There is no shortage of great dividend stocks across the FTSE 250 index, but there are two in particular I would like to draw your attention to today: Assura (LSE: AGR) and Big Yellow Group (LSE: BYG).
Assura, a real estate investment trust that specialises in the healthcare sector, has proved rich pickings for income chasers in recent times as it has almost doubled dividends over the past five years. And City analysts believe its progressive payout scheme has much more in the tank.
Supported by an estimated 10% earnings improvement in the year to March 2018, the company is expected to raise the dividend to 2.5p per share from 2.25p last year. And this results in a giant 4.2% yield.
And in the upcoming year a 2.7p dividend is being forecast, helped by a predicted 6% profits advance and a figure that yields a brilliant 4.5%.
In rude health
It isn’t difficult to see earnings and thus payouts continue streaming higher at Assura for a long time to come either.
Suffice to say the business of healthcare is one of the ultimate defensive investment segments, providing the sort of earnings visibility that is critical for strong and sustained dividend expansion.
But Assura isn’t prepared to rest on its laurels and is expanding at a furious rate to light a fire under shareholder returns. Indeed, it acquired 22 medical centres and one development during the October-December quarter alone, taking the number of medical sites on its portfolio to a shade under 500.
Assura may be expensive, the firm carrying a P/E ratio of 21.3 times for the year starting April 2019. But I believe the firm’s exceptional defensive characteristics merit such a weighty premium.
Big Yellow is another great pick for dividend investors in spite of an also-elevated valuation (it currently deals on a forward P/E rating of 22.1 times for the fiscal year beginning April 2018).
Investec brokers are expecting the self-storage experts to report a 10% earnings rise in the 12-month period closing in a couple of weeks. And this is expected to keep dividends chugging northwards, with last year’s 27.6p per share reward predicted to rise to 30.6p, resulting in a 3.5% yield.
And next year, the payout is expected to move to 31.6p, helped by an anticipated 3% profits improvement and nudging the yield to a delicious 3.6%.
As my Foolish colleague Peter Stephens recently commented, some have questioned Big Yellow’s near-term profits outlook as the UK economy slows. But I for one remain convinced by the company’s growth prospects — we are a country of hoarders and space is at a premium in this land, after all. The business is well placed to capitalise on this trend, particularly as it expands its store network in urban spaces the length and breadth of the country.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.