Under REIT rules, at least 90% of annual rental profits must be paid out to shareholders. That’s in exchange for certain corporation tax exemptions.

But their are other advantages to these trusts aside from the dividends they pay. Investors are saved the hassle and the up-front costs of buying property, and they don’t have to manage it or hunt for tenants. And unlike buy-to-rent, these investment trusts can provide exposure to many different sectors and not just residential rentals.

In my opinion, now’s an especially great time to consider targeting dividends with REITs. Want to know why?

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.

8.2% dividend yield

The Iran war has been catastrophic for many of these trusts’ share prices. With inflation on the rise, investors are expecting higher interest rates to last longer than previously predicted. The result is a potential hit to REIT earnings as borrowing costs rise and asset values take a whack.

But in some cases, I think the scale of the share price drop is unjustified. Take the case of Primary Health Properties (LSE:PHP). It’s sunk 7% in value since the start of 2026, driving its price-to-earnings (P/E) ratio down to a modest 8.1 times.

But what really grabbed my attention is the trust’s spiking dividend yields. For this year, the yield’s 8%, which is more than double the FTSE 100 share average of 3.2%. It marches even higher to 8.2% for 2027.

My favourite REIT

There are plenty of cheap REITs for me to choose from today. But Primary Health is by far my favourite. It’s why I’ve bought even more of its shares for my Self-Invested Personal Pension (SIPP).

Following last year’s acquisition of rival Assura, this is by far the London Stock Exchange‘s largest healthcare REIT with a portfolio of £6bn. In total, it holds 1,142 assets across the UK and Ireland including GP surgeries, dentists and pharmacies.

Its focus on this sector has numerous advantages. The rents it receives are unimpacted by broader economic downturns, which in turn leads to reliable dividends. In fact, market demand is stronger than the industry can meet, driven by ongoing demographic trends. The result? Primary Health’s organic rental growth accelerated to 3.4% in Q1, up from 3.2% a year earlier.

Too good to miss?

These factors have (and still are) having a substantial positive effect on dividends. Primary Health shares have:

• Delivered a growing dividend every year for 29 years.
• Carried an average dividend yield of 5.2% since its stock market listing in 1996.

Like any share, REITs like this come with some dividend risk. Though unlikely, in my view, a change to NHS primary healthcare policy might dent future investment. Costs might also rise if inflationary pressures endure. But on balance, I believe Primary Health is one of the best dividend shares out there to consider.

Should you invest £5,000 in Primary Health Properties 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 Primary Health Properties Plc made the list?

Royston Wild owns shares in Primary Health Properties.

The post Here’s the REIT I’ve bought for huge and sustainable passive income appeared first on The Twelfth Magpie.

Sorting the risks from the opportunities isn’t easy. In my view, however, there are at least a couple that are worth looking at in June.

REITs

When it comes to passive income, I’m a big fan of real estate investment trusts (REITs). These are distinctive businesses with some unique features.

REITs were designed to help people access the property market without needing a huge deposit. And from that perspective, they work.

Fundamentally, REITs own and lease properties to tenants. And they return 90% of their taxable income to investors as dividends. 

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.

The downside is that growth can be limited. If you have to distribute all your cash, you can’t use it to buy more properties. 

So why do it? The big advantage is that real estate investment trusts – legally – are exempt from paying tax on the income they generate.

In general, this makes REITs some of the more stable passive income stocks around. And the trade-off for limited growth is higher dividend yields.

Primary Health Properties

I said that REITs are known for stability. But Primary Health Properties (LSE:PHP) arguably takes this to the next level. 

The firm owns and leases GP surgeries and healthcare centres. And around 88% of its rental income comes from government-funded entities.

That means high occupancy rates, strong rent collection metrics and low default risk. All of these are very positive for long-term income investors.

With a 57% loan-to-value ratio, the firm has a lot of debt. And despite long-term leases and reliable tenants, that’s something to keep an eye on.

At 92.45p a share, the stock comes with a 7.79% dividend yield. And its record of increasing this over time is a thing of beauty. 

Source: Fiscal.ai

The growth isn’t spectacular, but it is consistent. That’s why I think income investors should have the stock on their radars.

AEW REIT

In many ways, AEW REIT (LSE:AEWU) is the polar opposite of Primary Health Properties. Instead of stability, it looks for opportunities.

