For those wanting to boost their levels of passive income, I think the FTSE 250 is a good place to start. In fact, the index is yielding 3.53% at the moment (16 June), compared to 3.06% for the FTSE 100.
However, there are plenty of stocks on the index with yields much higher than 3%.
A holy trinity?
By way of example, here are three that are currently offering a return that’s higher than any of the UK’s 100 largest listed companies. With a combined eye-watering yield of 9.82%, it means a £10,000 investment could produce £982 of dividend income over the next 12 months.
If this could be sustained, someone who reinvested the payouts would double their money in less than eight years. This is a powerful reminder of how dividend shares can help build significant wealth.
| Stock | Yield (%) |
|---|---|
| Greencoat UK Wind | 10.04 |
| Taylor Wimpey (LSE:TW.) | 10.00 |
| Telecom Plus | 9.42 |
| Average | 9.82 |
Buyer beware?
Before proceeding, it’s important to note that high yields could be a warning sign of an impending dividend cut. A near-double-digit return might result from a falling share price, brought about by some bad news that could impact future earnings. In these circumstances, there’s often a time lag before an announcement of a cut is made.
With yields generally quoted on a trailing 12-month basis, it means they can sometimes be misleading.
Delving deeper
However, I don’t think this applies to Taylor Wimpey, even though the UK housebuilder has seen a drop in sales, a reduction in its margin, and a fall in earnings since the pandemic.
In 2025, its profit before tax was 82% lower than in 2022:
- 2025 – £147m
- 2024 – £320m
- 2023 – £474m
- 2022 – £828m
- 2021 – £680m
Despite a cooling housing market, there remains a chronic under-supply of new homes in the country. But higher interest rates have increased the cost of borrowing and choked off the demand for new mortgages.
Prior to the recent conflict in the Middle East, there were signs of a recovery. However, fears that inflation could return leading to another tightening of monetary policy by the Bank of England have dented confidence again.
In its most recent trading update, the company said cost pressure and surcharges were “starting to come through from our supply chain”. Also, it’s had to drop the average selling price of the homes in its pipeline by 1%.
Looking ahead
But over the long term, I think the government’s planning reforms and the housing shortage should help the business return to pre-pandemic levels of completions. And the group’s policy of returning up to 7.5% of net assets to its owners each year means shareholder returns should grow as it recovers.
I already have exposure to the sector so I don’t want another UK housebuilder in my portfolio. However, those looking for an above-average dividend and a stock with long-term growth potential could, in my opinion, consider Taylor Wimpey.
A final thought
As for the other two stocks in the table – Greencoat UK Wind and Telecom Plus – I would have to do some more research before deciding whether their yields are sustainable.
However, I think it’s significant that there are 13 FTSE 250 stocks currently indicating a return of 9% or more. The index could be worth a closer look by passive income fans.
Should you invest £5,000 in Taylor Wimpey Plc right now?
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James Beard does not own shares in any of the companies mentioned.
