Is the FTSE 250 better than the FTSE 100 for dividends? As London’s leading index, the FTSE 100 gets most of the attention from dividend hunters. Folks who chase a big cash return from their portfolio naturally turn towards those massive global enterprises. But the FTSE 250 has a strong claim to offer better yields.
As the leaves change colour and November arrives, the FTSE 100 offers five dividend yields above 7% at the moment. The FTSE 250, on the other hand, offers 26 with several of the yields going a good sight higher than that. Here are three that I think an investor may wish to consider today.
Big yields
Media company ITV pays a dividend of 7.18% at the moment. Forecasts suggest this yield will hold and even rise during 2026. The 68p share price is seen as something of a bargain by some analysts too. One analyst’s 12-month target of 100p would mean a 47% increase!
The old ‘Channel Three’ is struggling with the change in viewers’ habits. Fewer people are watching terrestrial TV for one. But the firm does make a lot of shows viewable online on its own ITVX service and for global behemoth streaming services too. The company has made a number of productions for Netflix, for instance. This might show it has a future in the digital age.
Harbour Energy pays an 8.95% dividend yield right now. The dividends are forecast to increase in the next two years, making this one of the biggest dividend payers on the London Stock Exchange.
The firm drills for oil and gas in the North Sea (and other regions), making it an independent alternative to the big dogs Shell and BP. It also offers a much higher yield at present than the two oil majors. A green energy transition does pose questions about how much longer operations can be sustained, however.
A buy?
Primary Health Properties (LSE: PHP), a REIT that deals in healthcare property, pays a 7.44% yield at present. Forecasts look excellent with a bump up to a 9.06% yield predicted by 2026. Because higher yields are sometimes unsustainable and at risk of being cut or cancelled, an upwards direction of the dividend payments is just as important as the percentage return.
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Further evidence that this yield is no flash in the pan comes from its dividend streak. Continuing to pay out even during the 2020 pandemic and 2008 recession are good indicators. Well, PHP did just that with an unbroken streak of over 25 years of dividends.
The business itself is centred around steady, stable income. It rents out things like medical centres and GP surgeries on long leases. With an ageing population, I expect this to be a growing market in the years to come too. Rents are often inflation-linked, which provides even more safety.
The large property portfolio does mean a lot of debt. This can bring up issues in today’s higher interest environment. Overall though, I think this is a textbook example why dividend seekers may wish to expand their horizons past the FTSE 100.
