Stock market

Forget Lloyds shares and consider buying these high dividend stocks for passive income!

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It’s easy to see why Lloyd’s (LSE:LLOY) shares are very popular with dividend investors. Its 6% dividend yield to 2024 is higher than the 3.7% average for the broader FTSE 100.

And yields reach an even better 6.6% for 2025.

A strong balance sheet means the bank also looks well-positioned to meet these forecasts. But that’s not enough to motivate me to invest. I am also looking for stocks that can fetch solid capital. And as the UK economy struggles and market competition increases, I fear Lloyds’ share price may struggle for traction.

There are many other passive income stocks I think investors should consider today. Here are just a couple.

Banco Santander

Just like Lloyd’s, Banco Santander (LSE:BNC) faces the twin threats of increased competition and macroeconomic pressures on its profitability.

But one big thing sets this company apart. It is its exposure to emerging Latin American markets that could provide long-term growth.

Santander derives 25% of its profits from South America, where it is a leading industry player in regional powerhouses such as Brazil, Argentina and Chile. It also has a significant presence in Mexico’s rapidly expanding economy.

Although personal income levels are rising rapidly in these regions, penetration of banking products is still low. So Santander – whose revenue is expected to grow 13% in 2023 – has plenty of room to continue growing sales and earnings.

Like Lloyds, Santander has a rock-solid balance sheet that it is boosting through successful cost-cutting initiatives. It helped return €5.5bn to shareholders last year through dividends, cash and share buybacks. Encouragingly for income investors, the bank has also committed to increasing this amount to a new record of €6bn in 2024.

This supports a dividend yield of above 4.1% for 2024, a figure that rises to 4.4% for 2025. Short term yields may not be at Lloyds level but on balance, I think it is a far more attractive stock.

TBC Bank Group

TBC Bank Group (LSE:TBCG) is another retail bank with substantial share price and earnings potential. Like Santander, it focuses on customers in developing markets, in this case Georgia and Uzbekistan.

Its total revenue grew by 15 percent in 2023 as demand for its loans, and both current and savings accounts, continued to grow. The number of customers in its core Georgian market grew by 10% over the past year. Uzbekistan, where it entered 2020, saw a 48 percent increase in users.

TBC is benefiting the most from low product penetration and rapid GDP growth in these countries. It is also investing heavily in digital banking, a strategy that is proving to be highly effective in attracting customers.

One drawback of owning the bank’s stock is the proximity of its operations to Russia. If concerns about the geopolitical stability of the region rise, it could be detrimental to its share price.

Even so, I still think it’s an attractive passive income stock to consider today. Its 7.2% dividend yield for this year jumps to 8.3% for 2025.

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