The London Stock Exchange remains the land of the high dividend yield. Right now, literally dozens of FTSE 350 shares are sporting dividend yields above 5%.
Some of these will prove to be yield traps, but many others will be able to meet their high yields. This offers passive income investors a lot of choice and opportunity.
Here, I want to mention a trio of UK dividend stocks with yields above 5% that I reckon are worth examining more closely.
Property
Londonmetric Property (LSE:LPM) is a FTSE 100 real estate investment trust (REIT). After falling 20% over the past four years due to higher interest rates, this dividend stock is offering a juicy 6.5% yield.
Looking ahead, this is set to rise to around 7% in two years’ time. This is why I added the REIT to my own income portfolio a few months ago.
LondonMetric focuses on triple net lease properties, meaning tenants are typically responsible for most of the costs associated with the property. This provides the REIT with a relatively stable income stream.
Additionally, half the portfolio is in the logistics and distribution sector, which should enjoy long-term growth due to the ongoing shift toward online shopping. Tenants here include Amazon, Next, and FedEx.
We continue to believe that urban logistics remains the most attractive sub-sector with the greatest demand/supply tension and the strongest rental growth.
LondonMetric
The biggest risk ahead is if interest rates start rising again, as this would put pressure on property values and make borrowing more expensive. With inflation remaining sticky, this certainly can’t be ruled out (and dividends are never ultimately assured, of course).
However, due to the REIT’s quality assets, 98% occupancy rate and high starting yield, I think the risk’s worth considering.
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Banking
Turning to the FTSE 250 now, we have TBC Bank (LSE:TBCG). This is a fast-growing lender in Georgia, where it enjoys a significant market position alongside rival Lion Finance. It also operates a digital bank in Uzbekistan.
Despite a mouth-watering 295% share price rise over the past five years, TBC is still carrying a 5.6% yield. Moreover, due to robust growth, this is forecast to rise as high as 7.4% in 2027.
The fact that TBC operates across the less developed economies of Georgia and Uzbekistan adds risk. If either’s impressive GDP growth rates disappointed, the bank’s earnings growth could stall.
However, looking at the valuation, I can’t help feeling some of these risks are already baked in. I mean, we’re looking at a forward P/E ratio of 5.1, which appears too low.
Insurance
Returning to the FTSE 100 now, I want to briefly highlight Aviva (LSE:AV.). The UK’s largest diversified insurer is currently sporting a 6.1% dividend yield.
Again, when we peer ahead, though, this rises to almost 7% in 2027. Expected robust earnings growth will likely support the rise as the firm integrates the Direct Line acquisition, realising cross-selling opportunities across the enlarged group.
Given that Aviva focusses on just two markets today (the UK and Ireland, and Canada), any economic downturn in either could present challenges to growth.
But with management confident in achieving 11% growth in operating earnings per share between 2025 and 2028, the dividend prospects look attractive to me here.
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Ben McPoland owns shares in Aviva and LondonMetric Property.
