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The FTSE 100 is the principle area for buyers who’re searching for to make an above-average passive revenue. The likes of Lloyds, Shell, Authorized & Common, and Taylor Wimpey are among the many London inventory market’s best-loved dividend shares.
Many Footsie corporations have qualities that make supreme dividend candidates. These embody market-leading positions in mature industries, extensive geographic footprints, and rock-solid steadiness sheets.
That is all nice, however at the moment I’m not interested by speaking about FTSE 100 dividend heroes.
I feel there could also be higher UK shares to purchase for dividends proper now.
Small discuss
A contemporary report from Octopus Investments has caught my eye this week. It reveals that the potential dividend yields on the FTSE 250 (when excluding IT shares) and the FTSE Small Cap index beat that on supply from the FTSE 100:
But, this yield superiority is nothing new. As you’ll be able to see, the dividend yield on small-cap shares has crushed that of the broader Footsie for the previous two years.
And dividends amongst FTSE Small Cap corporations are tipped to develop strongly between 2025 and 2026, leading to yields of 4.03% and 4.41% respectively.
In fact yields are based mostly on dealer projections that aren’t set in stone. Nevertheless, excessive dividend cowl for the following two years gives payout estimates with loads of metal.
In actual fact, as you’ll be able to see, dividend protection for the FTSE Small Cap, FTSE 250 (ex IT), and FTSE Various Funding Market (AIM) indexes additionally surpass that of the FTSE 100:
These superior yields and dividend protection mirror expectations that earnings outdoors the FTSE 100 are about to take off. Based on Octopus Investments: “each the FTSE AIM index and the Deutsche Numis Smaller Firms Index are anticipated to ship 22% compounded annual earnings development for the 2 years to December 2026.”
Three high dividend shares
I personal a number of Footsie shares in my very own portfolio for passive revenue. However Octopus’ analysis reveals it will probably additionally pay to think about dividend shares from outdoors the FTSE.
Radiator producer Stelrad — with its ahead yield of 5.9% and powerful dividend cowl of two occasions — is one small cap I’m . I’m additionally contemplating pawnbroker Ramsdens — the dividend yield and dividend cowl listed below are 5.1% and a couple of.3 occasions, respectively.
However Social Housing REIT (LSE:SOHO) is on the high of my buying record at the moment. The dividend yield right here for 2025 is 9.2%.
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Dividend cowl is way much less spectacular, at 1.3 occasions. In idea, this might see the corporate undershoot dividend forecasts if earnings disappoint.
Nevertheless, Social Housing’s concentrate on the secure residential property market tremendously reduces (if not completely eliminating) this risk. What’s extra, tenants usually obtain monetary assist from central and native governments, offering hire assortment with added robustness.
Below actual property funding belief guidelines (REIT), at the least 90% of the agency’s annual rental earnings have to be paid out in dividends. With its robust development potential, I’m assured eye-catching dividends at Social Housing will proceed to climb.
