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Dividend shares is usually a nice supply of passive revenue. However for those who’re over 50, it is advisable be selective together with your inventory picks to minimise threat.
Right here, I’m going to focus on two dividend payers I believe may very well be nicely suited to these aged over 50. Each provide engaging yields at the moment but in addition have the potential to generate first rate capital features over the long term.
A London-based property firm
First up we’ve got Workspace Group (LSE: WKP). It’s an actual property funding belief (REIT) that gives versatile workplace house options throughout London.
The dividend right here’s engaging. For the present monetary 12 months (ending 31 March), the REIT’s anticipated to pay out 29.5p in revenue. That equates to a yield of round 4.5%. Provided that UK rates of interest are falling, that may very well be considerably increased than the charges money financial savings accounts are providing in 12 months’ time.
Wanting past the yield, there are a number of issues I like about this inventory. One is that it stands to learn from decrease rates of interest. Within the years forward, decrease charges ought to scale back the REIT’s curiosity expense (it had web debt of £828m on the finish of March) and increase profitability.
One other is that it appears nicely positioned to learn from the shift again to the workplace. As we speak, firms throughout all industries are making strikes to get staff again into the workplace and this might improve demand for workplace house.
It’s value noting that administration sounded fairly assured concerning the outlook in July: “Looking ahead, our scalable operating platform puts us in a strong position to continue to deliver near and long-term income and dividend growth, and we move into the second quarter of the year with positive momentum,” mentioned CEO Graham Clemett.
After all, financial weak spot is a possible threat right here. This might quickly scale back demand for workplace house.
In the long term nevertheless, I believe this REIT ought to do nicely on the again of London’s thriving start-up scene.
The second inventory I need to spotlight is Tesco (LSE: TSCO). It’s the most important grocery store operator within the UK with a near-30% market share.
The yield right here isn’t super-high at the moment. Wanting on the dividend forecast for the monetary 12 months ending 28 February (12.9p per share), it’s about 3.5%.
However analysts anticipate a wholesome degree of dividend development within the years forward. Subsequent monetary 12 months, the payout’s anticipated to climb to 14p per share, which pushes the yield to three.8%. It’s value noting that Tesco’s dividend protection (the ratio of earnings to dividends) is excessive. So there’s loads of scope for future dividend will increase.
Now, Tesco operates in a aggressive business. Within the years forward, it’s more likely to face intense competitors from rivals resembling M&S, Asda, and Aldi, so its market share may very well be in danger.
One factor that might give it an edge nevertheless, is its Clubcard scheme. As we speak, the corporate has over 20m Clubcard members. Which means it’s capable of gather a ton of knowledge from its clients. The extra information it might probably gather, the higher positioned it is going to be to prosper going ahead.
Total, I believe the inventory provides a pleasant mixture of development potential and defence. That’s why I see it as a very good inventory for these over 50 to think about.