The firm focuses on leases that are close to expiry. This is a high-risk strategy – no REIT wants vacant properties.

That’s a danger when contracts start to run down. But AEW aims to limit this danger by focusing on areas with limited supply.

This means tenants have limited alternatives. And by targeting properties where it can add value, re-leasing becomes a chance to increase rents.

With this type of strategy, managing debt levels is extremely important. But this is something the firm does very well.

Source: Fiscal.ai

A 7.55% dividend yield means AEW shares are worth considering. And the stock could add an interesting dimension to a passive income portfolio.

Passive income

Different investors – rightly – have different ambitions. My own focus is on looking for companies that can reinvest and compound their earnings.

This is a real challenge for REITs that have to distribute their income as dividends. For passive income, however, they can be a great choice.

REITs have a lot in common, but they aren’t all the same. But with Primary Health Properties and AEW, there might be something worth considering for everyone.

Stephen Wright does not own shares in any of the companies mentioned.

The post 7.5% yields! Here are 2 very different dividend stocks to consider buying in June appeared first on The Twelfth Magpie.

But this is no reason to panic. After all, there plenty of rock-solid dividend stocks to buy today. Shareholder payouts are never guaranteed, but I think this FTSE 250 dividend star — which has raised cash rewards every year since 1997 — will keep on delivering.

Want to know why?

Healthy dividends

Primary Health Properties (LSE:PHP) has many tricks up its sleeve and I see it as worth considering. The most attractive one for many investors is its classification as a real estate investment trust (REIT).

Why is this important? In exchange for tax breaks, at least 90% of these firms’ annual rental profits must be paid out in dividends. This removes the possibility management could slash payouts as economic uncertainty rises.

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.

The thing is, I wouldn’t expect such a scenario to play out for Primary Health even if its board had greater discretion over dividends.

Why is that?

This is because — unlike a large number of other REITs — this one has a number of defensive qualities including:

• A focus on the non-cyclical medical real estate market.
• Rents that are paid by government bodies (76% of total rents in 2025).
• Inflation-linked contracts that drive rent growth.
• Long average leases with healthcare providers (10.8 years on average as of December).
• Robust demand for healthcare property due to demographic trends (asset occupancy was 99% at the end of 2025).

So I’m backing Primary Health to keep its near-30-year record of consistent dividend growth to keep going. City analysts share my optimism, and so the forward dividend yield‘s an enormous 8%.

What’s the catch?

What are the risks of buying this income stock then? If interest rates spike and earnings suffer, Primary Health’s share price could sink even further. It’s already dropped 7% in value since the beginning of 2026, reflecting the surge in energy prices and their impact on broader inflation.

If interest rates rise as many expect, REITs like this could see their net asset values (NAV) sink. But this doesn’t worry me as a long-term investor. This is because — over time — I’m optimistic Primary Health’s share price can rebound as demand for community-based medical facilities steadily grows.

In the meantime, shareholders can sit back and expect more large and growing dividends from this heroic income stock. If broker forecasts are accurate, an £10,000 investment in Primary Health today will provide an £800 passive income this year, and another £820 in 2027.

Should you invest £5,000 in Primary Health Properties 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 Primary Health Properties Plc made the list?

Royston Wild owns shares in Primary Health Properties.

The post Seeking ‘safe’ dividends? This income stock’s raised payouts every year since 1997! appeared first on The Twelfth Magpie.

But smart investors can stand a better chance of reaching this goal if they’re patient, shrewd and pick the right dividend shares. Here’s how the strategy could work.

The building blocks

To begin with, let’s talk about numbers. If someone invests £100 a month, it simply isn’t going to grow into a four-figure monthly income, even with several decades of work.

But what size does it need to be to make things realistic?

To answer that question, we need to assess the portfolio’s average yield. Given there are 25 stocks in the FTSE 250 with a yield above 7%, I think it’s feasible to have a diversified portfolio with a dividend yield of 7%.

Therefore, to make £1.2k a month from income with a yield of 7%, the portfolio needs to be worth £205,714. In theory, if someone had this as a lump sum, they could get going straight away. For many of us, we’d need to build up to that by investing regularly over many months.

