The FTSE 100‘s a great place for investors to go hunting for dividend shares. However, those that confine themselves to the UK’s flagship index may be missing excellent opportunities elsewhere.
Here are three great passive income stocks I think share pickers should consider today.
As you can see, their dividend yields for next year smash the Footsie’s 3.5% forward average to smithereens. I’m confident that these companies can pay a large and growing dividend for years to come too.
ITV
ITV’s had a tough few years due to evaporating advertising sales. But with marketing budgets improving, now could be the time to consider buying the broadcasting giant.
Taking a longer term view, there are other reasons why I like ITV shares. The company’s bet big on the fast-growing streaming sector, and it’s paying off handsomely. Third-quarter financials showed streaming hours at its ITVX platform soar another 14%.
Remember though, that high competition from the likes of Netflix poses a threat to future growth.
I also like the huge investment ITV’s made to create a world-leading production arm. Organic revenues at ITV Studios are tipped to rise, on average, by an industry-topping 5% through to 2026.
For 2025, the predicted dividend is covered two times over by expected dividends. This is bang on the widely-regarded safety benchmark.
Inchcape
As a major car distributor, Inchcape’s profits are vulnerable during economic downturns. Sales of big-ticket items are usually the first thing to go when people feel the pinch.
Yet despite these threats, dividends over the next few years look secure, in my book. For 2025, the predicted dividend is covered 2.4 times by expected earnings, providing a wide margin for error.
With operations in 40 countries, the firm enjoys broad geographic distribution that helps reduce risk of profits and dividend turbulence.
Speaking of distribution, I like the Inchcape’s decision to sell its UK retail operations earlier this year and become a pure-play distributor.
Doubling down here — which the firm has described as “higher-margin, more capital‐light, higher return, more cash-generative, compared to retail-only businesses” — bodes well, in my opinion. Improved cash flows could certainly give dividend growth a big boost.
Care REIT
Care REIT — which was until last month known as Impact Healthcare REIT — also enjoys healthy dividend cover, at 2.1 times.
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This adds extra strength to an already-robust dividend stock. As an operator of care and residential homes, it operates in a defensive sector where rent collection’s broadly unaffected by broader economic conditions.
That’s not all. All of its contracts are 100% inflation linked, protecting profits from rising costs. And Care REIT has its tenants locked down on ultra-long contracts (the weighted average unexpired lease term is above 20 years).
Real estate investment trusts (REITs) like this must pay at least 90% of profits from their rental operations out in the form of dividends. While earnings are being dented by higher interest rates, I think it’s worth serious consideration from dividend investors.
This post was originally published on Motley Fool
