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.

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.

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.

Should you invest £5,000 in Aviva Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Aviva Plc made the list?

Ben McPoland owns shares in Aviva and LondonMetric Property.

The post 3 top passive income shares to consider with dividend yields above 5% appeared first on The Twelfth Magpie.

Here, I want to look at how much £25,000 could become by 2055, which gives a nice time span to let compounding do its thing (just under three decades). Let’s dive in.

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.

Mushrooming returns

For simplicity’s sake, I’m going to assume that the £25k sum is after the government top-up. This removes the variations associated with SIPP tax relief, as well as making the power of compound interest more explicit.

Now, the first thing to point out is that stock market returns are highly unpredictable, especially when we’re looking out years into the future. Investing a lump sum during a frothy market top can result in sub-par performance, and vice versa.

The problem is that nobody can reliably call a market top, nor a bottom. Bull runs tend to rage for years, while bear markets can keep heading lower and lower.

Again, to keep things simple, I’m going to assume an average annualised market return of 9%, including all dividends reinvested along the way. This is broadly what a global index fund has delivered historically.

Here’s how this scenario would play out over various time frames:

As we can see, the £25k becomes roughly £304k within three decades — with almost a third coming in the final four years. That’s the snowballing effect of compounding!

Admittedly, I haven’t included any fees here, which are real and would shave some off the total (how much would depend on which investment platform ones uses).

Even so, the end result would clearly still be worth it.

How to aim for 9%?

The obvious question now is, how to go about securing this 9% return? Well, there are broadly three approaches one could consider taking in the stock market.

• Passive index investing (eg, a low-cost global index tracker)
• Active investing (picking stocks, investment trusts, and funds)
• A mixture of the two

Of course, it’s for each individual to choose which investing strategy they pursue (all have the potential to produce solid returns).

But as far as stocks are concerned, I think LondonMetric Property (LSE:LMP) is worth considering today as part of a diversified portfolio. This FTSE 100 REIT (real estate investment trust) specialises in logistics, convenience retail, healthcare, and entertainment and leisure properties.

There are a number of things I like here. For a start, there’s a good mix of sectors, offering both stability (blue-chip tenants like Marks and Spencer and Premier Inn) and growth (e-commerce trends). The REIT’s occupancy rate is 98%.

Another attractive factor is that 69% of the rent has contractual uplifts in place, baking in guaranteed growth. And this should support dividend payments moving forward.

What could go wrong? Well, REITS are highly sensitive to sudden interest rate movements. Were inflation to prove stickier than we all hope, LondonMetric stock (and dividend growth) could disappoint.

However, with a substantial 6.7% starting dividend yield currently on offer, the rewards outweigh the risks for me. I own shares in my own portfolio.

Should you invest £5,000 in LondonMetric Property Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if LondonMetric Property Plc made the list?

Ben McPoland owns shares in LondonMetric Property.

The post £25,000 invested in a SIPP could be worth this much by 2055… appeared first on The Twelfth Magpie.

The time question will vary from one investor to another. But the rate of return stocks offer doesn’t care about how old you are.

How much can you earn?

Everyone’s investment outcome is a function of two things. One is the amount they invest and the other is the return they manage to achieve. 

The way to speed up the journey to a £6,515 second income isn’t by looking for higher dividend yields. They’re available, but can often be incredibly risky.

When a company’s shares trade with a 9% dividend yield, it can be a sign of trouble. This can take the form of excess debt, increased competition, or a declining market.

There is, however, something investors can do to speed the process along. And for those who achieve a positive return over time (which isn’t guaranteed), more money in means more money out.

Investing £200 a month at 6.5% creates a £6,515 second income within 22 years. And after 30 years, it gets to £13,030.

The importance of being consistent

Over the course of 20 or 30 years, stock market headlines will say all sorts of things. There’ll be doom, euphoria, and everything between.

This will make share prices go up and down. And there’s pretty much nothing you can do about this as an investor. 

The key to investing well is to focus on what you can control. And that means being consistent every month. 

Whether it’s £100, £200, or another amount, the important thing is to stick with it… each and every month, regardless of what the headlines are saying.

