Buying UK shares is a strategy I’m using to boost my passive income. And I’ve recently been searching the FTSE 250 for more high dividend stocks to add to my portfolio.
Here are two income shares on my watchlist today. I think they could help me generate a healthy extra income for years to come.
Gold star
Holding gold stocks isn’t just a good idea in periods of high inflation like these. I’d argue that they’re great assets to always have in a portfolio.
Economic shocks that sink share markets are hard to predict. See Russia’s invasion of Ukraine and the emergence of Covid-19 in 2020, for example. Having exposure to gold can help limit the damage for an investor’s portfolio, given that the safe-haven asset tends to rise in value when said shocks emerge.
See gold’s ascent to record highs above $2,070 per ounce in March when the Ukraine war began.
I would buy Centamin (LSE: CEY) shares to provide this insurance policy. An added bonus for me as an income investor is its long-term dividend policy of paying out at least 30% of free cash flow. This could deliver solid and sustainable dividends to boost my passive income.
I also like Egypt-focussed Centamin because of the steps it’s taking to gradually boost production and thus profits. It’s aiming to produce 500,000 ounces of gold a year from its Sukari mine over the next decade.
Remember though, its ability to pay big dividends is at the mercy of gold price movements.
Centamin carries a tasty 4.7% dividend yield for 2022.
Target big returns!
Care home operator Target Healthcare REIT (LSE: THRL) is another top stock I’d buy to boost my dividend income.
This dividend stock operates in a highly defensive sector. In other words, demand for its services remains stable at all points of the economic cycle. So as an investor I can expect rental income to stay solid whatever happens, giving it the strength to keep paying big dividends.
Speaking of which, under real estate investment trust (REIT) rules, Target Healthcare is required to pay a minimum of 90% of annual profits to shareholders by way of dividends. As someone who invests for passive income this provides added peace of mind.
I have to consider the damage that worsening staff shortages in the nursing profession might do to the care home industry and, by extension, to profits at Target Healthcare.
But I believe that the opportunities this REIT enjoys more than offset this risk. I think earnings could rise strongly over the long term as Britain’s elderly population balloons and age expectancy marches higher. The Office for National Statistics thinks one in five Britons will be aged 65 years or over by 2030.
Target Healthcare carries a mighty 6.1% dividend yield for this financial year (to June 2023).