If someone parked £500 a month in the stock market with this target yield, it could take just over 17 years to reach the desired target amount. Of course, this isn’t set in stone. Companies could cut dividends, stocks can appreciate in value, and a variety of other factors could shorten or quicken this timescale.

Picking the right shares

The other key factor is the portfolio’s stocks. Ideally, they should be from a mix of different sectors, in order to help provide a diversified balance. This helps so that if one part of the market has trouble, the whole portfolio isn’t overly impacted.

The diversification also helps in the long term. After all, some sectors could shine over the next decade, while artificial intelligence (AI) could disrupt others. Spreading risk should help to make the dividends more sustainable.

In terms of a stock to consider, I like Primary Health Properties (LSE:PHP). Down 5% in the past year, it has a dividend yield of 7.62%.

The real-estate investment trust (REIT) owns GP surgeries, medical centres and healthcare facilities across the UK and Ireland. It then rents them out on long-term leases, which is mainly to NHS-backed tenants. In other words, it’s a landlord for essential healthcare infrastructure.

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.

That creates a pretty reliable business model. The firm makes money through rental income, with many leases linked to inflation and stretching well over a decade. The 2025 full-year results showed occupancy sitting at 99%, which is exceptionally high for the sector.

This helps to support the dividend, which I believe looks resilient. The REIT has increased its payout for almost 30 consecutive years, with management saying that dividends should remain covered by adjusted earnings. The latest annual dividend rose again to 7.1p per share.

There are risks though. There’s concern about higher interest rates, which could lead to higher financing costs for new projects. This could squeeze profits further down the line. Yet even with this, I still think it’s a stock worth considering for investors.

The post How much do you need in dividend stocks for £1.2k of monthly passive income? appeared first on The Twelfth Magpie.

And right now, with higher interest rates weighing heavily on valuations, some genuinely attractive yields have popped up for long-term investors.

Two that stand out in May are Supermarket Income REIT (LSE:SUPR) and Primary Health Properties (LSE:PHP).

At current yields of 7.52% and 7.67% respectively, every £1,000 invested in Supermarket Income REIT generates £75.20 a year in passive income, while the same amount in Primary Health Properties delivers £76.70.

That’s more than double the rougly 3% payout UK index investors are earning today! So why are these yields so high? And where exactly is the risk?

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.

The investment thesis

Starting with Supermarket Income REIT, this commercial landlord owns a portfolio of large-format supermarket properties, predominantly leased to grocery giants such as Tesco and Sainsbury’s on long-duration rental contracts linked to inflation.

The appeal for income investors is quite intuitive. Supermarkets are among the most essential retail formats in the country, often continuing to trade profitably through even recessions. And with a client list of healthy industry titans, this REIT’s income stream looks exceptionally secure.

What’s more, the business has been quietly diversifying its target market. Several of its properties now double as fulfilment hubs for online grocery orders, increasing their operational value to tenants and paving the way for stickier, longer-lasting relationships.

Primary Health Properties tells an equally compelling story. Over 90% of its rental income is funded directly or indirectly by the NHS, effectively translating into cash flow backed by the British government.

But it also has a bit of a secret weapon. Many of its older leases are currently priced below open market rent levels. This means there’s a material pipeline of future rent uplifts on the horizon or, in other words, the group’s income looks set to grow even without acquiring a single new property.

What’s the catch?

As promising and secure as these cash flows and, in turn, dividends seem, there are some important risks to highlight.

Most notably, each REIT carries significant debt on its balance sheet. And with interest rates still remaining elevated, it’s already translated into notable pressure on margins as well as property valuations. The result has been higher loan-to-value ratios and tighter dividend coverage.

For the time being, shareholder payouts remain relatively secure. But if interest rates start to tick back up due to higher-than-expected inflation, that coverage could get strained.

The bottom line

The macroeconomic risks surrounding the entire REIT sector is tough to ignore. But while some businesses could struggle under increased pressure, there are always exceptions. And finding these exceptions today could result in earning substantial yields in the long term.

In my opinion, both these REITs could be in this winning category. That’s why I’m already investigating both as potential additions to my passive income portfolio.

The post 2 REITs yielding 7%+ to consider for passive income in 2026 appeared first on The Twelfth Magpie.

Here are three dividend stocks that experts believe deserve a closer look in May 2026.

