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It’s clear to me that key central banks are going to continue to cut interest rates over the coming year. This includes the Bank of England. As a result, I expect investors will make less money on cash sitting in a savings account. One option I think investors could consider is buying more high-yield dividend stocks to make passive income that way. Here are two I think are worthy of further research.
A sector for the future
If an investor had £10k in savings and an existing diversified portfolio, one idea could be to put half in Renewables Infrastructure Group (LSE:TRIG) shares. The stock might be down 15% over the past year, but the dividend yield‘s at a very healthy 8.07%.
The trust owns a portfolio of renewable energy generation and supporting infrastructure. It also has a diversified portfolio both in terms of geography around the UK and Europe, but also in the split between wind, solar and other elements of renewables.
I like the stock for income as one of the key stated financial objectives of the firm is to deliver “long-term, resilient dividends”. Given the cash flow generation, it can afford to do this on a quarterly basis, which is attractive.
As a risk, the fall in the net asset value per share due to lower power price forecasts isn’t great. Should those power prices move lower into 2025, it could weigh on the share price.
High seas, high dividends
The other half of the £10k could be invested in the Taylor Maritime Investments (LSE:TMIP). As the name suggests, operations are linked to the water, with the business owning and operating a fleet of dry bulk ships. The dividend yield’s 8.56%, with the share price up 12% over the last year.
It makes money primarily by leasing out ships, which creates a solid source of income. It also can make money from the acquisition and disposal of assets. In other words, it aims to sell the ships for more than it paid for them.
What’s good here is that there will always be a need for ship charter and leasing, given the global nature of commerce. So I don’t see demand falling anytime soon. As a result, this should enable the dividends to keep flowing.
Of course, investors do need to be aware that each ship has considerable value, with a lot of cash tied up in each. So if the business runs into problems, it’s not that easy to quickly sell a large vessel.
Above-average potential
If both these stocks were bought today, the average yield would be 8.32%. So in theory, owning both could make £832 in income next year. This assumes the dividends will stay the same. It doesn’t factor in unrealised gains or losses from share price movements. But even with these risks, it’s a very attractive return on an investment for consideration.
