I count 15 stocks in the FTSE 250 with forecast dividends of 8% or above. And there are only five in the FTSE 100 with yields that big (and one of those, Vodafone, will slash it next year).
But isn’t the FTSE 100 supposed to be the index for top dividend income, while the FTSE 250 is the place to go for growth?
Things sure look upside down. And I think the market could be undervaluing FTSE 250 shares, by a lot.
Top of the picks?
Can supermarkets keep on earning income for shareholders for decades to come? Are real estate investment trusts (REITs) suffering unfairly from today’s property downturn?
I say yes to both of those. And that could make Supermarket Income REIT (LSE: SUPR) an undervalued buy for my Stocks and Shares ISA.
It’s slumped since 2022, down 25% in the past five years. But the forecast dividend yield is up to a hot 8.1%.
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What it does
The business model is quite simple. The trust invests in high-quality supermarket property, and earns rental income. And it aims for capital growth too, as property values hopefully rise long term.
The biggest risk I see is in a ballooning share count, as the trust has raised equity finance. There’s been a lot of dilution, and fears for more of it could keep the share price weak.
Oh, and there’s been a fair bit of debt financing too, as is common with REITs.
But that big dividend yield, from a company that aims to “secure, inflation-linked, long term income from grocery property in the UK” could make the risk worth taking.
More FTSE 250 yields
I have my eye on ITV too. It’s forecast dividend yield, at 6.3%, is outside the 8% club.
But forecasts show strong cover by earnings in the next few years. And the mooted earnings growth could drop the price-to-earnings (P/E) ratio below nine by 2026.
After a rise in 2024, the shares might look fully valued on historic earnings. And we really won’t see if ITV has pulled off a recovery for a while yet.
But ITV joins my list of 2024 dividend stock candidates.
Changing winds
Others include Greencoat UK Wind. The shares are down from 2022’s peaks. But that means a forecast 7.2% yield.
Who’ll win the renewable energy race is a big question. But it’s a big business, and Greencoat is in with a shout. And we could see sustainable profit growth from 2025.
Forward yields above 8% include those from investment firms abrdn (9.3%) and Ashmore Group (8.5%). And housebuilder Crest Nicholson Holdings offers 8.1%.
This looks like a great time for FTSE 250 dividend investors.
