With Blue Monday behind us, I think there’s more optimism now to get cracking on making financial goals a reality for the future. Passive income is a great option that can help open the doors to more money if done correctly through sound investments. To that end, here are some FTSE 250 stocks that pay out income in the form of dividends.
A bright future
Two stocks that I like are both focused on renewable energy. These are the Bluefield Solar Income Fund (7.53%) and the NextEnergy Solar Fund (8.97%). The current dividend yields are included in brackets.
As the names suggest, both are focused primarily in investing in solar projects. The funds both allocate capital to infrastructure projects, which then generate revenue when the energy is sold to third-party grid users. Both also benefit from government grants and subsidies.
Quarterly dividends make both funds attractive to income investors. Even though there’s some capital growth associated with the assets held by the firms, it’s the dividend payments that really attract investors.
The risk is the fact that most of the assets are within the solar space. Even though both companies do have projects in other forms of renewable energy, these are minority interests. So if solar doesn’t turn out to be the future, these companies could be very exposed.
Finance but not banks
The other area I’m focused on within the FTSE 250 is financial services. Banks in particular have enjoyed a great couple of years thanks to rising interest rates. This has helped to boost the dividend payments too.
However, with interest rates looking to come down this year, I prefer to look for other areas within finance that could keep up the income payouts. To that end, I like abrdn (8.45%) and TP ICAP (7.02%).
The firms are quite different in nature. abrdn is an asset management company. The stock is down 17% over the past year after the assets under management fell in the summer report. However, this has acted to push up the dividend yield to very attractive levels. This is a risky stock, as if assets continue to fall then we could have a serious problem. Yet if interest rates fall I expect more money to be sent to abrdn, as investors are looking for ways to get better returns on their money.
TP ICAP is a broker that helps to facilitate trades for institutional clients. It typically does well during volatile market conditions. Given the backdrop of geopolitical tensions, wars, elections, and more for 2024, I think the firm could outperform.
Running the numbers
If I invested an equal amount in each company, my average dividend yield would be 8%. Let’s assume I could invest £150 in each company each month.
After a decade of receiving and reinvesting the dividends for a decade, my pot could stand at £111k. That would mean in the following year I could receive £740 on average, each month.
Of course, there’s no guarantee that the firms will keep paying out the same level of income for the next decade. But in terms of forecasting, that’s potentially what I could be looking at, which is very alluring.
