Efficiency 9.2%! 4 dividend stocks to consider right now

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The FTSE100 is home to some of the world’s most popular dividend stocks. With a stack of financially sound, market-leading companies in mature industries, it’s no secret why Footsie’s the a place to earn passive income.

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Is that so? Sure, the index has clear benefits for income investors. However, focusing solely on shares of the UK’s largest companies means investors often miss out on opportunities to get the highest dividends elsewhere.

To take Regional REIT , AEW UK REIT AND Target healthcare REIT. Combined with high pay FTSE250 energy companies – more on this later – the average dividend rate in this group is 9.2%. But what makes these such unique income shares worth considering?

Please note that tax treatment depends on each client’s individual situation and may change in the future. The content of this article is for informational purposes only. It is not intended to be and does not constitute any form of tax advice.

3 largest trusts

Real estate investment trusts (REITs) can be some of the most reliable dividend stocks. I’m not saying they’re immune to pressures that could affect shareholder payouts. However, sector rules mean they give investors better earnings visibility than almost any other stock.

This is because REITs must pay out at least 90% of profits from their rental operations as dividends. This is the trade-off they make in exchange for generous corporate tax breaks.

As a result, Regional REIT (9.7%), AEW UK REIT (7.7%) and Target Healthcare REIT (7.4%) all offer higher dividend yields than the average UK share. But what gives them the earning power necessary to deliver these juicy rewards?

Solid models

Many UK REITs are not immune to wider economic conditions. In tough times, their properties may become vacant and they may have difficulty collecting rent. The regional REIT’s focus on the highly cyclical office sector makes it particularly vulnerable to a downturn. Meanwhile, AEW has a vast exposure to industrial and retail industries.

That said, these mutual funds enjoy vast real estate portfolios and a broad customer base. This significantly reduces the risk of disruption to dividend payments if one or two tenants experience difficulties. Take Regional REIT, which has 118 properties and 690 tenants on its books, providing a steady and reliable income stream at a group level.

Target Healthcare REIT has been particularly solid throughout the economic cycle. In the December quarter, rent collection was 99%, reflecting the trust’s focus on the ultra-defensible care home market.

Dividend rate of 11%!

Another top dividend stock that I like right now is Renewable Infrastructure Group (LSE:TRIG). That FTSE 250 income hero I mentioned earlier offers a staggering 12% dividend yield.

But why is performance so high, I hear you ask? This is because, as with many renewable energy companies, the trust’s share price has fallen recently, causing dividend yields to boost. Lower wind speeds negatively impact energy production and profits. It has also suffered from higher interest rates, which have pushed up borrowing costs and lower net asset values.

This remains a risk, but I am hopeful that the Renewables Infrastructure Group share price can recover strongly as the Bank of England cuts interest rates again and demand for green energy increases. I certainly believe it will remain the highest dividend yielding stock, supported by defensive operations that provide stable cash flows.

Since 2013, when the company was listed on the stock exchange, the group has increased payouts almost every year. I think it will remain one of the highest dividend stocks in the UK.

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