2 FTSE 100 and FTSE 250 shares and an ETF to consider for a supercharged passive income!

Dividend investors can find a wide range of top stocks both inside and outside the FTSE 100. Here are three to consider.

| 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.

Young woman holding up three fingers

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.

Looking for ways to make a market-beating dividend income? Here are two high-yield FTSE 100 and FTSE 250 shares — along with a big-paying exchange-traded fund (ETF) — I feel are worth serious consideration right now.

The ETF

The Invesco US High Yield Fallen Angels ETF (LSE:FAHY) doesn’t, unlike most London-listed funds, invest in local or global equities. Instead, its portfolio’s loaded with below-investment-grade bonds.

Today, more than 97% of the fund’s tied up in debt instruments with ratings of BB or B. Some of the corporate bonds it holds are from medical specialist CVS Health, clothing manufacturer VF Corp and media giant Paramount Global.

Should you invest £1,000 in Chemring Group Plc 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 Chemring Group Plc made the list?

See the 6 stocks

Why’s this important? A focus on riskier bonds obviously comes with a higher level of risk. But the higher yields these bonds subsequently offer also mean the fund’s dividend yields are substantially above the ETF average.

For 2025, this stands at a very healthy 7%. And with 87 different holdings, the fund’s structured to cushion the impact of potential defaults on overall investor returns.

The FTSE 100 share

Now, BAE Systems (LSE:BA.) doesn’t offer up the same sort of eye-popping dividend yields as this. For 2025, its yield is a healthy-if-unspectacular 2.8%.

Yet I believe the defence giant remains a top-tier dividend stock to consider. As the chart shows, the dividend on BAE Systems shares has risen every year for more than a decade. This has allowed investors to offset the impact of rising inflation on their wealth.

BAE Systems' dividend history
Source: DividendMax

BAE Systems’ progressive dividend policy is thanks to its impressive cash flows and the dependable nature of defence spending. Even during economic downturns, the Footsie firm can expect new orders for its equipment to keep rolling in (its order book was a record £74.1bn as of last summer).

Past performance isn’t always a reliable guide of future returns however. In the case of BAE Systems, a range of problems, from supply chain issues and rising costs to disappointing project execution, could impact future earnings and dividends.

But, on balance, I’m optimistic the blue-chip weapons builder will remain an impressive passive income share.

The FTSE 250 stock

As a real estate investment trust (REIT), Urban Logistics (LSE:SHED) is set up to provide a steady flow of dividends.

Under sector rules, companies of this type must pay a minimum of 90% of annual rental profits out to shareholders. That’s in exchange for the favourable tax environment they enjoy.

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.

This doesn’t necessarily guarantee a large and stable income over time. The trust’s weighty exposure to cyclical sectors (like parcel services and retail) could leave earnings, and therefore dividends, vulnerable during economic downturns. Higher interest rates also have an impact on profits.

But on balance, I think Urban Logistics is pretty rock solid for dividend income. Like the aforementioned ETF, it’s well diversified to limit the risk of tenant defaults on overall returns (its top 10 tenants account for just 32% of total rents).

On top of this, Urban Logistics has long-term contracts in place to limit the threat of falling occupancy. As of September, its weighted average unexpired lease term (WAULT) was 7.6 years.

For this financial year (ending March), the dividend yield on Urban Logistics shares is 7.5%. This nudges higher to 7.6% for next year.

Should you invest £1,000 in Chemring Group Plc 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 Chemring Group Plc 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 no position in any of the shares mentioned. The Motley Fool UK has recommended BAE Systems. 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 »