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Are you looking for ways to escalate your passive income with shares in the UK? Here are two of the highest dividend stocks whose 2025 profitability is astonishing FTSE100 average 3.5%:
Dividend stocks | Dividend rate in the future |
---|---|
Taylor Wimpey (LSE:TW) | 8% |
Foresight Solar Fund (LSE:FSFL) | 10.7% |
Dividends are never guaranteed. However, if the brokers’ forecasts are correct, a one-off amount of £20,000 invested equally in these companies will generate a second income of £1,880 next year.
Here’s why I think they’re worth seriously considering.
Taylor Wimpey
Housebuilder Taylor Wimpey is not without risk at the moment. The bleak economic outlook combined with signs of persistent inflation cast a shadow over demand in the sector in 2025.
As if that wasn’t enough, profit warnings by Persimmon AND Wistry due to cost pressures also scared investors. As a result, Taylor Wimpey’s share price has plummeted since mid-October.
While worthy of note, I believe these risks are already baked into the company’s low FTSE valuation. Its forward price-to-earnings growth ratio (PEG) is just 0.5, well below the threshold for being undervalued.
With one of the highest dividend yields on the London Stock Exchange, I think Taylor Wimpey is an attractive value share worth considering.
The UK housing market is coming back to life thanks to recent interest rate cuts. Fresh data from Rightmove showed the property listing provider’s record ‘the busiest Boxing Day in history” last week in terms of novel seller activity and visits to the platform.
While not guaranteed, more interest rate cuts are expected in 2025, which could escalate buyer demand. Rightmove itself has said it expects as many as four cuts in the New Year.
City analysts expect Taylor Wimpey’s profits to rise rapidly amid predictions of a sustained market recovery. It believes earnings will grow by 23% and 18% in 2025 and 2026, which also leads to forecasts for further dividend growth.
This means that next year’s dividend rate will escalate to 8.1%.
Dividend coverage for the next two years is admittedly needy. However, a mighty balance sheet puts the construction company in good shape to meet these near-term payout projections. Net cash in June was over half a billion pounds, or £584 million to be precise.
Foresight Solar Fund
Like homebuilders, renewable energy stocks like Foresight Solar Fund have fallen in recent months.
In this case, concerns about the green energy sector under returning US President Donald Trump have spooked investors. I consider this to be the best dip shopping opportunity.
In addition to a double-digit dividend yield in the New Year, Foresight stock now boasts a PEG ratio of 0.1. Moreover, its corresponding price-to-earnings (P/E) ratio is just nine times.
It’s possible that share prices will continue to fall if confidence in renewable energy sources continues to decline. However, in practice, Trump’s policies are unlikely to have an impact on Foresight’s day-to-day operations. All FTSE250 The company’s solar farms are located in the UK, Italy and Australia.
With the climate crisis driving demand for pristine energy, I am confident that over time, share prices across the sector could rise significantly. In the meantime, investors can enjoy the prospect of higher-than-market dividend yields from such mutual funds.