2 dividend shares to turbocharge passive income

UK food prices rose at a record rate last month, according to the British Retail Consortium. The annual increase of 13.3% in December was up from 12.4% in November. Unfortunately, high inflation shows no sign of abating. So what am I? Well, for investors, dividend stocks have historically been a popular choice for protecting capital against inflation.

Here are two high-yielding dividend stocks that can help me offset the rising cost of living. Both are also above FTSE 100 average yield of 3.5% and therefore can turbocharge my passive income. That’s why I recently added two stocks to my income portfolio.

Warehouse REIT

Real estate investment trusts (or REITs) must pay 90% of their annual profits to shareholders in the form of dividends. So they play an important and profitable role in dividend portfolios.

One of my favorite stocks in this space is FTSE 250 constituents Warehouse REIT (LSE: WHR). As the name suggests, it focuses on buying and renting warehouse storage and logistics hubs for businesses. This is a market that has strong tailwinds going forward, as e-commerce continues to grow.

Warehouse REIT owns 91 estates with a total of 8.5 million square feet of industrial and logistics space. Its tenants range from start-ups to the likes of Asda, John Lewis and DHL.

It recently completed four more long-term claims, which increased the portfolio’s occupancy rate to 93.3% from 92.7% (as of September 30, 2022). It also increased the portfolio’s weighted average unexpired lease term to 5.7 years from 5.4 years.

While the positive leasing momentum is encouraging, we still don’t know what effect the recession may have on occupiers (and their ability to pay rent). However, the stock is down 35% over the past year, so some of this economic uncertainty may have been priced into the stock price.

The stock’s 6% dividend yield looks pretty good to me right now.

National Grid

Enjoying regulated monopoly status and record hiking dividends for decades, National Grid (LSE:NG) is a popular dividend stock. The core business of operating the energy transmission network is in no danger of being disrupted during a recession.

The stock offers a forward dividend yield of 5.3%, when available. The total dividend is expected to rise from 51p today to 57.5p in fiscal 2024.

Obviously, maintaining the country’s electricity grid is not cheap, especially when the company also invests in decarbonizing the energy system. Over the five years to 2025/26, it now expects to invest up to £40bn in energy networks and nearby businesses in the UK and US.

So one concern here is the company’s net debt, which stood at £46bn on 30 September. National Grid expects to reduce this by around £5bn, funded by the sale of some gas transmission assets.

However, this is still a lot of debt. Long term this can be problematic, even threatening dividend growth. However, the current dividend forecast is supported by the company’s impressive cash generation. The dividend is under no immediate threat.

On balance, I think the business’s highly defensive nature and long track record of increasing dividends make National Grid stock a top pick for passive income.