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

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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 carry 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.

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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.

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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.

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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.

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Let me reveal three top shares I think Stocks and Shares ISA holders should consider today: CRH (LSE:CRH), Aviva (LSE:AV.) and Primary Health Properties (LSE:PHP). I’ve put my money where my mouth is and bought them for my portfolio.

Here’s why they’re among my favourite UK stocks today.

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.

Growth hero

CRH has proved a reliable earnings grower even during tough times. City analysts expect this impressive run to continue — growth of 8% and 11% is predicted for 2026 and 2027 respectively.

The company supplies building materials across the globe, with the US its single largest market (60% of sales). It has significant growth levers to pull, including massive Stateside spending on transport and water infrastructure. Supply chain shake-ups, and the construction of new data centres and renewable energy projects also create major earnings opportunities.

CRH expects annual sales growth to average 7% and 9% between now and 2030. It’s also expecting adjusted EBITDA to leap to 22%-24% by the end of the period. I’m backing it to hit these targets, though difficulties in the US housing market may cause some near-term problems.

Too cheap to ignore?

At 6.6%, Aviva shares carry one of the FTSE 100‘s highest near-term dividend yields. Predictions of further dividend growth in 2027 drive the reading to 7.1% too.

I bought the financial services giant for it passive income qualities. The majority of its operations are capital light in nature. And with its insurance premiums and service fees driving a steady flow of cash, it’s able to return boatloads of capital to its shareholders.

But it isn’t all about dividends at Aviva. With ultra-low price-to-earnings growth (PEG) ratios, it has great appeal as a value share too. For this year and next, its PEG readings are 0.1 and 0.8 respectively. Any reading below 1 is considered bargain-basement territory.

Though its markets are highly competitive, I’m optimistic earnings and dividends will keep rising, driven by rising financial services demand.

8% dividend yield

Primary Health Properties is my favourite all-round dividend share, and last month I increased my holdings. For this year its dividend yield is 7.8%, rising to 8% for 2027. Both figures are more than double the FTSE 100 average of 3%.

These large payouts partly reflect real estate investment trust (REIT) rules, where at least 90% of annual rental profits must go out in dividends. However, it also reflects the company’s focus on the lucrative and ultra-defensive medical sector. With rental rolls guaranteed by government bodies too, and a large proportion also inflation linked, its income streams are rock solid.

Yearly dividends have grown every year since the mid-1990s. Primary Health’s share price could suffer if interest rates rise, hitting asset values. But it’s still one of the best UK shares out there, in my view.

The post 3 of the best UK growth, value and dividend shares to consider in an ISA! appeared first on The Twelfth Magpie.

In an environment of rising taxes and persistent inflation, fully utilising the £20,000 ISA allowance has become essential for those aiming to achieve financial freedom. So let’s explore how a new investor can begin building a reliable, lifelong income stream.

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.

Take a realistic approach

Of course, the idea of getting rich quickly is appealing. But in the stock market, building wealth seldom happens overnight. Before you even begin, accept that it’ll likely take a long time and lots of dedication.

The most popular (and proven) approach is to invest in high-quality assets for the long term and allow regular contributions to compound the pot.

So even with £20,000 invested from the outset, the initial passive income won’t be mindblowing. Using the recommended 4% withdrawal rule as a guide, it would only equate to roughly £800 a year.

Ok, but how could that eventually grow over time? 

Average calculations

Let’s assume you pick decent stocks and achieve slightly above-average market growth of around 9%. If left for 10 years, that pot would grow to over £49,000. Another 10 and it’s over £120,000.

Still, that’s only £4,800 a year at the 4% drawdown rule. But if you used the full £20,000 allowance each year, it would grow to a massive £1,188,153. Now, the 4% rule equates to £47,526 – almost £4,000 a month.

Admittedly, not many people can afford to invest £20,000 a year. So naturally, the final amount will differ depending on individual financial circumstances.

The key is to start as early as possible and be disciplined.

Hunting top stocks

The real question is which stocks to consider. One candidate that’s worth investigating further is Primary Health Properties (LSE: PHP). The real estate invetment trust (REIT) manages healthcare facilities such as GP surgeries and pharmacies.

