2 UK dividend shares I’ve bought for long-term passive income!

I think these UK income stocks are one of the best stocks to buy for passive income. This is how I would increase my holdings if I had the money to invest.

Major Health Properties

Real estate investment trusts (REITs) can be a great way to generate dividend income during good times and bad. Contract rents received tend to provide steady cash flow at all points in the economic cycle.

On top of this, tax-efficient REITs must pay out at least 90% of their annual profits from rental operations in the form of dividends.

Major Health Properties (LSE:PHP) is one REIT I have in my portfolio. This specialist company operates healthcare facilities, GP surgeries, and currently has over 500 properties in its portfolio.

And it has a good record of dividend growth. Shareholder payouts have increased annually for more than a quarter of a century, and 20% in the past five years.

I believe these UK stocks offer excellent long-term investment potential. However, earnings at Primary Healthcare Properties could suffer if NHS policy changes. But as the UK’s elderly population grows, so does the demand for everyday medical services. This is a trend set to expand and boost the foot in the doctor’s surgery.

City analysts now expect PHP to pay a planned full-year dividend of 6.7p per share in 2023. And they expect the total reward to rise to 6.9p next year.

This pushes the dividend yield of 6.7% for this year to 6.9% for 2024. Both readings beat the average of 3.3% for FTSE 250 stocks with large margins.

Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content in this article is provided for informational purposes only. It is not intended to be, nor does it become, any form of tax advice.

Spire Health

Admittedly, yielding dividends on Spire Health (LSE:SPI) sits below the broader FTSE 250 average. For 2023 and 2024, this is 1.3% and 1.6% for medical service providers.

But as a result of the increase, Spire – like Primary Health Properties – is a good part of the dividend growth.

The business is paying dividends during the Covid-19 crisis. And it may be canceled again if another public health emergency occurs in the future.

But on balance, the dividend will increase over the long term as demand for personal healthcare increases.

Lack of investment in the NHS has resulted in waiting lists. So people use health insurance or pay for treatment. Indeed, Spire’s revenue is expected to increase by 8.3% and operating profit by 9.7% in 2022 as the number of patients using its services increases.

The British Medical Association says that “it will take time and investment to put the NHS back on a sustainable footing“. In this climate, private healthcare providers can expect strong and sustained profit growth.

City analysts had expected Spire to report strong profit growth. An increase in the bottom line of 48% and 61% is predicted for 2023 and 2024 only. This explains why dividends are also predicted to rise higher.

Today, Spire trades at a forward price-to-earnings growth (PEG) ratio of just 0.7. To recap, any reading below 1.0 indicates that the stock is undervalued.

At that price, I’m thinking of increasing my holdings in the business. I think it can generate good capital appreciation and dividend income over the next decade.