The UK stock market is home to a huge collection of companies offering large and growing dividends. Investors can find top passive income stocks to consider buying on the FTSE 100 as well as on its less-prestigious share indexes.
With this in mind, here are two of my favourites in early 2025. I think they’re both worth further research.
| Dividend share | Predicted dividend growth in 2025 | Dividend yield |
|---|---|---|
| Primary Health Properties (LSE:PHP) | 2% | 7.7% |
| M&G (LSE:MNG) | 3% | 9.6% |
Dividends are never guaranteed. But if broker estimates are correct, a £20,000 lump sum invested equally in these shares would provide a £1,730 passive income this year alone.
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What’s more, I’m optimistic they’ll keep growing cash rewards beyond 2025 as well.
Here’s why I think they’re worth serious consideration.
Medical marvel
Primary Health Properties is a real estate investment trust (REIT). As a consequence, it’s highly vulnerable to higher interest rates that damage profitability and weigh on asset values.
However, this FTSE 250 trust classification also has advantages for investors. Under REIT rules, the company must — in exchange for corporation tax perks — 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.
There are more than 50 of these dividend-paying property trusts to choose from today. But I like this one as it offers a blend of security and growth.
Medical services demand remains stable over time, so — unlike some REITs — Primary Health can expect rents and occupancy levels to remain stable regardless of economic conditions. The business has more than 500 healthcare facilities (like GP surgeries) in its portfolio.
Finally, I think it could deliver impressive earnings growth over the longer term as the UK’s older populace ages and demand for medical properties grows. The number of Britons aged 65 and above is tipped to rise from 19% three years ago to 27% by 2072, the Office for National Statistics says.
FTSE 100 dividend star
Like Primary Health Properties, financial services providers like M&G stand to be big winners from a rising number of silver-haired citizens across the globe.
As a provider of pensions, annuities, protection and wealth management services, this FTSE 100 company can expect its customer base to continue growing. As of last June, it had 4.6m retail clients and 800+ institutional clients on its books.
Businesses like M&G also have a way to indirectly benefit from the UK’s soaring elderly population. The growing pressure this is putting on the State Pension (and other benefits older people enjoy) is placing greater importance on people to plan for their retirements.
As a passive income share, M&G has substantial appeal to me. Its operations are highly cash generative, and the firm has a strong balance sheet it can use to pay dividends while continuing to invest for growth.
As of June 2024, the company’s Solvency II capital was more than double regulatory requirements, at 210%.
Competitive pressures across its product lines are severe. But I believe M&G’s exceptional brand recognition helps to mitigate (if not eliminate) this threat.