In the short term, that can feel like a mistake. But over time, that kind of consistency can be hugely valuable. 

Real estate investment trusts

I think real estate investment trusts (REITs) are worth a look for income investors. And one with a 6.5% dividend yield is LondonMetric Property (LSE:LMP).

It operates in an area of the industry where demand is extremely strong. This is especially true of urban logistics warehouses.

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.

This can attract competition. And with Amazon – a firm with its own warehouses – as a key tenant, investors should be wary of risks. 

There are, however, two key reasons for optimism. The first is that leases are long and this means income should be secure for some time. 

The second is that physical space limits expansion. So it’s not easy to bring new supply online and start competing with the firm’s assets.

The road to £6,515

Investing regularly over time is the best way for investors to build a second income. And this is really good news for most investors. 

Warren Buffett says it doesn’t take a huge IQ to be a good investor. He’s right – what it takes is the ability to be consistent over decades.

That’s not a matter of intelligence – it’s a matter of patience. Whether or not investors have the ability to do that is a question for individuals.

For those looking to get started, I think LondonMetric Property is one to consider. And over time, I think more will show up if we’re watching for them.

Should you invest £5,000 in LondonMetric Property Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if LondonMetric Property Plc made the list?

Stephen Wright owns shares in Amazon.

The post Can you earn a £6,515 second income by investing £100 a month? appeared first on The Twelfth Magpie.

But that’s precisely what makes the current environment so interesting for income-focused investors. For those willing to look past the noise, some of the most compelling passive income yields in the entire FTSE 350 are hiding in plain sight right now.

And one business in particular has caught my attention.

An income machine quietly firing on all cylinders

LondonMetric Property (LSE:LMP) is one of the UK’s largest triple net (NNN) lease REIT. The business owns and manages an £7.6bn portfolio of logistics warehouses, convenience retail, healthcare facilities, and entertainment assets. But its NNN speciality is what makes it truly fascinating.

Why? Because it means tenants are required to pay the vast majority of operating, maintenance, and tax expenses. It makes this commercial landlord’s income model exceptionally clean and efficient. And the numbers from the latest full-year results back this up.

Net rental income rose 16.6% to £455.3m and underlying earnings climbed 13.9%. The dividend was raised for the 11th consecutive year by 3.8% and is still comfortably covered by profits, translating into a juicy 6.9% yield.

The portfolio is also well-positioned for the structural trends that matter most. Logistics now accounts for 53% of assets, urban logistics rent reviews grew 38% on market reviews over the year, and a contracted rental uplift pipeline of £38m is already locked in for the next two years.

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.

So where’s the risk?

The main concern for any REIT investor is leverage. And even LondonMetric isn’t immune. With a loan-to-value (LTV) ratio of 36.7% and £2.7bn of new or refinanced debt activity in the year, the balance sheet carries meaningful exposure to interest rate movements.

Yet to be fair, management’s done an impressive job insulating the business. A staggering 99.8% of debt’s hedged, the blended cost of debt is held at 4%, and there’s no material refinancing required until as early as 2029.

However, if rates remain elevated for longer than expected, then property valuations could face renewed downward pressure, which would dent the net asset value even if the income stream holds firm. And that’s now looking increasingly like a genuine possibility given the inflationary pressures from the Middle East conflict.

Put simply, the macroeconomic environment for REITs is uncertain. And even LondonMetric’s own results note that liquidity in the real estate investment market remains constrained for larger lot sizes. In other words, if LondonMetric’s forced to sell a property to cover its debts in the future, it might have to sell at a discount.

The bottom line

Concerns about real estate liquidity and interest rate exposure are why LondonMetric shares are currently trading 10% below the firm’s net asset value.

However, this nervousness, while understandable, seems a bit overblown given the quality of LondonMetric’s tenant list and asset portfolio. And with the dividend yield now hovering near its highest point in almost 15 years, this genuinely looks like a once-in-a-generation opportunity to consider.

That’s why I’ve already added it to my own passive income portfolio.

Should you invest £5,000 in LondonMetric Property Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if LondonMetric Property Plc made the list?

Zaven Boyrazian owns shares in LondonMetric Property.

