8.6% dividend yields! 2 FTSE 250 dividend stocks to buy

Runaway inflation and rising Covid-19 infections aren’t wrecking my investment appetite. Here are two big-yielding FTSE 250 stocks I might buy today.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A person holding onto a fan of twenty pound notes

Image source: Getty Images.

The increasingly uncertain outlook for the global economy isn’t draining my appetite for UK shares. Why should it? There are still many London-quoted companies that could thrive, even if the economic recovery crashes. Here are two rock-solid FTSE 250 dividend stocks I’m thinking of buying today.

Green giant

I don’t just buy UK income shares based on yields over the short-to-medium term. All the stocks I invest in are ones I think will provide terrific returns over a number of years. I buy companies I’d be comfortable to own for a decade, perhaps even longer.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

This is why I’m seriously thinking of adding Greencoat UK Wind (LSE: UKW) to my Stocks and Shares ISA. It’s hard not to look at a newspaper and read something on global warming and how lawmakers are accelerating their green energy strategies. This is something that bodes well for Greencoat, a firm which (as the name suggests) invests in wind farms across the country.

As we’ve seen in recent months, wind power is notoriously unreliable, a point that has helped to push natural gas prices in the UK to recent peaks. The business of keeping the turbines spinning is also massively expensive and huge (and often unexpected) costs can be common.

But despite these threats to Greencoat’s profits, it’s still a very appealing dividend stock to own. Electricity is one of those critical commodities so demand for the stock’s services is always guaranteed. And wind turbines are, broadly speaking, a very-effective means of generating the stuff.

I’d buy Greencoat UK today because of its huge 5.2% and 5.5% dividend yields for 2021 and 2022 respectively. And I’d aim to hold it for years to come.

8.6% dividend yields

I also think Direct Line Insurance Group (LSE: DLG) is one of the best FTSE 250 stocks to buy for big dividends. Recent share price weakness has sent the company’s already-impressive dividend yields through the roof. For 2021 and 2022, it now sports yields of 8.6% and 8.3% respectively.

Direct Line is a cash machine, pure and simple. And, like Greencoat UK, its ultra-defensive operations mean it is a reliable profits generator during good times and bad too. As a consequence it has a rich track record of rewarding shareholders with market-beating shareholder payouts.

Spending on general insurance (and especially car insurance) tends to remain unchanged, even if economic conditions significantly worsen. So Direct Line could be a particularly wise buy as economic indicators in the UK worsen.

However, I’m concerned by the intense competition the insurer faces in its key markets. This limits the wriggle room Direct Line has to raise premiums and thus boost profits. Though thanks to the immense brand power of brands like Direct Line and Churchill has meant that it still comes out slugging.

I think those 8% dividend yields — as well as a low forward P/E ratio of 11 times — make it a great dip buy right now.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. 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.

More on Investing Articles

University graduate student diploma piggy bank
Investing Articles

Should I be concerned about the windfall tax for my BP shares?

What does the new UK windfall tax mean for the BP share price? Michelle Freeman digs into the details to…

Read more »

Buffett at the BRK AGM
Investing Articles

What Warren Buffett’s wisdom and investing in stocks will teach you about life

Investing is a journey of self-discovery. So what will stocks and the words of legendary investor Warren Buffett teach you…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

5 ‘no-brainer’ income stocks to buy today!

Amid soaring inflation, I'm looking at these income stocks, offering big yields, to grow my portfolio.

Read more »

Trader on video call from his home office
Investing Articles

How I’d buy the dip in quality UK stocks with £750

Jon Smith explains the concept of buying the dip, and talks through the UK stocks he's going to buy at…

Read more »

Woman looking at a jar of pennies
Investing Articles

5 UK penny shares to buy with £5,000 today

It's hard to remember a time when there were as many tempting penny shares around as now. Here are five…

Read more »

man in shirt using computer and smiling while working in the office
Investing Articles

The Scottish Mortgage share price keeps falling. Should I buy?

The Scottish Mortgage share price has collapsed from its all-time high in little more than six months. Is it now…

Read more »

UK money in a Jar on a background
Investing Articles

Value investing isn’t dead! My top stocks to buy as inflation hits 9%

As value investing principles come back into fashion, Andrew Mackie looks at the current backdrop and shares what he's investing…

Read more »

Windmills for electric power production.
Investing Articles

Which FTSE 100 shares would I buy to offset higher fuel bills?

Rishi Sunak unveiled a windfall tax this week, hitting shares of energy firms, and especially oil & gas producers. But…

Read more »