Fancy a £1,640 second income in 2025? These FTSE 100 and FTSE 250 shares could deliver it

With yields well above the FTSE average, these dividend stocks are tipped to deliver a blistering second income next year.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Middle-aged black male working at home desk

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Dividends are never, ever guaranteed. But based on broker forecasts, the following FTSE 100 and FTSE 250 shares are set to deliver a market-smashing second income in 2025.

The average dividend yield for Footsie shares stands at 3.6%. As you can see, the yields on these UK shares sail past this figure, and then some:

Dividend share2025 dividend yield
Legal & General Group (LSE:LGEN)9.9%
Greencoat Renewables (LSE:GRP)7.9%
ITV (LSE:ITV)6.9%
AVERAGE8.2%

If analysts estimates are right, a £20,000 lump sum investment spread equally across these stocks will produce a £1,640 passive income next year.

Should you invest £1,000 in Kainos 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 Kainos made the list?

See the 6 stocks

I’m confident, too, that they could deliver a large and growing dividend beyond 2025 as well. Here’s why I think they’re worth considering right now.

With a dividend yield just below 10%, Legal & General is tipped to be one of the FTSE 100’s most generous income stocks next year.

There is peril here. The predicted dividend for 2025 is covered just 1.1 times by expected earnings, below the widely accepted security benchmark of two times.

Theoretically, this means dividends could fall below estimates if profits disappoint. However, Legal & General’s stunning cash generation means it still looks in good shape to meet City expectations.

As of June, its Solvency II capital ratio was 223%. This is more than double what regulators require. It’s also higher than those of Aviva, M&G, and Phoenix Group, other high-yielding financial services stocks.

With interest rates falling, I’m expecting profits and dividends to steadily rise as consumer demand improves.

Greencoat Renewables

Renewable energy stocks like Greencoat Renewables don’t face the same cyclical dangers as the likes of Legal & General. Demand for their product remains stable from year to year.

Yet shares like this still carry threat. For example, power generation — and by extension, earnings and dividend payments — can suffer when solar radiation is poor and the wind fails to blow.

I believe this threat is reduced with this particular FTSE 250 operator, however. With assets spanning Ireland and much of Continental Europe, the impact of unfavourable weather in particular regions is greatly diminished at group level.

Greencoat Renewables is also highly cash generative, which bodes well for future dividends. Its net cash generation during the first half of 2024 was three times the amount of dividends it paid out.

ITV

Earnings at broadcaster ITV have slumped in recent years as advertising spending dried up. Weak ad sales remain a threat going forwards, though the danger is reducing as interest rates begin to fall.

Today, City analysts expect profits at the FTSE firm to rise strongly through to 2026 at least. A recovery in advertising budgets, continued progress at its ITVX streaming platform, and post-strike conditions at ITV Studios all underpin their strong projections.

Against this backcloth, dividends are tipped to jump too. And with predicted payouts covered 1.9 times by anticipated earnings, dividend estimates also look well protected.

A strong balance sheet also supports ITV’s tasty dividend estimates. The firm’s net debt to adjusted EBITDA ratio was just 0.9 times as of June.

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

Should you invest £1,000 in Kainos 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 Kainos 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.

Royston Wild has positions in Aviva Plc and Legal & General Group Plc. The Motley Fool UK has recommended ITV and M&g Plc. 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.

More on Investing Articles

Investing Articles

£20K invested in Tesla stock last April is now worth…

Despite all the bad headlines lately, Tesla stock has put in a storming performance over a 12-month timeframe. Is this…

Read more »

Investing Articles

If a 40 year old invests £600 a month in a SIPP, here’s what they could have by retirement

With no retirement savings at 40, an investor could put £600 a month into a SIPP and grow its value…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Why hasn’t its 9.9% yield boosted the Phoenix share price?

Phoenix Group has a dividend close to double digits, but saw a weak share price performance in recent years. Christopher…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing Articles

With average 10% yields, these mid-cap FTSE shares could supercharge a passive income portfolio

Some of the best passive income gems can be found on the UK's smaller indexes like the FTSE 250 and…

Read more »

A coin being dropped into a piggy bank
Investing Articles

As the Barclays share price tanks 19% in 2 days, is this a great buying opportunity?

As a trade war sends the Barclays share price into a tailspin, Andrew Mackie steps back to look at the…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Is Fundsmith Equity still a good choice for a Stocks and Shares ISA in 2025?

Many Britons hold the Fundsmith Equity fund in their Stocks and Shares ISAs. Is this still a good move? Edward…

Read more »

Investing Articles

Nvidia stock is down 24% this year. Time to buy the dip?

Christopher Ruane has been eyeing Nvidia stock as a potential addition to his portfolio for a while. Is a recent…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Down 25% since January, this resilient dividend stock’s catching my eye

Maintaining the UK’s rail, water, and energy infrastructure isn’t the most exciting business. But it has made this a solid…

Read more »