Yields of up to 9.2%! Should I buy these FTSE 250 dividend shares for passive income?
These FTSE 250 income stocks all offer dividend yields north of the 3.3% index average. Should UK share investors like me snap them up for a healthy second income?
Bank of Georgia
Banking shares like Bank of Georgia have sunk amid worries over a meltdown in the global financial sector. Yet it’s too early to conclude that a crash is coming, and I believe recent share price weakness here makes this particular bank highly attractive.
Today the company’s shares trade on a forward price-to-earnings (P/E) ratio of just 3.4 times. It also carries a mighty 9.2% dividend yield. This is one of the FTSE 250’s biggest yields.
I think Bank of Georgia’s share price could soar from current levels as banking product demand in its country balloons. In 2022 pre-tax profit at the firm soared 59% year on year as lending rose by double-digit percentages.
I’m not prepared to buy Vistry Group shares just yet. Predictions of a sinking homes makes me concerned about dividend levels in the short-to-medium term.
The Office for Budget Responsibility says that house prices could tank 10% from last year’s highs in 2023. It warned too that average property prices may not start to grow again until 2026.
Yet I’m keeping an eye on key housebuilding data for a reason to invest. A stream of industry updates have suggested that the market is in the early stages of recovery. Trading might prove better-than-average at Vistry too given its focus on the more stable affordable homes segment.
The builder trades on an enticing forward P/E ratio of 8.5 times and carries a 6.4% dividend yield.
Digital 9 Infrastructure
The planet is becoming increasingly connected, which bodes well for Digital 9 Infrastructure. This investment trust uses capital to acquire assets like data centres and subsea fibre.
And it’s doing so with a large focus on sustainability. Data centres require huge amounts of power so Digital 9 concentrates on projects that have access to lots of renewable energy. This is an attractive quality as it could mean increased demand from investors as the importance of ESG rises.
The trust carries an 8% dividend yield. I’d buy it even though supply chain issues could impact its development pipeline.
NextEnergy Solar Fund
Growing environmental concerns could also power investor interest in NextEnergy Solar Fund. As the name implies, this share is focused on investing in solar energy. This is a white-hot growth market as the world switches away from fossil fuels.
Profits at companies like this can suffer when the sun fails to shine and energy generation drops. Yet this operator’s decision to spread investment across the globe — it has assets in Europe, The Americas and Asia — helps to reduce this risk.
Today NextEnergy Solar Fund carries a meaty 7.2% dividend yield. I think it could be a great source of passive income in the near term and beyond.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2023