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Do you have a pile of money in a savings account? Now might be the time to consider investing in high-yield dividend stocks as cash account rates fall.
Here are three passive income stocks that have caught my attention:
| dividend participation | Dividend yield |
|---|---|
| Dowlais Group (LSE:DWL) | 7.9% |
| Tritax Big Box REIT (LSE: BBOX) | 5.8% |
| UK Wind Greencoat (LSE: United Kingdom) | 8.2% |
Dividends are never, ever guaranteed. But if brokers' forecasts are accurate, an investment of £9,000 spread equally across these stocks would produce a passive income of £657 in 2025 alone.
I'm sure each of these stocks could also deliver growing dividends over time. Here's why.
bumpy road
Firstly, it's important to say that Dowlais Group, which makes parts for automakers, is not for the faint of heart. Its stock price has plummeted 55% since going public last spring. It could also fall further if pressures in the auto industry persist.
But looking at the longer term, I think the engineer has significant recovery potential. This is due to its focus on the high-growth electric vehicle (EV) segment. Composed of parts of the old FTSE 100 Stock GKN, is a leading light in areas such as electric propulsion system technology.
Also in the near future, Dowlais' share price could receive a boost if it manages to sell its powder metallurgy unit, which it put up for sale in August.
With that dividend yield close to 8% and a low price-to-book (P/B) ratio of 0.2, I think the company deserves a lot of attention at current prices.
smart boxing
I already own Tritax Big Box REIT shares in my stocks and Shares ISA. As a real estate investment trust, or REIT, it is designed to provide a steady stream of income to investors.
This is because, in exchange for tax advantages, you must pay out at least 90% of the annual rental profits in the form of dividends.
There are almost 50 REITs listed on the London Stock Exchange. Tritax is one of my favorites because of its focus on the chronically undersupplied warehouse and distribution center market. Comparable annualized rents at Tritax increased 5.1% for tenancies subject to rent review in the first half.
Like other real estate stocks, its share price could fall if interest rates do not drop significantly from current levels. But a healthy long-term outlook makes this dividend stock worth serious consideration.
Please note that tax treatment depends on each client's individual circumstances and may be subject to change in the future. The content of this article is provided for informational purposes only. It is not intended to be, nor does it constitute, any type of tax advice.
green machine
Renewable energy stocks have fallen sharply following the US presidential election. This includes Greencoat UK Wind, which could fall further if Donald Trump makes things more difficult for green energy suppliers, hurting the sector as a whole.
However, I am confident that renewable energy stocks could rebound sharply over a longer time horizon. As the climate crisis worsens, I think demand for wind energy and other clean sources could still skyrocket, whoever is in the White House.
Greencoat UK Wind owns £3.6bn worth of wind assets across the country, both onshore and offshore. This broad footprint reduces the risk that unfavorable weather conditions in one or two regions pose to the group's profits.
From a dividend standpoint, I also like the company's commitment to increasing shareholder payouts in line with retail price inflation (RPI). It's a policy that ensures my passive income keeps pace with the appreciation of living costs.
