Earning passive income from dividends is one of the benefits I derive from holding a Stocks and Shares ISA.
If I had spare cash to invest in the coming month, here are three UK shares I would happily buy for my ISA. Each yields at least 8.8% right now.
Legal & General
I have been buying Legal & General (LSE: LGEN) shares for my portfolio recently. I think the share continues to offer good value at its current price.
The financial services firm is well-positioned in a market I expect to see high and resilient demand over the long run. Thanks to its customer base, strong brand, long typical client relationship duration, and deep financial expertise, I am optimistic that the firm can continue to do well over the long term.
There may be bumps along the way, of course. A plan to merge asset management functions could distract key staff and I fear that weaker investment returns might see some clients move elsewhere.
From a long-term perspective, though, I think the 8.8% dividend yield currently offered is an excellent passive income opportunity. That explains why I am taking advantage of it myself.
Henderson Far East Income
Despite moving up 4% so far this year, the investment trust Henderson Far East Income (LSE: HFEL) still offers an eye-watering yield of 10.8%.
The trust – a quarterly dividend payer – has a recent history of raising its total ordinary dividend per share annually. Still, no payout is ever guaranteed and the high yield on offer raises questions of how sustainable the dividend is.
I do see a risk that weak performance in some key Asian economies poses a risk to earnings for the trust. But I like its focus on a significant economic region I expect to grow in coming years and decades.
As for the dividend yield, it has been high for years already — and the payouts have kept coming.
That is no guarantee that they will continue at the same rate, but my purchase of the shares reflects my confidence in the trust managers’ ability to find and invest in compelling Asian-linked businesses.
Phoenix
Another FTSE 100 financial services firm I would be happy to add to my ISA next month alongside Legal & General is Phoenix (LSE: PHNX).
Like Henderson Far East Income, it has a recent record of annual dividend growth and a notably high yield, currently standing at 9.8%.
I like the insurer’s huge customer base – it has a market-leading position in the UK in its line of business.
I also appreciate its commitment to aiming to grow the dividend per share annually. Whether that continues to happen depends on business performance. I do see a risk that any significant market downturn could mean Phoenix faces unseen costs on its mortgage book, eating into profit levels.
From a long-term perspective, though, I like its proven business model and significant cash generation potential. That makes me hope the income share could continue to be a lucrative dividend payer.
The post Three 8.8%+ yielding shares I’d buy for an ISA in August appeared first on The Motley Fool UK.
Should you buy Henderson Far East Income Limited shares today?
Before you decide, please take a moment to review this first.
Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.
It’s called ‘5 Stocks for Trying to Build Wealth After 50’.
And it’s yours, free.
Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.
And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.
That’s why now could be an ideal time to secure this valuable investment research.
Mark’s ‘Foolish’ analysts have scoured the markets low and high.
This special report reveals 5 of his favourite long-term ‘Buys’.
Please, don’t make any big decisions before seeing them.
Claim your free copy now
More reading
3 ways I could earn lifelong passive income from UK shares
Yields of 9.43% and 8.76%! Are these ultra-high dividend shares no-brainer bargains today?
I’d build a second income with £5 a day like this!
3 reasons why I love Legal & General shares!
3 top FTSE dividend stocks to consider buying before it’s too late
C Ruane has positions in Henderson Far East Income and Legal & General Group Plc. The Motley Fool UK has no position in any of the shares mentioned. 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.