Since REIT rents come directly or indirectly from public-sector bodies, cash flows are usually more stable than in many other property sectors. This stability adds attraction when aiming for long-term income.

Currently trading at 93p per share, the average 12-month price target of 114p suggests a potential 22.3% price rise.

But the real attraction here is the regulated shareholder returns that REITs must honour. The scheme enjoys tax benefits in exchange for ensuring 90% of profits go back to shareholders as dividends. That’s why the stock enjoys an attractive 7.82% yield backed by a 29-year-long payment track record.

Final thoughts

Regulated or not, Primary Health is still exposed to interest-rate sensitivity, property valuation changes, and political shifts affecting healthcare funding. Even if dividends remain strong, the price could underperform if financing costs rise or if investor sentiment toward property weakens.

As such, it’s worth considering but only as part of a diversified portfolio of growth and defensive stocks. This helps reduce volatility while ensuring stable, sustainable growth.

A few promising options I’ve looked into recently include 3i Group, Tesco and National Grid — but there are many more to consider.

The post How to invest £20k in a Stocks and Shares ISA to target lucrative passive income for life appeared first on The Twelfth Magpie.

Yet the overall returns delivered by the Cash ISA and Stocks and Shares ISA are considerably different. According to Moneyfacts, the average yearly return on the cash product was a miserly 1.79% between 2010 and 2025.

The investing ISA, meanwhile, has delivered a far superior 6.79%. In monetary terms, this translates into a substantially greater cash sum. Of course, this is an average figure. Different stocks would have yielded very different returns, so the exact return would have varied for each investor.

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 difference?

Let’s use a £20,000 investment made in 2010 to illustrate the wealth gap. If someone put this into a Cash ISA and didn’t touch the interest, they’d have £26,155 sitting in their account in 2025 based on those long-term averages.

The return on the same lump sum in a Stocks and Shares ISA would be a whopping £55,222, meanwhile, with dividends reinvested. That’s more than double the return of the cash product. This demonstrates perfectly the impressive long-term wealth creation of the stock market.

In reality, though, the return of the equities investor vs the cash saver would likely have been greater. This is because most people drip-feed money into their savings and/or investing accounts over time.

With an extra £500 a month parked in a Cash ISA, the total return over 15 years improves to £129,307. For a Stocks and Shares ISA? That comes in at a brilliant £210,842, meaning an even wider difference in cash terms.

Here’s what I’m doing

It’s important to remember, though, that the Cash ISA has some big advantages over the stocks equivalent. Savings products carry no risk, excluding the unlikely scenario where the account provider goes bust. And they provide a guaranteed return. Shares don’t carry the same assurances. In fact, it’s possible theoretically for investors to lose all their cash.

For this reason, I’ve taken two steps to protect my money while still targeting high returns. I hold money in cash, but put most of it in stocks. And in my shares portfolio, I hold roughly 20–25 stocks to help me manage risk.

Primary Health Properties (LSE:PHP) is a share I’ve just bought for my portfolio. It’s not totally without risk, as rising interest rates can hit earnings. But it’s still a pretty secure way to get stock market exposure.

Why? Well as the name implies, it rents out medical facilities like GP surgeries, and receives a steady stream of income. Healthcare assets like this remain in constant demand. And what’s more, rents are backed by government bodies like the NHS, basically eliminating the chance of rent defaults.

Primary Health has raised dividends every year since the mid-90s, underlining its resilience. And today its dividend yield is 7.7%. For ISA investors looking for low-risk ways to invest, I think it’s a great stock to consider.

The post £20,000 invested in an ISA a decade ago is now worth… appeared first on The Twelfth Magpie.

These are firms that lease properties to tenants and distribute the cash to shareholders. And the returns can be very attractive due to tax advantages they have.

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.

Earning income

Some REITs come with very high dividend yields. But while this can be a warning sign, a few are worth a closer look.

A 7.5% annual return is better than a savings account. And investing at that rate can bring big results over time. In Year One, a £10,000 investment earns £750. But reinvesting the dividends at the same rate means more income next year. 

At the same rate, the return in Year Two reaches £806. And by Year 10, it reaches £1,437 – more than twice the Year One return. After 30 years, this process returns £6,108 in dividends. That’s income that investors don’t have to do any work for. 

