With this in mind, here are two passive income ideas from the FTSE 250 worth exploring for an ISA.

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.

Infrastructure

3i Infrastructure (LSE:3IN) is an investment trust that has stakes in unlisted infrastructure firms. Through these, it aims to provide shareholders with a medium-term total return of 8%-10% per year, including a progressive annual dividend.

To give an example, it first invested in Belgium’s TCR in 2016. Since then, this lessor of airport ground support equipment has grown tremendously, even with Covid throwing a huge spanner in the works. It now operates at more than 237 airports in over 24 countries.

In March, 3i Infrastructure sold its 71% stake in TCR for expected net proceeds of €1.14bn, crystallising around a 19% per annum return over the life of the investment. Needless to say, that’s excellent.

With €300m of this profit, it plans to take a majority stake in the Lefdal Mine Datacenter in Norway. It says this data centre campus has “80 megawatt of fully let capacity, 10-year availability-based contracts across its customer base, and an attractive earnings growth outlook“.

Unfortunately, one big fly in the ointment here is DNS:NET, a German telecoms provider. The trust’s currently assessing restructuring options for this holding, but there’s a risk it will be written down to zero when FY26 results are reported in July. 

Despite this, 3i Infrastructure is still on track to deliver a 13.45p dividend. This would represent a 6.3% increase. For FY27, which has just started, analysts expect the dividend to rise to 14.3p.

At the current share price, this translates into a forward dividend yield of 4.3%. For a well-run infrastructure fund whose portfolio firms’ debt is mainly fixed rate or hedged, that’s an attractive starting yield. 

Healthcare landlord

The second passive income idea is Primary Health Properties (LSE:PHP), which is the UK’s largest pureplay healthcare REIT. It has a £6bn portfolio of 1,142 properties, including GP surgeries, medical centres and private hospitals.

From these, it receives rent, most of which is distributed to shareholders in the form of dividends. 76% of rent is currently funded directly or indirectly by the UK and Irish governments, with another 13% coming from established private hospital operators.

Last year, adjusted earnings per share rose 4% while the dividend edged up 3% to 7.1p. For this year, Primary Health Properties is confident that it can increase this another 3% to 7.3p.

Assuming this is met, which of course is never entirely guaranteed, it would be the trust’s 30th consecutive year of dividend growth.

What’s more, after falling 11% since February, the stock’s forward-looking yield has risen to a very attractive 8%.

Of course, no company is perfect, as a disappointing 36% decline in its share price over five years shows. REITs are highly influenced by interest rates, so if borrowing costs head higher this adds risk.

However, with an ageing population and the government rolling out more community-based care, the long-term prospects for the healthcare sector look bright.

Plus, the REIT has teamed up with pension fund giant USS to grow its portfolio without shouldering all the capital.

The post 2 passive income ideas for a Stocks and Shares ISA appeared first on The Motley Fool UK.

Here’s how investing £150 per month for a newborn could lead to quite a surprisingly large sum just under two decades later.

JISAs are fantastic

First though, I think it’s worth pointing out some of the benefits of a JISA. Because while only a parent or legal guardian can open the account for a child under 16, relatives or even friends can also pay money into the account once it’s open.  

For the 2026/27 tax year, they can collectively contribute up to £9,000 per year. And just like a standard Stocks and Shares ISA, there’s no tax on returns or dividends. 

As mentioned, the real benefit here is that the money is locked away. The child cannot touch the cash until they turn 18. At this point, the account automatically converts into an adult ISA and the child gets full control.

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Long-term investing

Let’s assume somebody starts with a £1,000 lump sum in the account, then invests a further £150 each month thereafter. This would equate to £1,800 per year.

By 2045, just over 18 years away, the JISA would grow to around £85,475 (ignoring trading fees). This assumes a 9% annual return, which I think is achievable given the total annualised return of the FTSE 100 has been about 9.4% over the past decade.

Of course, there’s no guarantee that return will continue in future. But with many high-quality UK shares generating significantly more than 9.4% per year, I see this level of return as realistic.

Beautifully boring

What sort of stocks should a JISA custodian think about buying? Well, given we’re investing for our loved one, I wouldn’t take any unnecessary risks with penny stocks.

Instead, I would want to focus on established, dividend-paying companies with solid track records. One that strikes me as a great example is 3i Infrastructure (LSE:3IN).

This is a FTSE 250 company that invests in private businesses that provide essential infrastructure services. Basically, the sort of things that would make a 10-year-old yawn, but help the firm with its aim to deliver a total return of 8% to 10% per year over time.

3i Infrastructure has a strong track record of selling assets at a significant premium once they have matured. Earlier this month, it agreed to sell its 71% stake in airport equipment firm TCR for €1.14bn (approximately a 50% uplift from almost a year ago).

With the proceeds, it plans to repay drawings from its revolving credit facility and invest in new assets. However, its £212m investment in German fibre operator DNS:NET is likely to be written down to zero. So the risk is that it doesn’t always get things right.

