Image Source: Getty Images
I’m looking for the best FTSE 250 stocks to buy to increase my passive income. Here are two top earning stocks on my radar today. I would buy them if I had some money to spare.
Grainger
Grainger (LSE:GRI) is the UK’s largest listed residential landlord. It has around 9,700 homes on its books and a construction-to-let portfolio of more than 6,800 properties.
High construction costs pose a danger to profits. But I still think it could be one of the best dividend stocks to buy in these uncertain times. People need to spend money on rent at all points in the business cycle. Having a roof over our heads is one of life’s non-negotiables.
So, in my opinion, Grainger’s earnings are likely to remain flat, giving it the financial muscle to keep paying dividends. The same cannot be said for many other UK-focused FTSE 250 stocks as the UK economy struggles.
I think Grainger’s earnings will also remain strong as a shortage of available housing drives up rents. The market tightness pushed occupancy levels at its properties to all-time highs of 98% in the 12 months to September. Meanwhile, comparable rents also rose a solid 4.7%, with the company also noting that rent growth “keep accelerating”.
In my opinion, the property shortage will drive strong rental growth for years to come. Britain’s population will continue to grow. However, an inadequate housing policy means that construction rates are unlikely to keep up with the growing demand for accommodation.
In December, the government abandoned its goal of building 300,000 new homes each year. Since then, a large number of additional local authorities have reported filed or ax your home construction plans.
Grainger doesn’t offer the biggest dividends out there. For this fiscal year, the business is returning a decent, if not spectacular, 2.6%. But I would still invest in passive income as I expect shareholder payouts to grow strongly in the long run.
Primary health properties
Demographic changes also bode well for earnings in Primary health properties (LSE:PHP). The steady growth of the country’s elderly population means that the demand for medical services will also increase.
As the name implies, this FTSE 250 stock owns and operates primary healthcare sites such as GP offices. It has a portfolio of over 500 properties in the UK and Ireland and is expanding rapidly to maximize this huge market opportunity.
In recent days, the company has acquired Irish property management company Axis Technical Services. It also signed an agreement with Axis Heath Care Assets for the option to acquire its development channel within five years.
Potential NHS policy changes could derail long-term earnings growth at the real estate investment trust (REIT). But I hope the government continues to invest in primary care as it looks to reduce the pressure on hospitals.
Under REIT rules, the company must distribute 90% of annual profits in the form of dividends. Consequently, its performance for 2023 stands at an excellent 5.9%.
