Buying high-yield dividend shares can be a great way to build wealth for retirement.
By reinvesting any dividends I receive, I can supercharge my eventual returns thanks to the miracle of compounding. And purchasing stocks with large yields — assuming that brokers’ dividend forecasts prove accurate — can give me especially large amounts of cash to buy more UK and US shares.
With this in mind, here are two high-yield income stocks I’d buy today if I had cash to invest. Both of their dividend yields sail above the FTSE 100 average of 3.6%.
Triple Point Social Housing REIT
Forward dividend yield: 9.2%
Investing in real estate investment trusts (REIT) can be a great way for investors to supercharge their dividend income. In return for certain tax perks, REITs must pay a minimum of 90% of annual rental profits out in the form of dividends.
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.
Triple Point Social Housing REIT (LSE:SOHO) is one such company with terrific investment potential. It supplies specialised supported housing (SSH), in other words, homes for adults whose special needs mean they require regular care and support.
It’s a sector that looks poised for rapid growth over the next decade. This reflects chronic underinvestment in suitable homes in the UK, and a predicted rise in the number of vulnerable adults.
Triple Point’s profits are highly sensitive to government health policy. But given that SSH is cheaper than in-patient care or residential care homes, policy makers could be likely to invest heavily here going forwards.
I also like this REIT because of the stability of its income flows. Its rents are inflation linked and indirectly paid by local authorities.
TBC Bank Group
Forward dividend yield: 7.9%
TBC Bank Group (LSE:TBCG) doesn’t have the same year-on-year consistency as residential property stocks. During economic downturns, profits can fall as revenues weaken and bad loans rise.
Yet, I believe this FTSE 250 share has capacity to deliver huge long-term returns, including a steady stream of large dividends. This is thanks to its number one position on Georgia’s rapidly growing banking sector.
Earnings here continue to soar as the Eurasian country’s economy booms (GDP grew 7.5% in 2023). TBC’s latest financial update showed pre-tax profits up 14% in the first half of 2024.
Given that financial product penetration in Georgia remains at relatively low levels, the banking giant has significant scope to grow profits. This will be boosted by the company’s massive investment in digital services.
Building a £636k+ nest egg
If I invested £10,000 equally in TBC Bank and Triple Point shares today, I could make a second income of £860 this year. That’s based on an average dividend yield of 8.6%.
And assuming I reinvested my dividends into these two stocks — along with a regular £200 monthly investment — I’d have turned that into an impressive £636,281 after 30 years. That’s assuming that the dividend per share and share price remain stable.
While shareholder payouts are never guaranteed, I’m confident that both stocks will continue to grow dividends over time. And with the potential for long-term share price gains, too, I think I could make even more than that £636,281.
The post 2 high-yield dividend shares I’d buy to target a £636,281 retirement fund! appeared first on The Motley Fool UK.
Pound coins for sale — 31 pence?
This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!
Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.
What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?
See the full investment case
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I’m considering buying 200 shares in this FTSE 250 star to target £4,500 a month in passive income!
Royston Wild has no position in any of the shares mentioned. 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.
