The FTSE 250 is a great place to go hunting for top dividend shares. Many top stocks have the sort of high yields that can supercharge an investor’s passive income.
Take the following dividend shares, for instance:
| Forward dividend yield | Dividend growth | |
|---|---|---|
| Custodian Property Income REIT (LSE:CREI) | 8% | +12% |
| ITV (LSE:ITV) | 7% | +1% |
| FTSE 250 | 3.3% | – |
You’ll see that the yield on these shares smashes the average for FTSE 250 shares. You’ll also notice that each three of these stocks is tipped to raise their annual dividend this year.
This is important to me as a long-term investor. I’m not only searching for big dividend yields today. I want companies that consistently grow their dividends year after year.
A growing dividend mitigates the impact of inflation, while also giving me a rising passive income stream. When reinvested, this income can help me compound wealth over time.
Pick #1
Property investment trusts like Custodian Property Income can be a great source of dividend income from year to year.
Real estate investment trusts (REITs) are designed to provide a decent cash stream for investors. In return for tax advantages, they pay a minimum of 90% of annual rental earnings to their shareholders.
This doesn’t guarantee a dividend, of course. Custodian’s exposure to cyclical sectors like retail, offices, and leisure means rent collections and/or occupancy may disappoint during downturns, hitting payouts in the process.
However, the firm’s large list of tenants helps to reduce this risk. It has 338 tenancies, and these have a weighted average unexpired lease term (WAULT) of just under five years, providing solid visibility.
At 77p, the company’s share price is trading at 21% below its estimated net asset value (NAV) per share of 97.5p. I think Custodian’s a top stock for consider for investors seeking a low-cost passive income.
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.
Pick #2
Commercial broadcasters like ITV face the ongoing threat of weak advertising sales in 2025. Poor economic conditions in the UK could see companies keep the taps turned down on their marketing activities.
Yet I figure this is baked into the company’s low price-to-earnings (P/E) ratio of 7.9 times. Combined with that huge dividend yield, I think it’s worth serious consideration.
As a long-term investor, I’m excited about ITV shares for two main reasons. With strike action in the US over, the outlook for its ITV Studios production arm is much improved. It can expect revenues here to rise steadily as broadcasters and streaming companies like Netflix seek to acquire new content.
I’m also impressed by the ongoing progress of its own ITVX streaming service. Total viewing hours here leapt 14% between January and December despite intense competition from other streaming services. I expect this strong growth to continue as ITV invests heavily in technology and programming.
With a net-debt-to-adjusted EBITDA ratio of below one, ITV has scope to continue investing for growth while also paying large dividends. I think it’s a top passive income share to look at.
