Since many UK shares are yet to recover from the 2020 stock market crash, it is possible to earn a relatively generous passive income. In fact, a number of FTSE 100 shares have dividend yields in excess of 5% at the moment.
Clearly, there are no guarantees that any dividends will be paid in future. However, the past performance of the economy suggests that a recovery is likely. This may improve the chances for rising shareholder payouts in the coming years.
With that in mind, here are two UK shares that offer 5%+ forecast dividend yields for 2021. They may offer a rising income stream in the long run.
An improving passive income outlook
Housebuilder Taylor Wimpey (LSE: TW) could offer a relatively attractive passive income opportunity compared to other UK shares. It announced in its latest trading update that it expects to recommence dividend payouts in the current year. As such, for 2021 it is due to yield just over 5%.
The company’s dividend is expected to be covered 1.9 times by profit this year. As well as its net cash position and solid balance sheet, this suggests that it is relatively sustainable at current levels. There may also be scope for a rising dividend in the coming years as the UK economy experiences a likely recovery from its current woes.
Clearly, Taylor Wimpey’s capacity to pay a passive income to its investors may be negatively impacted by risks such as changes to the Help to Buy scheme and rising unemployment. However, its recent updates suggest it is in a strong position to adapt to changing market conditions, such as through buying land should asset prices fall.
A high dividend yield relative to other UK shares
While many UK shares offer appealing dividend yields at the present time, the passive income opportunity available from FTSE 100-listed Vodafone (LSE: VOD) is relatively generous. The telecoms company currently yields just over 6%, which could realistically increase in the coming years.
Its latest results showed increased customer engagement via digital channels that could strengthen the company’s market position. This contributed to a reduction in mobile contract churn among customers in Europe of 1.1 percentage points. It also posted a relatively resilient financial performance in the most recent quarter. This suggests that Vodafone could have defensive characteristics that make it a more appealing income share.
Of course, the company’s passive income level could change over time. It may experience tougher operating conditions should current economic woes continue for longer than is widely anticipated. This would negatively impact on its financial prospects.
However, the stock’s high yield and recent performance suggests that it could offer a relatively appealing dividend outlook. As such, it may be worth buying in a portfolio of UK shares at the present time.