As global markets sink, British passive income shares offer high yields at cheap prices
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Global stock markets have had some tough times, and that’s never fun to watch if you’re a long-term investor. But falling share prices also mean rising dividend yields, which could be a rare opportunity to lock in higher income from strong UK companies.
Three famous names have slipped this past month Pets at Home (LSE: PETS), British World again Aberdeen (LSE: ABDN), each chunky sports yield between 6%-7%.
Pets at Home
Pets At Home makes most of its money from pet products, pet supplies and grooming, so their sales are tied to everyday (but emotional) pet use rather than big-ticket items. Shares now yield about 6.7%, with dividends covered 3.6 times cash and a payout ratio of 77%.
Recent results have shown consistent profit and steady profit growth over the past decade, suggesting a comfortable cash flow for the board while still investing in the business.
Valuations look reasonable, with a price-to-earnings (P/E) ratio of 11.7 – lower than most UK consumer goods stores. However, stubborn inflation poses a risk: although people rarely cut back on pet spending first, any deep recession could slow down discretionary purchases like toys or equipment.
Strong competition from low-cost online retailers can squeeze margins if shoppers look elsewhere.
British World
British Land is one of the UK’s largest listed property, office, retail and mixed-use companies. Its shares currently offer a dividend yield of around 6%, with payouts accounting for half of the dividend. In its latest half-year 2025/26 results, underlying profit rose by 8% and earnings per share rose sharply, allowing management to raise the interim dividend by 1%.
Higher interest rates continue to challenge commercial property values, but as markets begin to price in future reductions, yields on high-quality property groups such as British Land look more attractive.
The biggest risk is that if the UK economy weakens again, rental demand for office and retail space could fall. That can depress both income and asset valuations.
Aberdeen
Aberdeen is an asset manager that leads investment funds and portfolios for clients. The shares trade at a below average P/E ratio and the dividend yield of 8% is very attractive. The company has kept dividends rolling for 19 years and recent numbers show a payout ratio of nearly 80%. That’s a bit high but the dividend is still adequately covered by current earnings.
That limited coverage is a big risk though. When markets weaken and revenues decline, management may end up deciding to cut a payout to protect the balance sheet. On the other hand, recovery in markets and capital flows will give it more breathing room, as rising asset prices usually lead to higher income.
An extraordinary income opportunity
For UK investors, these three stocks show why market dips can be useful times to buy. Prices dropped by 8%-10% would increase the initial yield to 6%-7%.
Naturally, nothing is without risk – from online competition to property cycles and critical income in the market. But it’s a high yield toss-up today to accept those risks, which may move the odds in your favor if you’re patient.
Any of the three may be worth considering but as always, I would spread the money rather than backing just one name, so that one bad egg doesn’t hurt the entire portfolio.
