With a 7% yield, £15,000 in dividend shares would deliver £1,400 of passive income a year. Mark Hartley looks at one UK share that fits the bill.

Posted by

Mark Hartley

Published 18 August

POLN

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When targeting passive income, dividend shares are your friend. The regular payouts from the stocks drip feed cash into your account while you sleep.

If you invest with a Stock and Shares ISA, you can maximise returns. UK residents can invest up to £20,000 a year in an ISA without having to pay any tax on the dividends.

Over 10-20 years, those savings make a huge difference due to the magic of compounding.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

But are there really a lot of reliable UK stocks that pay a 7% yield? Yes — but you need to know how to identify them.

Targeting low-risk, high-yielding FTSE shares

The number one question to ask when assessing a high-yield is, why? Companies don’t set yields themselves — it’s a percentage derived from:

• Total annual dividends (set by the company).
• The current share price (set by the market).

The yield changes whenever the price moves (frequently) or when the dividend payout is altered (periodically). If the yield’s high because of an increase, that’s good. If it’s high because the share price tanked, not so good.

However, a dividend hike can still be risky if the company doesn’t have the cash to cover payments. Equally, if a price falls due to a temporary blip, it could be a bargain opportunity.

Long story short: picking dividend shares requires close inspection of what’s going on behind the scenes. 

One example to consider

Big market upsets are usually the result of macro factors that are unpredictable and out of our control. So I always assume a worst-case scenario and then try to identify which companies are best prepared to handle volatility.

What does that look like?

• A healthy balance: low debt, strong cash flow.
• A long track record of consistent dividend payouts.
• A structural competitive advantage, or ‘moat’.
• Earnings that sufficiently cover payouts.

Take Pollen Street Group (LSE: POLN), for example. The company provides specialist financial services in private equity and credit, which is hardly niche but it’s in demand.

It doesn’t have the moat of top dividend stocks such as RELX, Unilever or National Grid, but it does have a yield near 7%.

Net debt sits around £191.6m against £595m in equity – a debt-to-equity ratio of 0.34. That’s healthy. It’s been paying dividends for 10 uninterrupted years, and they account for only 61% of its earnings. That’s sufficient coverage.

Recent results revealed total assets under management (AUM) of around £7.1bn, with fee‑paying AUM of about £5.2bn. Critically, it enjoys high‑quality recurring fee income, which helps support a progressive dividend and regular buybacks. Together, these elements make it a strong contender as a dividend share to consider.

But like any stock, it still faces risks. For example, it’s highly susceptible to shifting markets and facing notable competition from larger rivals in the sector. If creditors lose confidence in the firm’s strategy, its fundraising could dry up, hurting profits and prompting a dividend cut.

The bottom line

No stock’s the perfect choice for a dividend portfolio. A higher yielder like Pollen Street can help increase your average income — but only in small allocations to reduce risk.

POLN current yield around 6%, if the price falls the Trust may be added to the Watch List.

This 12.2% Dividend Has “Paid Back” 97.6% of Our Investment (See How)

Brett Owens, Chief Investment Strategist
Updated: August 18, 2026

Here’s something we never hear about: The wonderful things that can happen when a stock “pays us back” in dividends.

It’s a shame more dividend investors don’t consider this, because it really is the “holy grail” for us contrarian income players!

What do I mean by “pays us back”? One way to think about dividends is as a small slice of corporate cash flows handed over to us as cash. Eventually, that cash will exceed, on a per-share basis, the amount we paid for the stock in the first place.

Once that happens, everything else is, well, gravy.

I bring this up now because one of our long-time Contrarian Income Report holdings is about to hit this mark. Others are hot on its tail.

Below, we’ll talk about this fund, which yields 12.2% today and pays dividends monthly. We’ll also discuss a business development company (BDC) we’ve held for just under five years. Since then, the stock has handed us nearly half of our original buy price in payouts.

Our buy windows on both of these tickers are still open. The sooner you pick them up (or add to an existing position), the faster your dividends will pile up!

This “Bond God” Favorite Covers 97.6% of Our Purchase Price

We bought the DoubleLine Income Solutions Fund (DSL) in April 2016, less than a year after we launched Contrarian Income Report. At the time, it traded at $16.99 a share. Just over 10 years later, we’ve collected $16.59 a share in payouts, or 97.6% of our original buy.

