The FTSE 100 can be a great place for passive income investors to go shopping. The UK’s premier share index is packed with mature, market-leading companies whose financial strength allows them to consistently pay healthy dividends.
The FTSE 250 might be more popular for investors seeking growth rather than income stocks. However, it’s also home to a wide selection of robust and generous dividend-paying shares.
Here are two FTSE 100 and FTSE 250 dividend shares on my watchlist. If broker forecasts are correct, they could provide me with a healthy £1,680 passive income in 2025 if I invested £20,000 equally among them.
Company
2025 dividend yield
Primary Health Properties (LSE:PHP)
7%
Legal & General (LSE:LGEN)
9.7%
That’s more than the approximate £720 I could expect to make with a dividend-paying FTSE 100 exchange-traded fund (ETF). I’d make even less — around £660, in fact — with a FTSE 250-geared tracker fund.
Here’s why I’ll consider buying these two dividend heroes when I have spare cash to invest.
Primary Health Properties
Today, the dividend yield on Primary Health Properties shares is more than double that of the broader FTSE 250.
In my opinion it’s one of the most dependable dividend stocks out there. It’s raised annual payouts for 28 years on the spin, which is why I already own its shares in my Stocks and Shares ISA.
Earnings here are sensitive to interest rate movements. And they may remain constrained if the Bank of England fails to cut interest rates markedly from current levels.
But I don’t think this will impact Primary Health Properties’ ability to keep paying large dividends, in my opinion. As its name implies, it operates medical facilities like GP surgeries. They remain in heavy use at all points of the economic cycle, meaning rental income remains stable year over year.
In addition to this, the rents it’s owed are effectively underpinned by government bodies, meaning it doesn’t have to worry about rents being missed.
And finally, the company has its tenants locked down on ultra-long contracts. Its weighted average unexpired lease term (WAULT) was 9.8 years as of June.
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.
Legal & General
Legal & General’s another rock-solid dividend share in these uncertain times. In fact, its dividend yield for 2025 is even more impressive than Primary Health Properties.
At almost 10%, it’s around 2.5 times larger than the average of the whole FTSE 100.
Legal & General is more cyclical than the aforementioned property stock. When times get tough, revenues can slip as consumers wind in spending on financial products.
But thanks to its strong financial footing, the company looks set to keep paying large and rising dividends whatever happens to the economy. Its Solvency II capital ratio was an exceptional 223% as of June.
Dividends are never guaranteed. However, the payout on Legal & General shares has risen every year (except during the pandemic) since the 2008 financial crisis.
This is a good omen, in my book. And it’s why I also own it in my portfolio.
The post 2 FTSE 100 and FTSE 250 shares I’d buy to target a £1,680 passive income in 2025 appeared first on The Motley Fool UK.
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More reading
£9,000 of savings? Here’s how I’d aim to turn that into £399 a month of passive income
How much would I need to invest in UK stocks for £500 in monthly passive income?
Here’s how I’d create a second income worth over £20k annually
The Legal & General share price is down 18% and gives me a world-class 9% yield!
9.2% yield! Are Legal & General shares too good to ignore?
Royston Wild has positions in Legal & General Group Plc and Primary Health Properties Plc. The Motley Fool UK has recommended Primary Health Properties Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
