High-yield passive income shares can offer terrific returns but also greater-than-average risk. Why? Large yields often signify a share price drop and significant operational problems. Sky-high yields can also be difficult to sustain over time.
Yet many companies with substantial yields can also be bona-fide dividend heroes. Take Octopus Renewables Infrastructure Trust (LSE:ORIT) and TwentyFour Income Fund (LSE:TFIF). Both these dividend shares have exceptional payout records and yields above 10% for this year.
A £20,000 investment spread equally in these shares will provide £2,030 in passive income this year alone. If done so inside a Stocks and Shares ISA, every penny of this will be free of tax, too.
But what makes these UK stocks top dividend payers? Read on.
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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Green machine
Octopus Renewables Infrastructure Trust (LSE:ORIT) has seen its share price surge in recent months. As the Iran war has supercharged oil prices, the outlook for green energy demand — and the financial support renewable power suppliers might receive — has improved substantially.
But despite this rise, Octopus shares still carry an enormous forward dividend yield of 10.2%. Dividends have risen consistently since it the company listed on the London stock market in 2019. Dividend targets have also been hiked for the last five years in a row.
So what’s made it such a strong dividend payer? One reason is its diversified approach, as the graphic below shows. By spreading its exposure across multiple countries and technologies, annual earnings — and by consequence, dividends — are better protected (if not completely insulated) by threats like unfavourable weather patterns.
Octopus has other tools in its arsenal too, including:
- 100% operational focus on the non-cyclical electricity generation market.
- Resilient cash flows underpinned by long-term power purchase agreements.
- Inflation-linked energy contracts.
- Manageable debt levels (net gearing was 45% at the end of 2025).
What can we expect going forwards? On the downside, dividends could disappoint if the Iran conflict rolls on, pushing inflation and interest rates higher. This could in turn raise the trust’s borrowing costs, hitting earnings and its payout growth targets. Yet on balance, it’s still (in my view) in great shape to keep paying large long-term dividends.
High risk but high reward?
TwentyFour Income Fund (LSE:TFIF) also offers a huge double-digit yield, in this case 10.1%. Its goal is to “invest in a diversified portfolio of predominantly UK and European Asset-Backed Securities [ABS]“.
We’re talking about things like mortgages and credit card debt that are held by financial institutions like banks. The income the fund receives from these are paid out in dividends, which have grown for each of the last five years.
So why is the fund’s dividend yield so high? Well it reflects the high-risk types of ABS it invests in — the greater the chance that the underlying borrower defaults, the higher the interest rate that’s charged.
This may make the fund less attractive to investors who are more risk averse. Though, on the plus side, the fund’s diversification across thousands of different loans significantly reduces the threat level.
As part of a diversified ISA portfolio, I think TwentyFour Income Fund’s a top passive income share to consider.