Since DSL pays dividends monthly, four months from now, we’ll be fully “comped”!

Source: Contrarian Income Report

In that span, DSL’s dividend has only moved lower once, in the pandemic-rattled market of 2021. That was smart risk management. And since then, the fund, run by the “Bond God,” Jeffrey Gundlach has kept the divvies flowing, with two healthy special payouts thrown in:

Source: Income Calendar

Fast-forward to today, and DSL is our only remaining holding from those relatively blissful pre-COVID days.

The fund has also posted a 92% total return (with dividends reinvested) since our original buy. That’s far ahead of the go-to index fund for high-yield bonds, the State Street SPDR Bloomberg High-Yield Bond ETF (JNK).

DSL Leads the Bond Pack (Thanks to Its Dividend)

That’s a big move for a bond fund at any time, and especially during a particularly wild time for bonds. It included periods of essentially negative interest rates (during the pandemic) and times of skyrocketing inflation (2022, when the CPI hit 8% and the Fed pushed rates from essentially zero to north of 5%).

Soaring rates are, of course, bad for bonds (rates up, bonds down).

Where does that leave us? Despite Fed Chair Kevin Warsh’s jawboning on higher rates, I still expect lower rates in the longer run as AI use spreads, cutting companies’ costs (including, yes, on hiring) and curbing wage growth.

The bond market agrees—something our suddenly tough-talking Fed chair no doubt knows. Its 10-year breakeven inflation rate (a forecast of where the market sees inflation heading) has been on a steady slide and is hovering around 2.25%. That’s “close enough” to the Fed’s 2% goal.

Lower rates also cut DSL’s borrowing cost. That matters for a fund with 23.5% leverage—a “Goldilocks” level that boosts returns without taking on too much risk if rates suddenly rise.

But look, we don’t pretend to know the future. We’re simply playing the odds. Sometimes the market zigs when we were expecting a zag. And with bonds, the main risk is duration, and being locked into yesterday’s lower-paying issues as rates rise and new, higher-paying bonds are issued.

As I write this, DSL holds about 53% of its portfolio in bonds with durations of 0 to three years, with a further 23.1% at three to five years. That’s a nice balance, letting Gundlach & Co. lock in decent yields while maintaining flexibility.

And since DSL is a closed-end fund (CEF), we can further protect ourselves by demanding a discount. And man, is the Bond God giving us one.

DSL’s Overdone Discount

As I write, DSL trades at a discount to net asset value (NAV, or the value of its underlying portfolio) of 6.7%. That’s below the fund’s five-year average discount of 2.4% and near levels not seen in any sustained way since the end of 2022—annus horribilis for bonds.

That’s more than enough compensation for the minimal duration risk we’re taking on, especially with Gundlach at the helm. We’ll happily take the discount and start (or add to!) our pile of dividends from this exceptional 12.2%-payer.

Ares Is Almost Halfway to “Paying Us Back.” Here’s How It Gets There

Ares Capital (ARCC) is our “BDC bully”—the biggest in the business. It’s also a bully on the dividend front: Since we bought almost five years ago, in September 2021, Ares has handed us $9.41 a share in total dividends, nearly halfway to “comping” our $20.36 purchase price. And if you’d reinvested your payouts, you’d have done just fine, too, with a 57% total return.

If you run a small business, you know it’s a hassle to get a loan from a bank. Enter BDCs, which loan cash to these firms and pass the interest to us as dividends. And its dividend—current yield: 9.5%—is rich, in part because BDCs (much like REITs) must pay at least 90% of their taxable income as dividends by law.

Over our holding period, it’s raised its regular payout twice and delivered a modest special dividend (the longer line in late 2022 below), too:

Source: Income Calendar

It is true that 71% of ARCC’s portfolio is floating-rate, and that’s been a plus as rates have risen and stayed relatively high.

This floating-rate concentration does pose risk as rates fall, but management is doing a nice job of offsetting that risk by originating more loans: At the end of the second quarter, it had loans out to 619 companies, up sharply from 566 a year ago.

And because Ares is the biggest player, it can be picky, only lending to the most creditworthy borrowers.

You can see that in the quality of its loan book: In the second quarter, 59% of ARCC’s loans were of the first lien senior-secured variety. That means it’s first in line to be repaid if any of its borrowers run into difficulty.

And even if rates do come down from here, as we discussed earlier, it’s likely to be a gradual decrease, giving ARCC ample time to adjust.

