Forecasts for yields from dividend shares don’t stand still. So it would be a mistake to think we’re certain to get what we see.
I also think it’s a mistake to search only the FTSE 100 for cash cows. Right now, I see a lot of high dividend yields in the FTSE 250 that I like the look of.
Liontrust soared a few years ago. But after a slump, we now see just a 30% gain in five years.
The price has fallen back 70% since its peak in 2021, and that alone makes me sit up and take note. Especially as the drop has pushed the forecast dividend yield up to a whopping 9.4%.
Annual results released in June showed a 10% fall in profit before tax. But at £87.1m, I see that as still quite decent. And the firm announced 72p in dividends, giving a bit of strength to next year’s forecast.
The home construction business is an example of how dividend forecasts can change. Right now, with the outlook for the sector a bit tough, they’re being pared back.
Vistry Group (LSE: VTY), for example, dropped its 2022 dividend to 55p, from 60p the year before. But with the share price down, that’s still a yield of 8.3%.
I’d say the case for buying Vistry shares is the same as the case for any of our housebuilders. Thanks to soaring mortgage costs and falling house prices, the business is in a downturn.
But it’s a company that surely has a strong long-term future. And it has a record of earning stacks of cash over the decades.
Yes, share prices could fall further. And I expect more dividend cuts in the sector this year. But won’t those surely be just short-term things?
If UK supermarkets look like cash generators, but their dividends seem a bit uncertain, I like the look of Supermarket Income REIT (LSE: SUPR) as an alternative take on the retail sector.
It’s a real estate investment trust, which owns and rents out supermarket real estate. And its share price fall has pushed the dividend yield up quite nicely.
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The forecast now stands at almost 8%, which is quite a bit more than we can get from supermarkets themselves.
There’s more to a REIT than just the dividend, of course. Asset values are an important part of the equation too. And there’s a good chance that those could fall in the coming year.
But it looks to me as if the pessimism might already be built into the share price, at least when I take a long-term view.
Buy all three?
This is just a brief look at what I think are three top FTSE 250 dividend shares. They all face their own individual risks. And I’d do a fair bit more digging before I’d buy.
But I can’t help thinking they could all reward investors well in the years ahead.