The post UK REITs: a once-in-a-generation passive income opportunity appeared first on The Twelfth Magpie.

Combining these three FTSE 100 income heroes in a Stocks and Shares ISA could generate an average yield of more than 7%. I wouldn’t suggest new investors rush out to buy all three. Two are in the same sector and diversification is vital. High yields can also be hard to sustain, but these three look reasonably robust.

Legal & General’s income is massive

Asset manager and insurer Legal & General Group (LSE: LGEN) has the most generous dividend on the entire blue-chip index at 8.1%. It also boasts a solid track yield of increasing shareholder payouts year after year, always the sign of a solid operation.

The downside is that the shares have underperformed as the board struggles to increase profits. Also, the board says it will only increase dividends by a modest 2% a year in future. Although it did find the cash to fund a record £1.2bn share buyback.

I think Legal & General Group is still worth considering for income seekers. I hold it myself. But I’ll be keeping an eye on those profits. Because one day, I want to see the shares growing as well.

Check out Standard Life’s mighty dividend

The second-highest FTSE 100 yielder is another insurer, Standard Life (LSE: SDLF), which recently rebranded from Phoenix Group. It has a generous trailing yield of 7.3% and the board has hiked shareholder payouts every year for the last decade. Standard Life has the edge over Legal & General in one respect. The share price is up 30% in the last year.

Coincidentally, its board has also trimmed dividend growth to just 2% going forward. That’s a concern, but at least the income starts from the high point. Standard Life operates in a tough and competitive market, where it has to keep finding new sources of revenue to fund its largesse. the shares won’t grow every year, but I think this one is worth considering too.

Don’t overlook Londonmetric shares

The third-highest FTSE 100 yielder at 6.9% is a less familiar name. It’s a real estate investment trust (REIT) called Londonmetric Property (LSE: LMP), which runs a diversified portfolio of commercial property, covering logistics, healthcare and entertainment.

REITs must pay 90% of their annual taxable income to shareholders as dividends, which is why they have such generous yields. However, the UK property sector has been bumpy lately, and the Londonmetric share price is down 10% over the last year and more than 20% over five. It may continue to struggle as inflation and interest rates climb, but at some point I’m hoping that cycle will turn.

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.

Underlying performance remains strong, with net rental income climbing 16.6% last year to £455.3m. I don’t own any REITs myself, but I’m intrigued, and am now considering it as a new form of income for my own portfolio.

Should you invest £5,000 in Legal & General Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General Group Plc made the list?

Harvey Jones owns shares in Legal & General Group and Standard Life.

The post How to invest £20k in 3 FTSE 100 stocks to get a stunning 7% dividend yield appeared first on The Twelfth Magpie.

Some are even using their size and recurring cash flows to expand their real estate empires even further, driving more growth and ever-higher dividends. That’s why, right now, my personal favourite passive income opportunity is a REIT.

Why? Let’s dig in.

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.

A FTSE 100 commercial landlord

LondonMetric Property (LSE:LMP) owns and manages a diversified real estate portfolio focused on logistics, convenience, healthcare, entertainment, and other mission-critical assets. And by specifically targeting industry titans, the lease durations tend to be long, and the rental payments are on time.

Pair that with the group’s unique focus on triple-net-leases, where tenants are responsible for maintenance, insurance, and taxes, operating costs are near negligible.

The result? Industry-leading profit margins and exceptional revenue visibility. And at a 6.63% yield, £1,000 invested today would instantly start earning roughly £66.30 in passive income overnight.

So is this a no-brainer?

Weak share price, strong business

Last month, LondonMetric published its latest full-year results for the 12 months ending in March. And the numbers didn’t disappoint. Net rental income rose by 16.6% to £455.3m while underlying rental earnings were up 13.9% to £305.3m.

In turn, dividends once again received another 3.8% boost to 12.45p, continuing the group’s decade-long hiking streak of cash-covered shareholder payouts.

That kind of progress matters. Usually, a high yield’s a warning sign of profit weakness. But in the unusual case of LondonMetric, it’s the opposite.

Occupancy is at 98%, the average outstanding lease duration is 17 years, 99.8% of its borrowings have now been hedged, and its average cost of debt sits at 4%.

