Image source: Getty Images
Looking for ways to boost your passive income with UK shares? Here are two major dividend stocks whose 2025 returns crush the FTSE 100 3.5% average:
| dividend stocks | Forward Dividend Yield |
|---|---|
| Taylor Wimpey (LSE:TW) | 8% |
| Solar Provident Fund (LSE: FSFL) | 10.7% |
Dividends are never guaranteed. But if brokers' forecasts are correct, a lump sum of £20,000 invested equally in these companies will generate a second income of £1,880 next year alone.
Here's why I think they're worth serious consideration.
Taylor Wimpey
Housebuilder Taylor Wimpey is not without risk at the moment. A gloomy economic outlook, combined with signs of persistent inflation, casts a shadow over demand for the sector heading into 2025.
As if this were not enough, the profit warnings of Khaki and Vistry Due to cost pressures they have also spooked investors. Consequently, Taylor Wimpey's share price has plummeted since mid-October.
While they deserve attention, I believe these threats are already built into the FTSE company's low valuation. Its future price-to-earnings growth (PEG) ratio is just 0.5, well below the high water mark that indicates undervaluation.
Given that it also has one of the highest dividend yields on the London Stock Exchange, I think Taylor Wimpey is an attractive value stock to consider.
The British property market is coming back to life, boosted by recent interest rate cuts. Recent Rightmove data showed property listing provider registration”its busiest Boxing Day yet”last week to find out the activity of new sellers and visits to the platform.
While not guaranteed, further interest rate reductions are anticipated throughout 2025, which could inflate buyer demand. Rightmove itself has said it expects up to four cuts in the New Year.
City analysts expect Taylor Wimpey's profits to grow rapidly amid predictions of a sustained market recovery. It believes earnings will rise 23% and 18% in 2025 and 2026, also leading to predictions of further dividend growth.
This means that next year's dividend yield will increase to 8.1%.
It is true that dividend coverage for the next two years is poor. But a strong balance sheet puts the builder in good shape to meet these short-term payment forecasts. Net cash was over £500m (£584m, to be exact) in June.
Solar Provident Fund
Like homebuilders, renewable energy stocks like Foresight Solar Fund have lost value in recent months.
In this case, fears about the green energy sector during the return of US President Donald Trump have spooked investors. I consider this an excellent dip buying opportunity.
In addition to its double-digit dividend yield heading into the New Year, Foresight stock also now boasts a PEG ratio of 0.1. Furthermore, its corresponding price-to-earnings (P/E) ratio is only nine times higher.
Stock prices may continue to fall if confidence in renewable energy continues to decline. In practice, however, Trump's policy is unlikely to affect Foresight's day-to-day operations. all the FTSE 250 The company's solar parks are located in Great Britain, Italy and Australia.
As the climate change crisis drives demand for clean energy, I think stock prices across the sector can rebound strongly over time. In the meantime, investors can enjoy the prospect of earning more market-beating dividend income from mutual funds like this.
