2 cheap FTSE 250 dividend shares! Here’s why I’d buy them this April

I’ve been searching the FTSE 350 for the best dividend shares to purchase for long-term passive income. Here are two I’ll buy if I have spare cash to invest.

| 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.

Young black woman in a wheelchair working online from home

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

These FTSE 250 shares offer dividend yields comfortably higher than the average for UK shares. Here’s why I’d buy them for my own stocks portfolio this month.

Centamin

Mining for metals is a notoriously unpredictable and expensive business. Profits forecasts for firms like Centamin (LSE:CEY) can crumble if production problems occur that hit revenues and drive up costs.

But I still believe buying gold mining shares like this can be a good idea. This is because they provide investors with protection during economic, political and social crises.

You see, demand for safe-haven assets like gold climb at times like these and prices can often soar. This gives profits at miners like Centamin a boost and can, therefore, reduce falls across an investor’s portfolio.

I think buying this Egypt-focussed company is an especially good idea at the current time. Bullion prices have burst back through the $2,000 per ounce marker and could be on course to print repeated record highs.

But I’d buy Centamin shares today with a view to holding them for the long haul. It is taking steps to boost output at its flagship Sukari mine over the next couple of years. And it has a robust exploration pipeline elsewhere in Africa that could help it supercharge earnings growth.

Today, the precious metals business trades on a forward price-to-earnings (P/E) ratio of just 7.3 times. This — along with its 6.4% dividend yield for 2023 — makes it too cheap to miss, in my opinion.

Pennon Group

Centamin’s large dividend yield comfortably beats the 3.3% average for FTSE 250 shares. And so does that of water supplier Pennon Group (LSE:PNN). The yield here sits at 5.2% for the current financial year to March 2024.

Buying utilities businesses can be excellent ways to make long-term passive income. The defensive nature of their operations provides dependable revenues and cash flows at all points of the economic cycle.

This is why City analysts expect dividends here to keep rising, even as the domestic economy cools. As a result, Pennon’s dividend yield marches to 5.4% for fiscal 2025.

Pennon has one of the most generous payout policies across the water industry. This is thanks to its superior return on regulated equity (RORE) to those of its peers. RORE stood at an impressive 13.1% between April and September, latest financials showed.

This means the business remains committed to raising annual dividends by CPIH (consumer prices index including owner occupiers’ housing costs) plus 2%. Over the long term, this could make a big impact on investors’ passive income.

My chief concern with buying Pennon shares is that it operates in a highly regulated industry. Any changes introduced by Ofwat on issues like dividends or environmental standards could have a huge impact on shareholder returns.

That said, as things stand today, I still believe the company is a great way to make dividend income.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Pennon Group Plc. 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 Dividend Shares

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why is ‘dividend cover’ important for an income investor?

Dividend cover isn't just some arcane accounting concept, but an important idea for income investors to engage with. Christopher Ruane…

Read more »

A front-view shot of a multi-ethnic family with two children walking down a city street on a cold December night.
Investing Articles

No savings at 25? I’d aim to turn a £20k ISA into £21,384 of passive income with 3 stocks

Harvey Jones reckons he can build a high and rising passive income by making full use of this year's Stocks…

Read more »

Investing Articles

Buying 2,779 shares in this 7.7% high-yielder gives me a £1k annual second income

Harvey Jones wants to generate a high and rising second income by investing in top FTSE 100 shares like this…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

If I invest £17,000 in Aviva shares, how much passive income could I make?

Aviva shares look very undervalued currently and could make me big passive income over time, particularly if the dividends are…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

Can I really make this much passive income from £11,000 invested in this FTSE dividend superstar?

This FTSE 100 dividend giant pays big dividends that can make me very high passive income over time, especially if…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

Here are 2 of my top stocks from the FTSE 250 for passive income

The FTSE 250's packed full of businesses offering attractive dividend yields. This Fool thinks these are two top picks to…

Read more »

Young woman holding up three fingers
Investing Articles

Dividend yields up to 11.1%: 3 FTSE 100 passive income shares to consider

Looking for ways to make a market-beating return? These popular FTSE 100 dividend shares might be the wisest you can…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Passive income powerhouses! 3 FTSE stocks I’d consider buying for rising dividends

Our writer picks three under-the-radar UK shares that boast excellent records of returning increasing amounts of passive income to their…

Read more »