Searching for income-generating stocks? Look no further than the FTSE 250. Here, I highlight three high dividend shares that deserve careful consideration.
Tritax Eurobox
Property stocks could continue to suffer if interest rates remain around recent highs. But for Tritax Eurobox (LSE:EBOX) — which lets out distribution and warehouse assets across Mainland Europe — things could be looking up.
Dovish comments from the European Central Bank (ECB) this week suggest a rate cut could be coming as soon as June. This would provide net asset values (NAVs) at companies like this with a big boost.
I think Tritax Eurobox could be a strong performer over the next decade. Demand in this property class is strongly growing thanks to phenomena like evolving supply chain management, growing urbanisation, and the steady rise of e-commerce.
And supply is failing to keep up, which in turn is driving rents higher. Like-for-like rents here rose 4.5% in the 12 months to September, up from 3.6% in the prior year and 2.8% the year before that.
A weak development pipeline suggests this trend should continue for the next several years at least. Today Tritax Eurobox carries a huge 8.5% dividend yield.
Supermarket Income REIT
As the name suggests, this FTSE 250 share is a real estate investment trust (REIT). So in exchange for certain tax advantages, it has to pay at least 90% of annual rental earnings out to its shareholders by way of dividends.
This means the forward yield here sits at a vast 8.2%.
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Supermarket Income REIT (LSE:SUPR) lets out more than 50 properties to some of the grocery sector’s giants like Tesco, Sainsbury’s, and Morrisons. This strategy provides excellent earnings visibility, as rent collection remains unchanged at all points of the economic cycle.
The company also has these tenants tied down on long contracts. The average lease here has another 13 years to run.
While high interest rates are raising its borrowing costs higher, I think it’s an excellent defensive share for these uncertain times.
Assura
Like Supermarket Income, Assura (LSE:AGR) is a UK-listed REIT. Its focus is on the provision of medical facilities, a property sector which also has significant demographic drivers.
As with grocery outlets, the country’s rising population will call for more primary healthcare facilities in the coming years. But demand for doctor surgeries and the like could grow even faster, in my opinion, given the surging number of older people in Britain.
Assura is well placed to service this need. It owns 612 primary medical facilities and is expanding rapidly (it has delivered 101 new assets in the past two decades).
Changes to NHS policy could hamper profits in the future. But today, the potential benefits of owning this share could well outweigh the risks. Its forward dividend yield stands at 8%.
