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I'm looking for great stocks to buy this month to earn a winning passive income. Of course, I'm not just looking for dividend stocks that currently have the highest yields. Instead, I'm looking for companies in good shape to increase shareholder payouts over time.
I think the following dividend stocks would give me the best of both worlds.
| Stock | 2024 dividend per share | Dividend yield | Dividend per share 2025 | Dividend yield |
|---|---|---|---|---|
| Tritax Big Box REIT (LSE: BBOX) | 7.64p | 4.7% | 8.09p | 5% |
| Primary health properties (LSE:PHP) | 6.9p | 6.8% | 7p | 6.9% |
Here's why I think they're worth taking a closer look this October.
Tritax Big Box REIT
Tritax's merger with UK commercial property REIT in May opened the door to promotion by FTSE 100. And it enters the index as one of the largest dividend payers. As the table above shows, dividend yields are above the 3.5% average for the Footsie overall over the next two years.
Real estate investment trusts (REITs) like this can be great options for income investors. This is because they are required, in exchange for tax benefits, to pay out at least 90% of annual rental income in the form of dividends.
It's also because they tend to have tenants locked into long-term contracts, which gives them the essential cash flows (not to mention confidence) to pay a large and usually increasing dividend over time.
At Tritax, the weighted average outstanding lease term (WAULT) for its core Foundation assets was 14 years in June.
This bodes well for future payments, as does its place in a rapidly growing market. Demand for the modern fulfillment centers it specializes in should grow steadily as e-commerce volumes increase, supply chains are optimized and companies invest to improve their ESG credentials.
Higher-than-normal interest rates have most recently pressured real estate stocks like Tritax Big Box. This remains a threat in the future. But receding inflation means the Bank of England looks set for a series of rate cuts, which will provide a boost to the entire sector.
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.
Primary health properties
Like Tritax Big Box, Primary Health Properties is categorized as a REIT, giving investors the same dividend benefits. But over the next two years at least its dividend yields are more impressive, approaching 7%.
Additionally, its dividend growth track record is better as well. Payments to shareholders have increased every year since 2009.
Like its peers in the sector, its tenants sign long-term contracts. Its WAULT stands at 9.8 years in June.
Primary Health also has an ace up its sleeve that makes it a reliable dividend payer. The company's focus on healthcare properties (such as GP surgeries) means rents are essentially guaranteed by local authorities and the NHS.
As with Tritax, the future direction of interest rates creates uncertainty here. Profits could also come under pressure if health policy in the UK changes. However, overall, I think Primary Health Properties are an excellent income share to consider.
