AJ Bell Buyers Pile Into UK High-Yield Dividend Shares Offering 7%-Plus

Three UK high-yield dividend shares dominated the AJ Bell most-bought list last week: Primary Health Properties (PHP), LondonMetric Property (LMP), and Legal & General (LGEN). All three yield above 7% at current prices. The more interesting question is whether the underlying businesses justify the income on offer, or whether investors are reaching for yield without fully pricing the risks.

Primary Health Properties: 30 Years of Dividend Growth, With a Caveat

PHP is a healthcare real estate investment trust (REIT) whose tenants are predominantly NHS-linked, giving the rent roll a degree of government backing that most commercial property landlords cannot claim. The income case is well supported by history: the company has delivered 30 consecutive years of dividend growth, according to its investor relations page.

For the full financial year to 31 December 2025, net rental income was £230m and adjusted earnings per share were 7.3p. EPRA net tangible asset value per share stood at 99p against a current share price of 94p, so the stock trades at a modest discount to book. The total property portfolio is valued at £6.0bn.

On the dividend schedule, PHP pays quarterly. Each 2026 quarterly payment is 1.825p per share, producing an annualised total of 7.3p. At 94p, that is a prospective yield of 7.7%. Analysts expect the payout to rise to 7.56p in 2027, which would push the forward yield to around 8% at the same price.

The one number that gives pause is the payout ratio. With adjusted EPS at 7.3p and the 2025 actual dividend at 7.1p per share, coverage is tight. Any sustained rise in interest rates would squeeze margins on the debt-funded portfolio and could halt that growth streak. That is a real risk, not a theoretical one, for any leveraged REIT in this rate environment.

LondonMetric: A Stronger Balance Sheet and a Lease Book Built for Inflation

LondonMetric is the more institutionally credentialled of the two REITs. Fitch assigned the company a first-time BBB+ Issuer Default Rating in March 2025, with an A- rating on senior unsecured debt, noting 99% occupancy and contractual CPI, RPI or fixed rent uplifts on 78% of the portfolio.

Per its 2026 Annual Report, net contracted rent stands at £432m across 37 million square feet. The company describes itself as the UK’s leading Triple Net Lease REIT, which means tenants carry the operating costs, not the landlord. That structure is more defensive than a standard commercial lease.

The lease duration is the standout. LondonMetric’s four theme park assets, including Alton Towers and Thorpe Park, are all let to Merlin Entertainments with a weighted average unexpired lease term of 51 years and annual CPI+0.5% rent reviews on the UK assets. The snippet’s description of those reviews as plain CPI-linked understates it slightly; the annual report specifies the uplift premium. Alton Towers generates £10m in annual rent, Thorpe Park £7m.

In FY2026, LondonMetric acquired 17 Premier Inn hotels for £161m via sale and leaseback, let for 30 years with CPI-linked reviews. Premier Inn now represents 3.3% of total rent, up from 1.1% in 2025, extending the company’s long-duration income base further.

The current yield is 7.1%, based on a share price of 183p and a projected payout of 13.1p per share. For income investors who want duration and inflation linkage in a single vehicle, LMP’s lease architecture is genuinely difficult to replicate.

UK High-Yield Dividend Shares: Where Legal & General Fits In

LGEN looks different from both REITs. The yield of 7.5% (based on 296p and a projected 22.2p payout for 2026) is the headline, and on a £10,000 investment that equates to income of £750 a year. The business, however, is carrying more broker scepticism than the yield alone suggests.

The operating picture is not uniformly weak. H1 2026 results showed Institutional Retirement operating profit up 5% to £646m, with £2.0bn of UK pension risk transfer (PRT) premiums written in the half. The interim dividend was 6.24p, up 2%, and a £1.2bn buyback is underway. Full-year 2025 data from Hargreaves Lansdown’s results coverage showed PRT volumes of £11.8bn and assets under management of £1.2 trillion, though the Solvency II coverage ratio slipped from 232% to 210% over the year.

Against that, the broker consensus is deteriorating. The consensus analyst target sits at GBX 276.86, with a ‘Reduce’ rating. JPMorgan cut its target to GBX 270 in August 2026, and Jefferies carries an Underperform with a GBX 185 target. The concern shared across the bearish camp is that competitive pressure in the PRT market will compress LGEN’s margins in the years ahead, and dividend growth could stall or reverse. The company has completed sizeable transactions, including buy-ins for the Ford and BP pension schemes, so the franchise is real; whether volumes remain at that level is the open question.

PHP and LMP share the same core risk (interest rates) but carry it on lease books built for inflation linkage and long duration. LGEN’s risk is structural rather than cyclical, which makes it harder to time. The next test for all three arrives with the Bank of England’s rate path through late 2026; if cuts materialise and stick, the REIT case strengthens considerably. For LGEN, the more pressing catalyst is FY2026 PRT volume disclosure and any guidance on capital strain.