The income heavyweights

First up is Legal & General (LSE:LGEN). As one of the UK’s largest insurance and asset management groups, it provides a host of retirement and investment management services.

The bull case is straightforward. The stock currently yields 8.7%, backed by nearly two decades of consecutive dividend growth. And several institutional analysts are pointing to Legal & General’s expanding pension risk transfer business as a powerful long-term growth engine as defined benefit schemes continue to offload their liabilities.

However, not everyone is convinced, with some analysts rightfully flagging earnings coverage. With dividends currently running slightly ahead of earnings per share, any unexpected pressure on profitability could force management to reconsider the payout trajectory.

That’s a risk worth watching closely.

Another high-yield income stock to consider is Primary Health Properties (LSE:PHP). This is a specialist tax-efficient REIT that owns and leases primary healthcare facilities as well as GP surgeries across the UK.

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.

‘Dependable’ is probably one of the best words to describe its dividend, with the healthcare landlord raising shareholder payouts for 28 years in a row, underpinned by long-term leases predominantly funded by the NHS.

However, it’s important to highlight that while renting the majority of its properties to the NHS, the REIT is somewhat captured by its flagship customer.

The UK government has significant negotiating leverage when it comes to renewing leases. And if political priorities shift, budget cuts to certain parts of the NHS could translate into expiring leases not being renewed.

That’s potentially a big problem given that higher interest rates are already putting pressure on cash flows and, in turn, dividends.

A consumer retail dark horse

Another pick from the experts is Dunelm Group (LSE:DNLM) – the UK’s leading homewares retailer, selling everything from bedding and curtains to furniture through its nationwide store network and rapidly growing online channel.

Analysts at Barclays and Berenberg both have Buy ratings, citing Dunelm’s exceptional cash generation and management’s consistent ability to grow market share even in tough consumer environments. The icing on the cake? The board recently declared a special dividend of 25p per share on top of its regular payout.

That’s certainly an encouraging sign for investors looking for a new income stock. However, it’s important to highlight the group’s sensitivity to the British consumer.

If UK household spending comes under renewed pressure from higher taxes or sticky inflation, discretionary homewares purchases are often one of the first things customers cut back on.

The bottom line

These are three very different businesses. But while none are perfect, they are all currently generating strong cash flows that are being used to reward shareholders with impressive yields.

Out of the three, Primary Health Properties looks like it’s the most secure in my eyes. But all three deserve a closer look. So, for income-focused investors hunting for a quality stock to buy this month, these might be worth mulling over.

The post 3 top income-focused stocks to buy in May 2026, according to experts appeared first on The Twelfth Magpie.

Want to know why? Read on.

Devil’s in the detail

Today, the State Pension is £12,548 a year. According to Pensions UK, the average Brit needs an annual income of £43,900 to live comfortably.

The result? A shortfall of £31,352 that investors need to make up with ISAs, SIPPs, or through other means.

But I’m not aiming to make up that exact amount. I’m looking for more, in case the State Pension doesn’t keep up with the rising living and social care costs.

This is where my £666 a week second income goal comes from. That would give me an extra £34,632 a year for me to live on — roughly £3,000 higher than today’s shortfall. That’s a pretty decent buffer in my book.

Just £442 a month

Yet, achieving a near-£35,000 passive income each year will be no easy feat. To hit that target, an investor will need to commit to investing regularly and building a diversified portfolio of mainly stock market winners. Most importantly, they’ll need to take a patient, long-term approach.

However, building an ISA that can provide a cash stream like this may be easier than you think. Let’s say you invest £442 a month in a well-crafted portfolio of global shares, funds, and trusts. If you can achieve an average 9% annual return over 25 years, you’ll have a portfolio worth £494,743.

If that was then invested in 7%-yielding dividend shares, you’d reach that magic £34,632 annual passive income.

Boost your chances

There is no universal strategy that fits every investor. But a few timeless principles are worth keeping in mind.

These include:

• Investing regularly through market upturns and downturns.
• Creating a diversified portfolio of 15 or more shares.
• Buying companies with operations across different regions, industries, and sub-sectors.
• Holding both growth and income shares for portfolio growth and a stable long-term return.
• Reinvesting dividends to maximise the compounding effect.

