I’m looking for Stocks and Shares ISA investments to line up for the winter, and I see quite a few FTSE 250 dividend yields that I really like the look of right now.
They’re mostly financial stocks, though. And the reason I might keep away from investment firms like abrdn and Ashmore Group, with their big dividends, is because I already have investments in the finance sector.
So with diversification in mind, I’ll look for other tempting choices instead.
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Supermarket cash
I could buy Tesco shares, and pocket a dividend yield of 3.4%. It’s not a big yield, but I think it should be relatively safe. Well, as safe as a dividend can be, bearing in mind they’re never guaranteed.
But why not go for real estate investment trust Supermarket Income REIT (LSE: SUPR) instead, as a way into a truly essential sector?
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It aims to provide dividend income, with forecasts showing an 8% yield, plus room for capital growth.
The above share price chart shows that the capital growth aim hasn’t gone well of late. The commercial property market still looks a bit shaky. So I think there’s a fair risk of further poor share-price performance.
But I buy shares with the aim of holding for at least a decade, ideally longer. And until I want to sell, the share price won’t matter. And I’ll be happy to keep taking the dividend cash. As long as it holds up, that is.
A good wind
I don’t have anything in the renewable energy business, and my eye has fallen on Greencoat UK Wind (LSE: UKW). It runs as a REIT, but of a rather different nature. It owns onshore and offshore wind farms.
It’s a profitable business too. At H1 results time in July, we saw £165.4m in net cash generation in the half.
In the period, Greencoat bought back 32 million of its own shares, boosting the returns created by its dividends. Forecasts suggest the dividend should yield 7.2% for the full year.
My biggest fear, I think, is that Greencoat is doing especially well while energy prices are high. But we could be in for a shaky spell when prices start coming down some more, as we expect them to do.
Health dividends
My third choice is yet another REIT, Primary Health Properties (LSE: PHP), with a forecast 6.7% dividend yield.
I wouldn’t worry about being too heavy in REITs, though, as these three businesses are very different.
Primary Health owns GP surgeries and other purpose-built healthcare facilities. And it lets them on long-term leases, to clients including the NHS.
We don’t really know how the new government will approach the NHS yet, mind. “It’s broken, we have to fix it” is about all they seem to be saying as far as I can make it out.
And again, the chart appears to show how REITs are out of favour, so that’s a risk too.
Still, with interim results released in July, new CEO Mark Davies spoke of the trust’s anticipated “30-year anniversary of continuous dividend growth in 2026“. He seems optimistic that it’ll make it.
