Excessive-yield dividend shares are naturally engaging to revenue traders. With the FTSE 100 at present having a mean yield of three.11%, there are many shares that might provide greater than merely shopping for an index tracker that distributes the revenue. Right here’s one firm that has a robust forecast price contemplating.
Uni lodging
I’m speaking about Unite Group (LSE:UN). Unite is the UK’s largest proprietor, supervisor and developer of purpose-built pupil lodging. It supplies properties to roughly 72,000 college students throughout 29 college cities and cities. The actual property funding belief (REIT) generates revenue by renting rooms on to college students and thru agreements with universities.
A part of the rationale why the present 8% dividend yield is excessive is because of the share worth fall just lately. The issue is that pupil demand has grow to be much less predictable.
Tighter visa restrictions have lowered worldwide postgraduate numbers, whereas greater residing prices have inspired some home college students to stay at dwelling. Consequently, Unite’s occupancy fell from 97.5% to 95.2% for the 2025/26 educational 12 months.
Rental development has additionally upset. October’s buying and selling replace revealed simply 0.6% like-for-like revenue development for 2026/27, with common rents per occupied room declining barely.
But regardless of this, I believe the revenue is sustainable for traders and that the outlook isn’t unfavourable.
Please word that tax therapy is dependent upon the person circumstances of every consumer and could also be topic to alter in future. The content material on this article is offered for data functions solely. It isn’t meant to be, neither does it represent, any type of tax recommendation.
Dividend particulars
The corporate paid dividends totalling 37.7p per share for 2025, towards adjusted earnings of 47.5p. This represents dividend cowl of roughly 1.26 occasions. That’s an indication that the dividend is sustainable as earnings can cowl it.
For this 12 months, the dividend is identical, however in 2027, it’s as a consequence of rise to 40p per share. If the share worth stays the identical, this may bump the yield to eight.51%. In fact, the value could rise or fall over this time interval, so the precise yield may very well be greater or decrease.
Importantly, Unite advantages from comparatively predictable rental revenue. Some 95.6% of its beds had been offered for the present educational 12 months, whereas college nomination agreements present further visibility. That implies that I’m assured within the revenue for the following 12 months.
The outlook
Past the predictability of revenue, there are different causes the inventory appears to be like interesting for the approaching interval.
Administration intends to scale back its portfolio to roughly 55,000–60,000 beds, promoting much less engaging properties and reinvesting in areas with extra resilient demand. This could act to future-proof it from falling demand in some areas, and go to the place the scholars truly are.
The mixing of Empiric Scholar Property additionally gives alternatives. Unite expects annual value financial savings of £18m as the companies mix their operations. In the end, this could assist to spice up earnings and due to this fact the dividend funds.
When it comes to dangers, the most important concern is that weaker worldwide pupil recruitment persists. Additional visa restrictions may undermine occupancy and rental development. Elevated borrowing prices may additionally depress property valuations.
On steadiness, I’m contemplating shopping for the inventory given the juicy yield. Earnings traders who agree may think about doing the identical.
Must you make investments £5,000 in Unite Group Plc proper now?
When investing skilled Mark Rogers and his staff have a inventory tip, it could possibly pay to pay attention. In any case, the flagship Twelfth Magpie Share Advisor e-newsletter he has run for almost a decade has offered hundreds of paying members with high inventory suggestions from the UK and US markets.
And proper now, Mark thinks there are 6 standout shares that traders ought to think about shopping for. Need to see if Unite Group Plc made the checklist?
Jon Smith has no positions within the shares talked about.