I personally own a wide selection of shares from across the world. I hold individual shares like Legal & General, Diageo, and Aviva from the FTSE 100. I also have exposure to a greater range of US shares thanks to tracker funds like the HSBC S&P 500 ETF.

I also recently increased my position in Primary Health Properties (LSE:PHP). Want to know why?

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.

A 7.8% opportunity?

Put simply, Primary Health is a cash machine that’s supported by its huge and dependable rent rolls. The real estate investment trust (REIT) has more than 1,100 properties on its books. Last year its rent rolls were a colossal £342m.

So what does this mean for investors? An enormous and growing dividend, that’s what. Shareholder payouts are on course to rise for their 30th straight year in 2026. This also means a large 7.8% forward dividend yield.

As with any share, there are risks to owning Primary Health Properties shares. Rising interest rates could impact earnings and therefore future dividends. But long-term, I still believe it’s one of the best passive income stocks for me to buy. Its focus on an ultra-defensive real estate sector provides dividend visibility that few other UK shares provide.

The post How much is needed in an ISA for a £666 weekly second income? appeared first on The Twelfth Magpie.

Here I want to talk about three in particular, and reveal what makes them such powerful dividend payers. The companies are Primary Health Properties (LSE:PHP), City of London Investment Trust (LSE:CTY), and Rathbones (LSE:RAT).

Read on to discover what makes them passive income stars.

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.

Three of the best

Each of these FTSE 250 shares boast features that make them ideal dividend stocks. With Primary Health Properties, these qualities include:

• Real estate investment trust (REIT) classification, meaning at least 90% of rental profits are distributed to shareholders.
• A focus on the defensive healthcare property market.
• Tenants that are tied down on long, multi-year contracts.
• Tenancy agreements backed by government bodies (like the NHS).
• Index-linked rents that protect against rising inflation.

City of London Investment Trust benefits from:

• A focus on the dividend-heavy London stock market (95% of its holdings are UK shares).
• The trust’s ability to retain up to 15% of income in ‘good’ years, allowing it to grow dividends even if underlying holdings freeze or cut theirs.
• A portfolio dominated by financially robust FTSE 100 companies with proven business models.
• Diversification across 77 companies spanning different industries.
• Limited gearing, which helps keep borrowing costs down.

Growth AND yields

Finally, dividends at Rathbones are supported by the asset manager’s:

• Reliable recurring management fees.
• Strong record of customer retention.
• Robust balance sheet (its CET1 ratio is currently 17.4%).
• Increased scale, following the acquisition of Investec Wealth & Investment.
• Exposure to the growing asset management sector.

How have these qualities boosted their dividend performance over the years? Let’s take a look.

During the last decade, dividend yields have comfortably beaten the FTSE 250 long-term average of 2.5% to 3.5%. What’s more, each of the three companies has overcome issues like soaring interest rates, the pandemic, and a weak UK economy to keep raising shareholder payouts.

So what next?

The question is, can these dividend heroes keep on delivering? With Primary Health Properties, earnings and dividends could suffer if the NHS reduces support for primary healthcare.

City of London might disappoint if financial services companies — which make up a large proportion of the trust — come under pressure. And dividends at Rathbones could eventually stop growing if competition in the asset management sector continues to rise.

That said, any dividend share presents risk to investors. And taking everything into account, these three FTSE 250 stocks are among the UK stock market’s most reliable passive income stars. I think they’re worth serious consideration for a long-term income portfolio.

The post How do these FTSE 250 stocks keep paying stunning dividends? appeared first on The Twelfth Magpie.

For me, the London stock market’s the best place to find dividend-paying shares. It’s packed with market leaders whose strong cash flows and diverse income streams deliver juicy dividends year after year. And here’s the kicker: after years of share price underperformance, the dividend yields on many of these winning stocks are currently sky high.

Take Primary Health Properties (LSE:PHP). This FTSE 250 dividend hero carries yields approaching 8% for both of the next two years. The result? Investing in £20,000 in a Stocks and Shares ISA could earn you more than £3,000 in dividends just this year, completely free of tax.

In great health

Primary Health Properties is in fact a personal favourite of mine. It’s also one of the largest holdings in my passive income portfolio after I increased my holdings last month.

