points of the economic cycle.

Furthermore, almost all of its rental agreements are underpinned by NHS and government bodies, providing added stability over time.

Don’t be mistaken in thinking this sector is just brilliantly boring, however. It also has substantial opportunity for growth under the government’s new 10-year Health Plan to “[move] care from hospitals to the community“.

Primary Health has grown annual dividends each year since the mid-to-late 1990s. Threats to future growth include future changes to NHS policy and sector oversupply than dents rental rolls.

But on balance, I think it’s a great stock to consider, and one I hold in my own Stocks and Shares ISA.

Boxing clever

Tritax Big Box’s dividend growth policy isn’t quite as impressive as that of its FTSE 250 counterpart. One reason is that it’s only been in existence since 2013. Another reason is that the annual dividend fell for the first time during the height of the pandemic five years ago.

But this REIT has grown shareholder payouts steadily since then, and is tipped to continue through to 2027 at least. In fact, predicted dividend growth for this year is more than double the rate predicted for the broader UK share complex.

Tritax Big Box doesn’t operate in defensive sectors, which can leave profits vulnerable during lean periods. But its portfolio composition helps to reduce (if not totally eliminate) the threat to dividends and its share price.

It has more than 128 tenants on its books spread across 102 properties. These cover multiple industries and include blue-chip companies like Amazon and Ocado, providing strength through diversification.

With online shopping still growing, supply chains being onshored, and data centre demand increasing, I expect demand for its big box assets to rise over time. This could in turn deliver sustained long-term dividend growth.

The post Are these 2 of the best high-yield dividend growth shares to consider today? appeared first on The Motley Fool UK.

Right now, there are a number of stocks that analysts have positive views on. But a couple stand out to me as particularly interesting opportunities to consider.

Games Workshop

Games Workshop (LSE:GAW) is a firm favourite with analysts covering UK stocks. And whether it’s growth or dividends, the stock has been an outstanding investment for shareholders.

Source: TradingView

In terms of growth, earnings per share have more than doubled in the last five years. And while this has happened, the firm has paid out almost 80% of its net income as dividends.

This can be risky. If demand falters, because household budgets tighten and discretionary spending comes under pressure, there’s a real chance the dividend might not be sustainable.

In some ways, though, the high payout ratio is a sign of Games Workshop’s strength. Its main asset is its intellectual property and this doesn’t take huge amounts of investment to maintain.

For most companies, paying dividends means compromising on returns. The cash returned to shareholders can’t be used to open new stores, recruit more staff, or acquire other businesses.

With Games Workshop, though, the situation is different. That’s why it’s grown to be the largest investment in my Stocks and Shares ISA and why I think it’s worth considering in July.

Target Healthcare REIT

There aren’t many analysts paying attention to Target Healthcare REIT (LSE:THRL), but the ones that do all think it’s worth considering. And it’s easy to see why. 

Source: TradingView

The firm owns a portfolio of 94 care homes, which it leases to operators across the UK. Like other real estate investment trusts (REITs), it returns 90% of this to shareholders as dividends.

Occupancy levels are around 85% at the moment, which is on the low side. And this reflects the ongoing risk of inflation on the firm’s tenants, which have limited ability to increase prices.

I think, however, that a general trend of longer life expectancy should make for strong demand over time. And there’s a lot more to like about the stock from an investment perspective.

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.

Target has a strong balance sheet, which isn’t automatic when it comes to REITs. And its leases also have an average of 25 years left to run, providing good long-term stability for the business.

Given all of this, I think 5.6% dividend yield is relatively attractive. So I can see why analysts think this is one for investors to check out – and it’s certainly one I’ve got my eye on right now.

Finding stocks to buy

I’m often reasonably sceptical of analyst ratings – especially positive ones. When it comes to investing my own money, I tend to be a bit more cautious.

With Games Workshop and Target Healthcare REIT, though, the consensus view looks plausible to me. I think there’s a lot to like about both stocks and dividend investors should take a look.

The post 2 Strong Buy dividend shares to consider in July appeared first on The Motley Fool UK.