Finally, there’s AI, which small- and medium-sized businesses are embracing: According to Goldman Sachs (GS), 76% of small businesses are using AI in the US, with 93% of those users saying it’s had a positive impact.

As AI saves costs and boosts business for smaller companies, they’ll grow—and Ares will be ready to supply the loans they’ll need. We’re here for it, too—happy to collect the stock’s 9.5%-yielding payout on our way to a full “dividend payback” on our shares.

The SNOWBALL has bought back FSFL, current profit £621.00.

Foresight Solar, the fund investing in solar and battery storage assets to generate income and deliver long-term growth, is investing in a programme of upgrades designed to improve electricity generation and revenues, strengthen dividend cover and support long-term shareholder returns.

The enhancements, also known as revamping, involve replacing components such as solar panels and inverters with newer, more efficient equipment. The planned works cover nine sites representing more than 150 MW of capacity, about 20% of the UK portfolio, and are scheduled to be finalised by summer 2027.

Once fully implemented, the programme is expected to deliver up to £2.5 million of annual revenue, contributing approximately 0.05x towards the Company’s dividend cover. At the current 8.10 pence per share target, the Investment Manager calculates the dividend will be 1.1x covered in 2026.

Current buy price 71p, equates to a yield of 11%

14070 shares for 10k.

U$ Treasuries

The 30-year yield stretched to 5.32% from 5.29%. Is this a dangerous trend ?

Yes — the trend is dangerous.
Not because of the 3‑basis‑point jump, but because the 30‑year yield is rising for reasons that point to deep structural stress in the U.S. fiscal and inflation outlook. Markets are signalling that long‑term borrowing is becoming riskier, and that has economy‑wide consequences.

The SNOWBALL has sold SMIF ahead of the xd date for a tiny profit of £84.00

Top holdings across age groups.

The goal for the SNOWBALL is to double the income by investing in dividend paying stocks and re-investing those dividends in more dividend paying stocks.

The twenty year goal is a yield of 28% on invested capital, with no further capital being added. The target is to achieve the yield in less than twenty years and we are currently well ahead of target.

Thursday 20 August

Greencoat Renewables PLC ex-dividend date
JPMorgan UK Small Cap Growth & Income PLC ex-dividend date
Lindsell Train Investment Trust PLC ex-dividend date
Personal Assets Trust PLC ex-dividend date
Riverstone Credit Opportunities Income PLC ex-dividend date
Schroder Real Estate Investment Trust Ltd ex-dividend date
Temple Bar Investment Trust PLC ex-dividend date

Given their solid underlying businesses, reliable cash flows, high yields, and healthy growth prospects, these two high-yield Canadian stocks are ideal for your TFSA.

Posted by

Rajiv Nanjapla

Published August 16

ENBSRU.UN Key Points

• Investing in a TFSA with quality dividend stocks like Enbridge and SmartCentres can provide tax-free returns and long-term wealth growth, focusing on assets with strong cash flows, reliable payouts, and robust growth potential.
• Enbridge’s extensive energy infrastructure and SmartCentres’ strategic retail and office properties offer high yields with resilience against economic volatility, making them ideal candidates for building wealth in a TFSA.

A Tax-Free Savings Account (TFSA) is an excellent vehicle for long-term wealth creation, allowing investors to earn tax-free returns on eligible investments within their available contribution room. However, investors should be selective when choosing TFSA investments, as selling stocks at a loss can permanently reduce their contribution room. Therefore, focusing on quality dividend stocks with well-established businesses, reliable cash flows, strong payout track records, and solid growth prospects can be an effective strategy for long-term wealth building.

Against this backdrop, here are two high-yield dividend stocks that could be excellent additions to a TFSA. Let’s take a closer look at these investment opportunities.

Enbridge

Enbridge (TSX:ENB) is an attractive dividend stock for a TFSA, supported by its diversified asset base, reliable cash flows, strong dividend track record, and solid growth prospects. The company operates approximately 200 revenue-generating energy infrastructure assets, with around 98% of its earnings coming from regulated assets and long-term take-or-pay contracts. Moreover, about 80% of its earnings are protected by inflation-indexed mechanisms, helping reduce its exposure to economic volatility and commodity price fluctuations.

This resilient business model has enabled Enbridge to pay dividends for more than 70 years and increase its payout for 31 consecutive years. With a quarterly dividend of $0.97 per share, the stock currently offers an attractive yield of 5.43%.

