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4 passive income ideas from the FTSE 250

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Business development to success and FTSE 100 250 350 growth concept.
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The FTSE 250 currently has a lower average dividend yield than the FTSE 100. Yet within the index, individual stocks have generous yields that still rival the FTSE 100 counterparts. With this being the case, here are some of my favourite passive income ideas from the FTSE 250 index at the moment.

High passive income options

Two companies that operate in the same area are CMC Markets (LSE:CMCX) and Plus500 (LSE:PLUS). Both are retail trading and investment platforms. They offer a range of services across the investing spectrum. For example, spread betting is a leveraged way of buying or selling stocks, FX, and other instruments. This is a high-risk way of trading, but with potentially high rewards. 

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 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 UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

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During the pandemic, the volatility in financial markets saw a surge in account openings and trading activity for both companies. Money is made by taking a small spread off each transaction. So the more that clients trade, the more profitable it is for CMC and Plus500.

As a result, both companies were able to pay generous dividends out of the profits during this period. In terms of passive income, both FTSE 250 stocks have a dividend yield above 6%. This puts both within the top 10 highest yielding stocks within the index.

The risk here is that both companies need to adapt to keep the growth going. If retail participation slows, they need to be able to generate revenue from other sources, such as ISAs, more crypto offerings, and other services. The client base that has been generated is golden, but these companies need to ensure clients remain active, otherwise revenue will dry up during quieter times.

Defensive FTSE 250 stocks

Another area within the FTSE 250 for passive income ideas is within consumer staples, for example, PZ Cussons (LSE:PZC) and Tate & Lyle (LSE:TATE). PZ Cussons owns brands such as Carex and Imperial Leather. Tate and Lyle is a well-known sugar supplier.

Both companies should continue to offer me good dividends into the future. By nature of the products sold, customer demand should remain constant irrespective of what happens to the UK economy in the coming year. I say this because there are concerns about the negative impact of the current political situation, Brexit issues, high inflation, and so on.

Even if all of these things blow up, I’ll still need to buy sugar and soap! This is one reason why I’m happy to consider buying shares in both FTSE 250 stocks.

The risk here is that supply chain disruption could hamper stock levels even if demand is present. In fact, in a recent result presentation, Tate & Lyle noted that sweeteners and starches profit was down 13% “due to cost inflation and operational and supply chain disruption”. If this continues, then it could hamper future dividend payments.

Ideas for right now

Overall, I’m considering buying shares in all four of these passive income ideas. The FTSE 250 stocks offer me alternatives to the main index, and I think there’s good value to be had.

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!

Jon Smith has no position in any share mentioned. The Motley Fool UK has recommended PZ Cussons. 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.

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