Owning dividend shares can be an effortless way to boost my passive income streams. Here is a trio of UK shares yielding at least 5%, all of which I would buy for my portfolio now if I had spare funds to invest.
All pay dividends on a quarterly basis, although no dividend is ever guaranteed.
5%+ yield: Assura
Healthcare landlord Assura (LSE: AGR) has the makings of a long-term cash generation machine. It focuses on building, buying and leasing properties for medical care providers such as doctors’ surgeries and ambulance depots.
Not only do I expect demand for such spaces to be resilient, I like the low risk profile of the tenant base. No tenant is ever guaranteed to pay their rent, but taxpayer-funded healthcare providers seem less likely to default than commercial renters.
That helps the company fund a generous quarterly dividend. It has raised its payout annually in the past few years. The shares now yield 5.9%.
But if Assura really is so attractive, why have its shares fallen 18% over the past year?
I think investors are nervous that rising interest rates could hurt profitability. Assura ended last year with net debt of £1.1bn. I see the price fall as an attractive buying opportunity for my portfolio.
6% yield: European Assets Trust
Many UK shares have had a great few months since their October lows. Could economic recovery also improve the outlook for their mainland Europe peers?
I think it may. European Assets Trust (LSE: EAT) offers me exposure to small and medium-sized companies on the Continent. Not only does that mean I can get diversified exposure to a range of European markets, I think it could help me benefit from the growth prospects of medium-sized companies when the economic engine starts humming once more.
Despite a dividend cut last month, the investment trust still has a prospective yield of 6%.
Why would I invest in a company that has just slashed its dividend? The trust’s policy is to target paying out 6% of its net asset value each year as dividends in the following 12 months. So although falling stock markets could lead to more cuts in the payout, the reverse is also true. Strong performance this year by companies in which it invests could lead to a bigger dividend in 2024.
7%+ yield: British American Tobacco
With a thumping 7.2% dividend yield, British American Tobacco (LSE: BATS) already pays me passive income thanks to my existing shareholding – but I would welcome more.
In fact, I ought to receive more soon, without lifting a finger. Yesterday the company unveiled a 6% increase in its annual dividend per share.
As the results showed, revenue is increasing, cash flows remain gargantuan and the company’s non-cigarette business is growing sales very fast. However, the business remains heavily reliant on cigarettes. The non-cigarette business is still loss-making and may never achieve the sort of margins produced by cigarettes, which are cheap to manufacture. The long-term decline in cigarette smoking therefore poses a risk to profits — and the dividend.
So far, I think the firm has managed this longstanding risk well. Yesterday’s rise was just the latest in more than two decades of annual dividend increases.