Looking ahead, rising oil and natural gas production across North America should continue to drive demand for Enbridge’s infrastructure. The company is advancing its $41 billion secured capital program, with projects expected to come online through the end of this decade. These investments could support annualized adjusted EPS (earnings per share) and cash flow growth of approximately 5% through 2030, providing a solid foundation for continued dividend growth and making Enbridge an appealing long-term TFSA investment.

SmartCentres Real Estate Investment Trust

Another high-yield dividend stock that would be an excellent addition to a TFSA is SmartCentres Real Estate Investment Trust (TSX:SRU.UN), which owns and operates approximately 201 strategically located, income-producing retail and office properties across Canada. The REIT benefits from a strong tenant base, with 95% of its tenants having a national or regional presence and 80% providing essential services. This solid tenant base supports a healthy occupancy rate and resilient cash flows across economic cycles.

Consistent lease renewals, healthy rental growth, and ongoing lease-up activities have further supported the REIT’s cash flows and dividend payments. Its monthly distribution of $0.15417 per unit currently yields 6.46%.

Looking ahead, demand for retail space should remain healthy, supported by economic growth and limited new supply due to rising construction costs. SmartCentres is expanding its portfolio through several development projects, including a 200,000-square-foot Canadian Tire store in Toronto. The REIT expects to complete the project in the fourth quarter of this year. The REIT has also acquired a 17-acre parcel in Winnipeg for approximately $10.1 million and is developing two additional self-storage facilities in British Columbia, which are expected to come online next year.

Overall, SmartCentres has approximately 0.8 million square feet of properties under construction and another 87 million square feet in various stages of planning and development. Given its resilient cash flows, attractive yield, and substantial development pipeline, SmartCentres could be an excellent long-term TFSA investment.

AIRE closed at 74p, when the share opens today, you will not be able to trade at that price and book the profit of £558.

If AEW makes a bid, it might be possible to book a similar profit.

GLENSTONE’S ALREADY NEGLIGIBLE SHAREHOLDER ACCEPTANCES FALL FURTHER

The Board of AIRE (“AIRE Board”) notes yesterday’s announcement by Glenstone REIT plc (“Glenstone”) regarding the acceptance level for its unsolicited final* cash offer for AIRE (the “Glenstone Offer”).

ACCEPTANCES FROM INDEPENDENT AIRE SHAREHOLDERS FALL FURTHER TO LESS THAN 0.025%

After 35 days, excluding the AIRE Shares held by Glenstone and its concert parties and the 1,900,000 AIRE Shares subject to Adam Smith’s irrevocable undertaking, Glenstone has only received valid acceptances in respect of only 17,849 AIRE Shares, rather than the 19,849 acceptances previously announced. This represents a negligible proportion of AIRE’s issued share capital, representing less than 0.025 per cent.

After five weeks, Glenstone has therefore secured negligible net acceptance of its Offer from AIRE Shareholders other than its own director.

The AIRE Board’s view continues to be that the Glenstone Offer fundamentally undervalues the Company and as a result, the AIRE Board continues to recommend that AIRE Shareholders:

DO NOT ACCEPT GLENSTONE’S OFFER

The Glencore bid looks like a dead deal. The SNOWBALL will have to keep watching and waiting.

Dividends really are the “Rodney Dangerfields” of the investing world—they get no respect!

But they should, because growing dividends are the key to thriving through any market.

And if you roll your dividends back into your portfolio, the power of compounding takes over and delivers the sort of growth that tech fanboys (and girls) can only dream of.

Here’s the proof, from our friends at Hartford Funds.

Hartford looked at the years between 1960 and the end of 2024, which included everything: the inflation of the ’70s, economic crashes in 2001 and 2008 and, of course, the pandemic.

Here’s what they found: if you’d put $10,000 in the S&P 500 in 1960, you would have had $982,072 at the end of the period, based solely on price gains.

That’s not bad: a 9,721% increase.

It shows you why most folks only think about share prices when they invest. After all, with a gain like that, it’s tough to get excited about a dividend that dribbles a few cents your way every quarter.

But here’s the thing: when you reinvest your dividends, the magic of compounding kicks in. The difference is shocking: your $10,000 would have grown to $6,399,429, or more than $5.4 million more than you’d have booked on price gains alone!