Put simply, both the balance sheet and dividends look rock solid. And in the words of CEO Andrew Jones, “our relentless expansion has put us in a strong position with every reason to be optimistic.”

Needless to say, this all sounds rather perfect. So what’s the catch?

What could go wrong?

Even with strong execution and skilled leadership, LondonMetric nonetheless has weak spots. Like most REITs, the business remains highly sensitive to changes in interest rates. Existing debt might be hedged, but rates also impact property values and make new borrowings more expensive.

Consequently, it becomes much harder for the business to continue to expand its empire at pace. But the challenges don’t end there. Cheaper property valuations also put downward pressure on rental rates.

The group’s long-duration leases help offset this impact. But when leases are up for renewal, it makes it harder for management to exercise rental pricing power. And in turn, dividend growth can come under pressure from multiple directions.

Still, in my opinion, this nonetheless looks like one of those rare income stocks where the headline yield is backed by genuine fundamentals that investors seem to be ignoring or, at least, discounting heavily due to weakened sector sentiment.

LondonMetric has scale, discipline, and a clear track record of compounding cash flows, and that is exactly the sort of setup I love to have in my passive income portfolio. That’s why I’ve already bought shares in this REIT.

Should you invest £5,000 in LondonMetric Property Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if LondonMetric Property Plc made the list?

Zaven Boyrazian owns shares in LondonMetric Property.

The post 6.63% yield! This UK REIT’s my top passive income stock for June appeared first on The Twelfth Magpie.

Here, I want to highlight a pair of them. Why do I own them? And are they still worth considering buying today?

The highest blue-chip yield

Up first, we have Legal & General (LSE:LGEN). This is the insurance and asset management firm whose roots stretch back almost 200 years.

L&G, as it’s known, sports a dividend yield of 8.1%, which is the highest in the whole FTSE 100. This means £20,000 invested in the shares could generate £1,620 in passive income. Nice.

For the record, I haven’t got twenty grand in the insurer. But it will pay out the bulk of its annual dividend on Thursday (4 June), and I have enough shares so that I’ll get a few hundred quid.

But will I continue holding L&G? My main concern is that the yield might not be sustainable over the medium term.

For example, I read how analysts at Jefferies recently turned bearish, noting that L&G’s net surplus generation — which they regard as a proxy for free cash flow — is expected to stay flat at around £1.2bn through 2028.

If so, this means the payout will only just be covered. And this could see the dividend cut in future to improve capital flexibility — a move that would probably shock many investors, who have milked this dependable cash cow for a long time.

But there’s a reason why the yield is so high and the share price has basically gone nowhere for a decade. The dividend stock is clearly viewed as higher-risk by the market, so investors should bear this in mind.

What will I do? Well, that juicy yield has kept me loyal so far, and there’s an interim (smaller) dividend slated for September. Greedily, I’ll wait for that before making a decision.

UK property

The second FTSE 100 stock is Londonmetric Property (LSE:LMP). Now, this is a newer purchase for me, as I took advantage of a big share price decline (down 33% in less than four years).

LondonMetric is a real estate investment trust (REIT), which means it’s legally required to distribute at least 90% of taxable income back to shareholders as dividends. It’s a way of investing in property without the hassle of being a landlord.

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.

Nearly 53% of the £7.6bn portfolio is in urban logistics (think distribution centres for online shopping), where tenants include Amazon, Primark, and Next. E-commerce is booming but there’s a shortage of available land, creating an attractive dynamic.

Meanwhile, rent from the entertainment and leisure sector, making up 20.2%, comes from the likes of Travelodge and Merlin (owner of Alton Towers and Thorpe Park). Contractual increases apply to 98% of rents here.

The reason the stock has lost a third of its value is due to the higher interest rate environment. This has obviously made borrowing more expensive. If rates stay elevated due to high inflation, then this REIT will likely underperform.

For me though, the 6.6% dividend yield on offer makes this a risk worth taking. A combination of high-yield income and turnaround potential makes LondonMetric worth considering at 190p.

Should you invest £5,000 in LondonMetric Property Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if LondonMetric Property Plc made the list?

