The top ten dividend stocks in the FTSE 250
The average FTSE 250 dividend yield is around 4%, but many stocks yield much more. Rupert Hargreaves picks the best FTSE 250 stocks for income investors to buy.
The FTSE 250 is a market index made up of 250 mid-cap equities traded on the London Stock Exchange. The 250 companies that make up the index are not big enough to be included in the FTSE 100, but they are still some of the UK’s largest publicly-traded enterprises.
However, as James McManus, chief investment officer at Nutmeg, the digital wealth manager notes, “The FTSE 250 is considered more of a place for share price growth than the FTSE 100, because its companies are somewhat smaller, there can be more potential for them to expand.”
What’s more, the FTSE 100 tends to be the first port of call for income investors as “companies on the FTSE 100 are typically larger, which can mean their capacity for returning money to shareholders in the form of dividends is greater.”
This is evidenced by the fact that the dividend yield of the FTSE 100 is 3.65% compared to the FTSE 250’s 3.1%.
Still, there are some companies in the FTSE 250 that have great income credentials.
Here’s a list of the ten highest-yielding dividend stocks in the FTSE 250.
Company | Dividend per share (DPS) for 2022* | DPS for 2023* | Dividend Yield (%) (2023) | Dividend Growth (%)* | Forward p/e* |
Diversified Energy (LSE: DEC) | 17.3c | 17.3c | 12.0 | 2 | 8.2 |
Direct Line Insurance (LSE: DLG) | 15p | 20p | 11.6 | 34 | 7.7 |
Sequoia Economic Infrastructure Income Fund (LSE: SEQI) | 6.9p | 6.9p | 7.9 | 1 | 10.3 |
Target Healthcare Reit (LSE: THRL) | 6.6p | 6.6p | 7.8 | 0 | 13.5 |
Bank of Georgia (LSE: BGEO) | 5.7 GEL | 6.3 GEL | 7.5 | 10.3 | 3.8 |
NextEnergy Solar Fund (LSE: NESF) | 7.5p | 8.4p | 7.4 | 11.2 | 9.6 |
TP Icap (LSE: TCAP) | 11.3p | 12.9p | 7.1 | 14.2 | 7.6 |
Tritax EuroBox (LSE: EBOX) | 5.9c | 5.2c | 7 | -11.9 | 13.4 |
Osb (LSE: OSB) | 31.5p | 35p | 6.9 | 11.2 | 5.4 |
Abrdn (LSE: ABDN) | 14.5p | 14.4p | 6.9 | -1 | 24 |
*Refinitiv broker estimates
Dividend stocks in the FTSE 250
What’s notable about this list is how much it has changed over the past couple of months.
A few months ago, housebuilders and financial services companies dominated the list.
Financial services companies still have a strong presence, but the rest of the list has been replaced by investment trusts (and one oil company).
The list has shifted as analysts have reconsidered their dividend expectations for the year ahead. They are now expecting many companies in the FTSE 250 to cut their dividends in 2023 as they preserve cash to deal with the challenging economic backdrop.
Direct Line is a great example. It recently said it would not be paying a final dividend for 2022 as inflation had pushed the cost of Insurance claims above its expectations leaving it with less capital than it would like. While analysts are expecting this company to increase its payout in 2023 after this setback, if the economic outlook deteriorates, these projections could look optimistic.
One company that really stands out on this list is Bank of Georgia.
One of the largest lenders in Georgia, it offers investors an interesting way to gain exposure to this fast-growing economy (GDP growth hit 10% last year), and reduce exposure to the UK.
As the bank benefits from Georgia’s economic expansion, it should be able to support its dividend, and there's even headroom for growth.
The dividend yield stands at 7.5% and the stock looks dirt cheap, trading at a forward price-to-earnings (p/e) ratio of 3.5.