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I count 15 actions in the FTSE 250 with expected dividends of 8% or more. And there are only five in it FTSE 100 with such great returns (and one of those, Vodafonewill cut it next year).
But isn't the FTSE 100 supposed to be the highest dividend income index, while the FTSE 250 is the place to go for growth?
Surely things look the other way around. And I think the market could be seriously undervaluing FTSE 250 shares.
The best thing about the elections?
Can supermarkets continue to generate income for shareholders for decades to come? Are real estate investment trusts (REITs) suffering unfairly from the current housing crisis?
I say yes to both of them. And that could do Supermarket Income REIT (LSE: SUPR) an undervalued buy for my stocks and Shares ISA.
It has fallen since 2022, down 25% in the last five years. But the expected dividend yield amounts to a spectacular 8.1%.
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What are you doing
The business model is quite simple. The trust invests in high-quality supermarket properties and earns rental income. And it also targets capital growth, as property values are expected to rise in the long term.
The biggest risk I see is the increasing share count as the trust has raised equity funding. There has been a lot of dilution and fears that more could keep the share price weak.
Oh, and there has also been quite a bit of debt financing, as is typical for REITs.
But that great dividend yield, from a company that aims to “Secure, inflation-linked, long-term income from UK grocery properties.”might make the risk worth taking.
More FTSE 250 returns
I have my eye on ITV also. Its expected dividend yield, at 6.3%, is outside the 8% club.
But forecasts show strong profit coverage in the coming years. And the debated earnings growth could push the price-to-earnings (P/E) ratio below nine by 2026.
After a rally in 2024, the stock could look fully valued based on historical earnings. And we won't really see if ITV has recovered for a while yet.
But ITV joins my list of 2024 dividend stock candidates.
changing winds
Others include UK Wind Greencoat. The stock is down from 2022 highs. But that means a projected return of 7.2%.
Who will win the renewable energy race is a big question. But it's big business, and Greencoat agrees. And we could see sustainable earnings growth from 2025 onwards.
Forward returns above 8% include those of investment companies open (9.3%) and Ashmore Group (8.5%). and house builder Cresta Nicholson Holdings offers 8.1%.
It looks like a good time for FTSE 250 dividend investors.