Ben McPoland owns shares of Legal & General and Londonmetric Property.

The post 2 UK stocks I own for chunky passive income appeared first on The Twelfth Magpie.

The stock market isn’t just about building wealth. It can also be a great way of earning passive income.

Food inflation

According to Confused.com, the average UK household spends around £119 a week on food. And this just seems to rise with inflation. 

There are, however, ways to try and offset this by earning extra cash. But this doesn’t have to involve getting another job. 

Instead, you can buy shares in businesses that return cash to investors as dividends. And a Stocks and Shares ISA is a great way to do this.

The big advantage of an ISA is that you don’t have to pay dividend tax. So you can keep 100% of whatever the company pays out.

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.

That can be a huge difference over time. But what could a realistic return look like for someone starting today?

How much could you earn?

Investors getting started might be surprised at what’s on offer. The FTSE 100 has stocks with dividend yields up to 8.15%.

At that rate, someone could earn £119 a week by investing £75,927. That’s using the tax advantages of a Stocks and Shares ISA to keep those returns. 

So far, so good. The trouble, however, is that high dividend yields are often compensation for investing in risky businesses.

Sometimes, however, those risks are worth it. And I think there are some stocks where this might be the case.

Real estate investment trusts (REITs) are where I think these most frequently show up. And one from the FTSE 100 stands out to me.

6.61% yield

LondonMetric Property (LSE:LMP) leases warehouses and retail properties. And the stock comes with a 6.61% dividend yield.

So what’s the catch? One thing to pay attention to is the firm’s debt profile, with the average loan maturing in less than five years.

By contrast, the average lease has around 17 years to run. So there is what’s known as a duration risk – a mismatch between assets and liabilities. 

If interest rates rise, the company might not be able to offset higher borrowing costs with rent increases. That’s something to keep an eye on.

How big is the threat?

LondonMetric’s leases have inflation-linked uplifts built in. This means rents increase over time, but it also helps with the duration risk.

Inflation is one of the most likely causes of higher interest rates. But the firm stands to benefit from this before debt costs increase.

Another thing to note is that the company’s debts don’t all expire together. So that means the exposure at any time is limited.

Long leases also make the firm more attractive to lenders. Having long-term contracted income should help it negotiate lower interest rates.

Lastly, the company is selling some of its peripheral assets. And the cash from this should help bring down debt levels.

The opportunity

A 6.6% yield means the amount needed for £119 a week in dividends is £93,615. That’s a lot and investors will want to look for a few stocks with that kind of sum.

LondonMetric Property, however, is a good place to start looking. And with inflation, sooner is probably better than later.

Should you invest £5,000 in LondonMetric Property Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if LondonMetric Property Plc made the list?

Stephen Wright has no position in any of the companies mentioned.

The post How to target £119 a week in passive income from a Stocks and Shares ISA appeared first on The Twelfth Magpie.

But here’s the thing. REIT investors can sidestep those headaches entirely.By holding REIT shares inside a Stocks and Shares ISA, investors can earn rental income indirectly through dividends completely tax-free. And today, there’s one REIT in particular from my portfolio that looks especially compelling.

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.

Why LondonMetric stands out from the crowd

LondonMetric Property‘s (LSE:LMP) a UK logistics and convenience retail REIT, owning a portfolio of last-mile distribution centres, supermarkets, and urban retail assets leased to some of Britain’s most recognisable brands.

The shares currently offer a dividend yield of 6.76% – one of the highest in the FTSE 100. But on top of that, seven out of nine institutional analysts following the business currently rate it as a Buy or Outperform, with an average share price target of 230p.

That’s close to 25% higher than where the shares are trading today, meaning investors could be looking at a rare combination of high yield and high growth simultaneously.

Digging deeper, the dividend income’s underpinned by a triple net lease structure.

Under this model, tenants pay not just the rent but also the property’s insurance, maintenance, and tax costs directly. In other words, LondonMetric collects rent while passing most of the running costs onto its occupiers.

It’s a nifty capital-light business model that’s translated into remarkably predictable and resilient cash flows, paving the way for 11 years of continuous dividend hikes.