The big question is how to find 7.5% opportunities. Fortunately, the UK is an unusually good place to look. 

Primary Health Properties

Primary Health Properties (LSE:PHP) owns GP surgeries and health centres, and it’s a long-term passive income machine.

Its average lease has almost 10 years to run and the bulk of its income comes from the NHS. That’s about as reliable as it gets.

That reliability however, comes at a cost. It means chances to increase rents don’t come around often and negotiating can be tough. There’s also a risk that a change in government policy could affect demand. That’s impossible to rule out. 

The firm has however, recently acquired its biggest competitor. That should strengthen its negotiating position. 

Dividends are never guaranteed, but in terms of a reliable 7.5% yield, Primary Health Properties has to be worth considering.

AEW REIT

AEW REIT (LSE:AEWU) is the opposite of Primary Health Properties. But there’s more than one way to be a great investment.

The firm’s portfolio is a mix of different property types. These include leisure centres, gyms, and car parks.

The average lease is also much shorter, with less than six years to expiry. That obviously creates a risk of vacancies. With risk however, comes opportunity. AEW looks to use expiring leases as a chance to negotiate higher rents.

As a result, the firm focuses on properties with certain feafures. This can be low competition or scope for improvement.

Finding a 7.5% dividend yield with real growth potential is rare. So AEW has to be worth a closer look at today’s prices.

UK REITs

Stable businesses and high yields are an attractive combination. And UK REITs have been attracting attention recently. There are however, still some opportunities that I think are worth considering. These include Primary Health Properties and AEW.

A portfolio of stocks like these could be a valuable asset. And reinvesting dividends could generate real passive income.

The post How to invest £10,000 to aim for a £6,108 annual passive income appeared first on The Twelfth Magpie.

Yet there are other ways to invest in UK real estate. And one such method only takes a few hundred pounds to get started, with all income potentially entirely tax-free. Here’s how.

An easier, tax-efficient way to invest in property

With high-yielding real estate investment trusts (REITs), it’s possible to start earning a chunky tax-free second income overnight.

These unique businesses trade like any other stock on the London Stock Exchange. That means compared to a buy-to-let property, it’s far more straightforward to start putting money to work.

But REITs are a special type of investment. The underlying business owns and manages a portfolio of real estate assets, generating rental cash flows each month, the bulk of which is returned to shareholders via dividends after covering expenses.

Dividends in the UK are indeed taxed. But when REITs are held inside a Stocks and Shares ISA, this tax disappears. And the result is an indirect real estate passive income stream that HMRC can’t touch.

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.

Which property stocks should investors buy?

Here in the UK, there’s a long list of REITs to pick from. But one that currently stands out in April 2026 is Primary Health Properties (LSE:PHP).

As the name suggests, the REIT owns and manages a portfolio of healthcare-related real estate, primarily GP surgeries. In fact, the company is one of the UK’s largest healthcare landlords with over 1,100 properties in its portfolio.

Digging deeper, most of these facilities are leased by the NHS, resulting in a revenue stream that’s ultimately backed by the UK government.

That’s translated into a remarkably reliable rental income, resulting in 30 years of continuous dividend hikes. And at a share price of around 92p, the yield sits close to 7.8%.

In terms of money, that means for every £100 invested, Primary Health Properties will generate £7.80 in a passive second income that’s almost entirely guaranteed by the government.

What’s the risk?

Having the UK government as the largest tenant is quite advantageous. But it’s also a double-edge sword. It’s no secret that the state of the UK public finances is a mess. And if political priorities shift or budgets are cut, Primary Health Properties’ predictable cash flow could start to suffer if expiring leases don’t get renewed.

Another weak spot is debt. With the bulk of profits paid out to shareholders, the company is highly dependent on debt to expand its empire. That’s not a problem when interest rates are low. But when rates are high, suddenly enormous chunks of cash flow get gobbled up. And that means, less money is available for dividends.

For now, the company is generating enough profit to cover shareholder payouts. But the margin is thin. And if interest rates start rising again while leases expire, dividends could be put on the chopping block.

This risk is why the yield is so high. And investors will need to consider this potential scenario carefully before snapping up any shares. Yet with such a long-track record of financial diligence, Primary Health Properties could be worth mulling over for investors seeking a second income from UK property.

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