Earlier in August, I looked at three companies from the FTSE 100 that have consistently raised the dividends returned to investors.
Since spreading my money around the market is a good way of mitigating risk, I’m now looking further down the market spectrum and into the FTSE 250.
Rathbones
Investment manager Rathbones (LSE: RAT) admittedly isn’t a company I’ve paid much attention to over the years. In fact, I’ve completely overlooked its superb record of hiking dividends.
At the time of writing, the stock boasts a chunky forecast dividend yield of 5.1%. By comparison, the FTSE 250 index yields 3.5% as a whole. So is buying a stake worth the extra risk?
Well, one reason the yield looks so good here is that the share price has been sinking for most of 2023. Much of this can be blamed on wider market jitters surrounding inflation and interest rate rises.
With more hikes to the latter seemingly on the horizon, there’s a chance of this downward trajectory continuing in the months ahead.
On a more positive note, this leaves the shares on a price-to-earnings (P/E) ratio of 13. That looks reasonable. The payout also looks to be covered 1.5 times by profit, suggesting a cut to the dividend is unlikely.
Obviously, never say never.
Cranswick
Since it pays to be invested in different sectors just in case some run into trouble, I’d also add Cranswick (LSE: CWK) to my portfolio. Like Rathbones, the meat supplier has a great track record of consistently bumping up its bi-annual cash returns.
On the downside, the yield here is just 2.5%. So I’d be getting less income than if I were to buy a fund that tracks the FTSE 250 return.
Still, the way trading is going, I can only see these payouts going one way. Following a strong set of Q1 numbers in July, management said the full-year performance was now likely to be ahead of previous expectations.
I’d also much rather own a slice of a company that, in addition to sending me money, has delivered solid capital growth for investors. Cranswick shares are up almost 200% in 10 years, easily beating the index return.
With the popularity of alternative meat products seemingly on the wane, I see no reason why this won’t continue.
Safestore
A final FTSE 250 stock that hits the mark when it comes to throwing ever-increasing amounts of passive income back at its investors is self-storage firm Safestore (LSE: SAFE).
Perhaps we shouldn’t be surprised. After all, Safestore’s line of business is about as passive as it gets. The firm gets paid simply to keep our possessions protected and secure. This has allowed the company to grow dividends by a stonking 16% annually.
Then again, no investment is risk-free. Safestore faces plenty of competition in this fragmented space. Having got ahead of itself in the post-pandemic surge in markets, the shares are also down almost 25% in value in the last 12 months.
On balance however, I’d feel comfortable buying here. When interest rates settle and confidence returns to the housing market (increasing demand to store things temporarily), the stock should recover its mojo.
In the meantime, Safestore yields 3.7% for FY23.
