These are the 3 top-yielding FTSE 250 stocks in my passive income portfolio

Mark Hartley explains why these three mid-cap stocks make good additions to his passive income portfolio, despite lacking the stability of FTSE 100 shares.

| 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.

Image: 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.

FTSE 100 stocks tend to dominate my passive income portfolio because I trust them more for long-term gains. With huge market-caps and decades’ worth of business behind them, I feel more confident in their future.

However, there are a few FTSE 250 stocks I’ve added over time because I find their prospects appealing. Whether it’s a solid dividend track record or a competitive market position, these stocks have made their case to secure their place in my portfolio.

OSB Group

With a 7.72% yield, OSB Group‘s (LSE: OSB) the highest-yielding FTSE 250 stock on my list. I recently bought the stock because I like its valuation. Along with loans and savings accounts, this small British challenger bank offers specialist mortgage services.

Should you invest £1,000 in Legal & General 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 Legal & General made the list?

See the 6 stocks

Created with Highcharts 11.4.3OSB Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

But its exposure to the mortgage market also adds risk. Not only does it face tough competition from the big banks but could be hit hard by defaults if the economy tanks again. 

That may be why its price looks lower than most banks, at only 5.3 times forward earnings. And its price-to-book (P/B) ratio’s only 0.7. Revenue and earnings declined last year but forecasts for next year are good. Analysts expect the price to rise by around 30% on average.

It may be slightly riskier than some of my other bank stocks, but it shows promise. If I had the cash, I’d buy more shares today.

Primary Health Properties

Primary Health Properties (LSE: PHP) is my second-highest yielder, at 7.32%. As a real estate investment trust (REIT), it’s obligated to return 90% of profits to shareholders as dividends. This has helped to ensure it has an excellent track record, increasing dividends at an average rate of 3.4% a year since 2014.

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.

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

Property’s a slightly risky sector which has suffered recently under high inflation. This has dragged the share price down 37% in the past five years. The recent interest rate cuts are helping turn things around but it could fall further if inflation resumes.

For now, things look good, with earnings forecast to grow at 40% a year. If the price holds steady, the dividends should deliver decent returns next year. I don’t plan to buy more of the shares though as I have sufficient allocation in property.

ITV

ITV‘s (LSE: ITV) had a rollercoaster time since Covid, fluctuating wildly between 50p and 150p per share. Several takeover bids last month added to the fun, with the stock bouncing between 61p and 74p.

Created with Highcharts 11.4.3ITV PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

No offer has been accepted yet but regardless of whether it sells, the vote of confidence could give it a boost. The board believes it’s still on track to make record profits this year, attributing the recent slump to US writer strikes.

Analysts are generally optimistic, with Citigroup reiterating a Buy rating on 5 December. The stock’s fairly undervalued with a forward price-to-earnings (P/E) ratio of 9.5. However, earnings are forecast to decline next year which could threaten dividends.

But if it decides to sell, that’s all perhaps irrelevant to me as a shareholder. So far it’s been a good dividend earner with a 6.83% yield. So I’ll hold my shares and see what unfolds. 

Should you buy Legal & General shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy now

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.

Citigroup is an advertising partner of Motley Fool Money. Mark Hartley has positions in ITV, OSB Group, and Primary Health Properties Plc. The Motley Fool UK has recommended ITV and Primary Health Properties 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.

We think earning passive income has never been easier

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »