With 7.4% yields, I think these are two of the best dividend stocks on the FTSE 250

I’m looking for the best FTSE 250 dividend stocks to buy in 2024. I like the look of the yields on these mid-cap shares right now, but are they reliable?

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The average dividend yield on the FTSE 250 is 3.2%, slightly below the FTSE 100. However, I like the higher growth potential in smaller-cap stocks.

The highest-yielding stocks are Ithaca Energy at 16.5%, and Diversified Energy Company (DEC), at 14.61%. But Ithaca has only paid dividends for a year and DEC recently announced a dividend cut from next year that brings the yield down to 7.2%.

Earlier this year, my Vodafone shares fell sharply and dividends were cut. Not only was I down on the share price but I no longer had the dividends to make up the deficit. So I offloaded them at a loss and promised myself I wouldn’t make that mistake again!

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

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High yields can be misleadingly attractive. So now I like to look for more concrete evidence of long-term reliability.

These two stocks satisfy my criteria in that respect.

Greencoat UK Wind

Oil remains the fuel of choice today but the winds of change are blowing and renewable energy is making powerful strides forward. Greencoat UK Wind (LSE: UKW) is at the forefront of wind power generation, having just received a powerful boost from the new Labour government.

With onshore wind farm construction now given the green light, the firm forecasts a significant increase in market opportunities. It’s paid a consistently increasing dividend since 2013 and currently has a yield of 7.4%. The price, at 143p, is up 8.7% this month, having traded between 130p and 150p for the past year.

Created with Highcharts 11.4.3Greencoat Uk Wind Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

But nature is a fickle beast and wind is unreliable. Calm weather combined with an electrical fault at a major site resulted in lower earnings this year. With free cash flow falling from £204m to £165m, dividend coverage dropped by 25%. So far, payments have been reliable but that does add an element of risk.

Still, I trust in its future so I plan to buy the shares as soon as they become available on my broker platform.

Primary Health Properties

Primary Health Properties (LSE: PHP) is a real estate investment trust (REIT) that invests in health facilities.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

It’s been paying dividends for over 20 years, increasing from 1.7p to 6.7p at a rate of 3.25% per year. Over the past five years, the yield has increased from 4% to 7.4%. That would be good, had the share price not dropped 28% in the same period.

Fortunately, things look to be turning around. Over the past year, it traded mostly flat as inflation settled — and it has a history of growth, increasing 533% between 2000 and 2020. If things improve as they did after 2008, I expect another decade of growth.

Created with Highcharts 11.4.3Primary Health Properties Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

However, if stubborn interest rates stifle the housing market, the REIT could suffer further losses. It already carries £1.34bn in debt, only slightly less than its equity. That puts it in a precarious position if earnings don’t improve.

Once again, I believe they will, so I recently bought the shares.

Other great income options

It’s best to have a diversified portfolio of stocks to shield against sudden and unpredictable market mishaps. Even the most reliable companies have bad days!

A few other FTSE 250 income stocks that I’ve added to my portfolio recently include TP ICAP and ITV. They both have yields between 6% and 7% and their prospects look good to me.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

See the 6 stocks

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.

Mark Hartley has positions in ITV, Primary Health Properties Plc, and Tp Icap Group Plc. The Motley Fool UK has recommended Greencoat Uk Wind Plc, ITV, Primary Health Properties Plc, Tp Icap Group Plc, and Vodafone Group Public. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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