7.5% dividend yields! 2 UK shares I’d buy in August and hold for 10 years

Zaven Boyrazian explores two British shares offering impressive dividend yields that look sustainable and expandable in the long run.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Happy couple showing relief at news

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

While the stock market is steadily recovering from last year’s correction, high dividend yields are still everywhere.

The recent interest rate hikes have been particularly impactful in capital-intensive industries. As such, the real estate sector doesn’t have much favour right now. A similar story exists within the renewable energy market, especially now that electricity prices have started to drop and a new UK tax levy has been introduced.

However, some of the best UK shares to buy are often in places where most investors aren’t looking. And that makes unpopular sectors like these a perfect hunting ground for lucrative income opportunities.

Should you invest £1,000 in Foresight Solar Fund Limited right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool 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 Foresight Solar Fund Limited made the list?

See the 6 stocks

With that in mind, I’ve found two businesses that look particularly promising – not just for 2023, but for the next decade to come.

Turning sunlight into money

While renewable energy infrastructure leaves much to be desired, its steady expansion over the last decade has reduced the UK’s reliance on fossil fuels. In 2022, solar panels generated roughly 1.4 gigawatts of electricity. That’s only around 4.6% of the total energy generation, but it’s up massively from the 0.14 gigawatts achieved in 2012.

In the span of a decade, British solar energy has increased 10-fold. Should this trend repeat itself between now and 2033, Foresight Solar Fund (LSE:FSFL) could be an exceptional source of income.

Today, the stock offers a dividend yield of 7.5%. And with contracted revenue providing a coverage ratio of 1.5 times for the next three years, shareholder payouts look rock solid, in my opinion.

The UK isn’t known for being the land of sunshine. So management has begun diversifying its asset portfolio across Spain and Australia, as well as introducing industrial energy storage facilities. With minimal operating expenses leading to impressive underlying pre-tax profit margins of 76%, the income stock looks like an excellent candidate for an income portfolio, in my opinion.

A yield set to surge?

The e-commerce industry is filled with fast-expanding enterprises, giving growth investors plenty of choices. But there’s more than one way to invest in this theme. And what’s often overlooked is the infrastructure required to support online sales, namely warehousing.

Warehouse REIT (LSE:WHR) is a relatively young enterprise. But, so far, management has proven it has an eye for prime real estate.

The group acquires, renovates, and leases well-positioned logistics centres nationwide before leasing them primarily to online retailers. And while e-commerce sales, in general, are currently constricted due to the cost-of-living crisis, demand for the group’s warehouses is still on the rise.

Offering a similar dividend yield of 7.5% backed by underlying profit margins of 68%, this is yet another FTSE 250 income stock that looks promising. That’s why it’s already in my portfolio.

Taking a step back

While both Foresight Solar and Warehouse REIT offer chunky dividend yields, both share a common weakness. Buying and installing renewable energy infrastructure isn’t cheap, nor is acquiring and renovating commercial real estate.

With interest rates unlikely to fall to near-zero any time soon, raising capital to fund future growth will be far more expensive. Not to mention that other businesses are operating in these industries with far more resources at hand.

Nevertheless, despite these risks, both companies look like terrific investments for my portfolio today. That’s why I’m considering snapping up some shares once I have more capital.

AI Revolution Awaits: Uncover Top Stock Picks for Massive Potential Gains!

Buckle up because we're about to dive headfirst into the electrifying world of AI.

Imagine this: you make a single savvy investment in some cutting-edge technology, then kick back and watch as it revolutionises entire industries and potentially even lines your pockets.

If the mere thought of riding this AI wave excites you and the prospect of massive potential returns gets your pulse racing, then you’ve got to check out this Motley Fool Share Advisor report – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And here’s the kicker – we’re giving you an exclusive peek at ONE of these top AI stock picks, absolutely free! How’s that for a bit of brilliance?

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Zaven Boyrazian has positions in Warehouse REIT Plc. The Motley Fool UK has recommended Foresight Solar Fund and Warehouse REIT Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Investing Articles

2 New Year resolutions for ISA investors to consider!

Looking to put the fizz back into ISA investing? These top tips could help turbocharge the returns UK investors make…

Read more »

Close-up of British bank notes
Investing Articles

Fancy supercharging your passive income? Here are 2 cheap FTSE 250 shares to consider!

The dividend yields on these FTSE 250 shares are MORE THAN DOUBLE the index average! Here's why they could be…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

Here’s how a stock market beginner could get going in 2025 with a spare £300!

Our writer considers some approaches and principles he thinks might help someone with a few hundred pounds spare to start…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Here’s how I’ll aim for a million in 2025 and beyond buying just a few shares!

Our writer thinks that by investing regularly in proven blue-chip companies, he can aim for a million in coming decades.…

Read more »

Investing Articles

I asked ChatGPT to name the best UK growth stock and it picked this red-hot blue-chip

Harvey Jones asked generative artificial intelligence to name the very best growth stock on the entire FTSE 100. He wasn't…

Read more »

Close-up of British bank notes
Investing Articles

9%+ yields! 3 FTSE 100 shares to consider for 2025

Christopher Ruane highlights a trio of high-yield FTSE 100 shares he thinks income-focussed investors should consider for the coming year…

Read more »

Investing Articles

Want a supercharged passive income in 2025? Consider this high-yield dividend hero!

Looking for the best high-yield income shares to buy this year? Here's one I expect to deliver large and growing…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Micro-Cap Shares

At 3.3p, could penny stock GSTechnologies generate huge gains for investors?

Penny stock GSTechnologies is absolutely on fire at the moment. Could it be worth considering as a high-risk/high-reward investment?

Read more »