So what makes it such a dividend winner? There are multiple reasons, including:

• 29 straight years of payout growth.
• Its focus on the non-cyclical medical property market.
• Long-term contracts backed by government bodies, meaning reliable cash flows.
• A broad range of properties in the UK and Ireland (1,142 in total).
• Inflation-linked rental agreeements that protect earnings and dividends from rising costs.

What really sets Primary Health apart — and leads to its huge dividend yields for 2026 and 2027 — is its status as a real-estate investment trust (or REIT). Under sector rules, at least 90% of profits from rental operations must be paid out to shareholders. That’s in exchange for tax breaks.

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.

What’s the catch?

So what’s the downside to buying Primary Health shares for income? If interest rates rise, the firm’s cost of borrowing could increase when refinancing takes place, hitting earnings and dividends later down the line.

The FTSE 250 company also relies heavily on borrowing to grow its portfolio through developments and acquisitions. If debt costs increase, the business could pull back on its expansion plans, impacting long-term profit and dividend growth.

The good news is Primary Health is on track to significantly reduce its loan-to-value (LTV) ratio this year. This was recently at 57%, reflecting its acquisition of rival Assura last year. But this should fall to a more sustainable 40% to 50% later this year as asset sales and cost synergies kick in.

Let’s talk dividends

For 2026, Primary Health is tipped to pay a dividend of 7.3p per share, marking the 30th straight yearly increase. Another hike to 7.5p is forecast by analysts for 2027, too. The result? Enormous dividend yields of 7.8% and 7.9% for this year and next respectively.

All this means £20,000 worth of Primary Health shares in an ISA today could make you £3,271 worth of dividends tax free. That’s assuming 2026’s payouts are reinvested. I expect the company to remain one of the UK’s best passive income stocks for years to come.

The post £20,000 in an ISA? This passive income stock could give you £3,271 in dividends in 2025 and 2026 appeared first on The Twelfth Magpie.

Investment returns

According to the Office for National Statistics, the median income for full-time workers is £39,039. After tax, that translates to £31,628. On a monthly basis, that’s £2,635. But how much could you earn if you invested just 10% of that – £263.50 a month?

I think a 7.5% annual return’s a realistic target. And on that basis, you could be earning £3,146 a year after 10 years. This increases to £9,840 a year after 20 years and £23,635 after 30 years. That’s £1,969 a month in extra income. 

Aside from reinvesting, you don’t have to do anything to keep the cash coming in. And that’s with no initial savings – just 10% of your annual take-home pay.

Is a 7.5% return realistic?

The obvious thing to ask is a 7.5% annual return a realistic possibility? And it’s a very fair question. The simplest way to aim for this kind of return is to find a stock with a 7.5% dividend yield. This isn’t that hard – there are plenty of them around. 

Investing however, isn’t quite so straightforward. The high dividend yield is a bit like an insurance premium for taking on unusually high risks. A lot of the time, it isn’t worth it. If the company isn’t going to be able to keep returning cash to investors, the stock can be a trap. 

In a few cases though, I think the rewards might be worth the risks. And in those situations, there’s a passive income opportunity for investors.

Healthcare properties

Priamry Health Properties (LSE:PHP) is a FTSE 250 real estate investment trust (REIT) with a 7.76% dividend yield. And I don’t think it’s a trap.

The firm owns and leases a portfolio of GP surgeries and healthcare centres. And as a REIT, it returns the cash to investors instead of paying taxes. 

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.

So what is the catch? The average debt maturity is five years away, but the average lease still has 10 years to expiry. That means the firm will have to refinance before it can renegotiate its leases. That creates a risk of higher costs weighing on profits.

With the NHS as its largest tenant however, rent collection is incredibly reliable. And that should help the firm maintain a strong credit rating.

Income investing

Is turning a £39,039 monthly salary into £1,969 a month in passive income a realistic ambition? I think it is. A 7.5% annual return is a big help, and Primary Health Properties is one stock with that dividend yield that I like the look of.

It’s not the most high-octane business. But acquiring its largest competitor should put it in a much stronger position going forward. As long as it can stay ahead of inflation, I think investors could do well. So for long-term passive income, it has to be worth a look.

The post No savings? Here’s how to try and turn a £39,039 salary into a £1,969-a-month passive income appeared first on The Twelfth Magpie.