High-yield dividend shares are naturally attractive to income investors. With the FTSE 100 currently having an average yield of 3.11%, there are plenty of stocks that could offer more than simply buying an index tracker that distributes the income. Here’s one company that has a strong forecast worth considering.
Uni accommodation
I’m talking about Unite Group (LSE:UN). Unite is the UK’s largest owner, manager and developer of purpose-built student accommodation. It provides homes to approximately 72,000 students across 29 university towns and cities. The real estate investment trust (REIT) generates income by renting rooms directly to students and through agreements with universities.
Part of the reason why the current 8% dividend yield is high is due to the share price fall recently. The problem is that student demand has become less predictable.
Tighter visa restrictions have reduced international postgraduate numbers, while higher living costs have encouraged some domestic students to remain at home. Consequently, Unite’s occupancy fell from 97.5% to 95.2% for the 2025/26 academic year.
Rental growth has also disappointed. October’s trading update revealed just 0.6% like-for-like income growth for 2026/27, with average rents per occupied room declining slightly.
Yet despite this, I think the income is sustainable for investors and that the outlook isn’t negative.
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Dividend details
The company paid dividends totalling 37.7p per share for 2025, against adjusted earnings of 47.5p. This represents dividend cover of approximately 1.26 times. That’s a sign that the dividend is sustainable as earnings can cover it.
For this year, the dividend is the same, but in 2027, it’s due to rise to 40p per share. If the share price stays the same, this would bump the yield to 8.51%. Of course, the price may rise or fall over this time period, so the actual yield could be higher or lower.
Importantly, Unite benefits from relatively predictable rental income. Some 95.6% of its beds were sold for the current academic year, while university nomination agreements provide additional visibility. That means that I’m confident in the income for the next year.
The outlook
Beyond the predictability of income, there are other reasons the stock looks appealing for the coming period.
Management intends to reduce its portfolio to approximately 55,000–60,000 beds, selling less attractive properties and reinvesting in locations with more resilient demand. This should act to future-proof it from falling demand in some areas, and go to where the students actually are.
The integration of Empiric Student Property also offers opportunities. Unite expects annual cost savings of £18m as the businesses combine their operations. Ultimately, this should help to boost profits and therefore the dividend payments.
In terms of risks, the biggest concern is that weaker international student recruitment persists. Further visa restrictions could undermine occupancy and rental growth. Elevated borrowing costs could also depress property valuations.
On balance, I’m considering buying the stock given the juicy yield. Income investors who agree could consider doing the same.
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Jon Smith has no positions in the shares mentioned.
This story originally appeared on Motley Fool