So is this an obvious no-brainer?

No investment’s ever without risk. And even as a bullish shareholder, I can see that LondonMetric has some notable weak spots.

Higher interest rates apply real pressure to the group’s leveraged balance sheet. To be fair, management’s been proactive here, refinancing its outstanding debt facilities through to 2029 – a move which provides meaningful near-term protection. But the pressure doesn’t disappear entirely.

The more subtle risk sits with tenants. Even if LondonMetric can service its own debt comfortably, some occupiers facing their own cost pressures may choose not to renew leases upon maturity.

This is particularly true if they need to scale back operations in a tougher economic environment. And a rise in vacancy rates, even a modest one, could weigh on distributions.

These are genuine risks worth watching carefully. But so far, management’s proven quite skilled at navigating different economic cycles.

So for real estate investors looking for a tax-efficient way to earn rental-style income without the headaches of direct property ownership, LondonMetric Property shares look like one of the most compelling options to consider, in my opinion. And it seems other institutional analysts agree.

Should you invest £5,000 in LondonMetric Property Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if LondonMetric Property Plc made the list?

Zaven Boyrazian owns shares in LondonMetric Property.

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That’s why I’m using mine to do something specific: craft a portfolio built exclusively around dividend growth stocks. These businesses may not have the highest yields today. But by continuously hiking payouts, the income generated can evolve into something spectacular.

Over time, higher payouts and automatic dividend reinvestment have caused my portfolio to naturally concentrate into a small number of positions. And right now, LondonMetric Property (LSE:LMP), Melrose Industries (LSE:MRO), and Howden Joinery (LSE:HWDN) together make up a combined 32% of my SIPP.

That level of concentration obviously comes with notable risk. But it’s a risk I’m willing to take. Here’s why.

Three businesses, one common thread

Each of these businesses operates in a completely different sector. Yet they share a defining characteristic: durable competitive advantages that support long-term dividend growth, even in periods of macroeconomic turbulence.

LondonMetric is a REIT specialising in logistics and convenience retail property. The structural tailwind of e-commerce driving sustained demand for last-mile distribution assets makes this a genuinely compelling long-term compounder. And contractual rental uplifts underpin a growing dividend that has proven remarkably resilient.

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Meanwhile, Melrose is an aerospace and engineering group, supplying mission-critical components to aircraft manufacturers including Airbus and Boeing. The multi-decade aerospace upcycles driven by surging global air travel and fleet renewal programmes, as well as the rearmament of Europe, provide a long runway for earnings and, once again, dividend growth.

Lastly, Howden Joinery is the UK’s largest trade kitchen supplier, selling almost exclusively to small builders and tradespeople rather than directly to consumers. That B2B model insulates it from the worst of retail sentiment swings, and its capital-light franchise-style branch network generates consistently strong free cash flow.

That’s why all three have been able to raise shareholder payouts for at least five years in a row, with LondonMetric showing off with its decade-long hiking streak.

What could go wrong?

Of course, even my three favourite holdings come with weak spots worth considering carefully.

Like most REITs, LondonMetric is sensitive to movements in interest rates. If borrowing costs remain elevated for longer than expected, refinancing pressures could weigh on both its own financials and those of its tenants, making lease renewals more challenging.  

Melrose’s multi-year transition into an aerospace pureplay still has plenty of execution risk for management to overcome. But even if this process is completed flawlessly, the firm remains exposed to the wider cyclicality of the commercial aviation sector.

As for Howden, with the bulk of its revenue stemming from the sale of its fitted kitchens, it too is indirectly impacted by higher interest rates, which softens activity within the home renovation market.

But here’s what gives me some contrarian confidence.

All three businesses have continued to grow their dividends through recent periods of significant external stress. That kind of consistency is hard to fake. And it’s exactly why I haven’t trimmed a single position despite the growing concentration.

So, for investors looking for dividend growth stocks to anchor a long-term retirement portfolio, I think all three are worth mulling over.

Should you invest £5,000 in Howden Joinery Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Howden Joinery Group Plc made the list?

Zaven Boyrazian owns shares in Howden Joinery, LondonMetric Property, and Melrose Industries.

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