However, I see this failure as a rare outlier, as the rest of the portfolio is performing strongly. The forecast dividend yield is 4%, and 3i Infrastructure has raised its dividend every single year for nearly two decades.

Overall, I think this is a high-quality compounder worthy of consideration.

The post Here’s what £150 a month in a Junior ISA could be worth by 2045… appeared first on The Motley Fool UK.

Here are a pair of FTSE 250 dividend shares that I think income investors might want to assess further.

Banking

Let’s start with the highest-yielder — TBC Bank Group (LSE:TBCG). The Georgian bank stock is offering a very attractive 7.1% dividend yield, which towers above the FTSE 250’s 3.5%.

This comes despite a 200% share price surge over the past five years!

The reason for this outperformance is exceptionally strong revenue and earnings growth, driven by the booming Georgian economy. It has benefitted from rising tourism in Tbilisi, a pro-business environment, and a huge influx of wealthy migrants (primarily from Russia, Belarus, and Ukraine) following the Ukraine invasion. 

TBC has also aggressively expanded into nearby Uzbekistan, which is another part of the growth story. Its digital bank there now has millions of users.

Yet, despite this geographic expansion, what happens with the Georgian economy is key. If economic growth suffered a setback, this would likely see earnings dip significantly across the banking sector. Adverse regulatory changes may also arise in future.

On balance though, I like the risk/reward setup here. The stock is trading at just 4.8 times forward earnings while offering that juicy 7.1% forecast dividend yield.

Plus, most economists see Georgia growing strongly for at least the next two years. While no payout is nailed on, TBC’s is very well-covered by expected earnings, suggesting it’s safer than most.

Infrastructure

Next, I want to highlight 3i Infrastructure (LSE:3IN). This investment company has diversified assets across digital infrastructure (fibre networks, for example), renewables, and transportation logistics.

These businesses tend to throw off reliable cash flows, which support regular dividend growth. Given this safer profile, the forward-looking yield is lower at 3.7%.

However, the portfolio is high-quality and demonstrating strong growth. In the six months to the end of September, 3i Infrastructure generated a 7.4% total return on opening net asset value (NAV).

This exceeded its target total return of 8% to 10% per year, meaning the portfolio was “performing ahead of expectations“.

A key driver has been TCR, a leader in aviation ground support equipment. Think vehicles we see on the tarmac from airport lounge windows (baggage loaders, aircraft tugs, passenger stairs, and so on).

Airports don’t want to own and repair this essential equipment, so they lease it from TCR on long-term contracts. These are the sort of unsexy-but-reliable businesses that 3i Infrastructure specialises in.  

That said, the portfolio is quite concentrated, with the top three holdings (TCR, ESVAGT, and Infinis) making up more than 40% of assets. So if anything went awry at one of these, it would likely have an outsized negative impact on the portfolio.

As things stand though, the long-term dividend growth potential looks very solid to me. The infrastructure specialist specifically targets markets with structural growth drivers, like decarbonisation and data connectivity.

Meanwhile, the firm is on track to deliver its FY26 dividend target, which is a 6.3% increase on the year before.

And the good news is the shares are currently trading at a 6% discount to NAV, which I think offers a nice entry point to consider.

The post 2 cheap dividend shares to consider for passive income in 2026 appeared first on The Motley Fool UK.

High-quality infrastructure assets

Let’s start with 3i Infrastructure (LSE:3IN). This investment trust has stakes in 12 assets spanning areas including energy networks, fibre broadband, and transport infrastructure. These generate long-term, often inflation-linked cash flows, underpinning predictable income. 

Given this stability, the forward-looking dividend yield isn’t particularly high at 3.8%. However, 3i Infrastructure has delivered 14% annualised returns since going public nearly 20 years ago. So this is a high-quality income trust.

Now, one risk here is that the portfolio is quite concentrated. For example, it has a chunky 16.5% weighting towards TCR Group, which is Europe’s largest independent manager of airport ground support equipment. So were problems to emerge at TCR, this would be an issue for 3i Infrastructure.

However, in the six months to 30 September, total income and non-income cash increased by 18%, setting the trust up for a 6.3% hike in the annual dividend. The long-term dividend growth prospects look very strong.

Right now, investors can pick up shares of the trust at a very attractive 9.2% discount to net asset value (NAV).

Our largest investment, TCR, continues to outperform expectations and deliver significant value growth. We remain confident in the long-term growth potential of the portfolio. The Company is on track to deliver results ahead of its return target for this financial year. 3i Infrastructure.

Income from Asia

Heading eastwards now with Schroder Oriental Income Fund (LSE:SOI). I find this trust’s investment proposition attractive: “Asian companies are increasingly world-leading and returning cash to shareholders. The Schroder Oriental Income Fund aims to tap into the Asian income story and help investors diversify their dividends“.

Top holdings here include Taiwan Semiconductor Manufacturing (TSMC), Samsung Electronics, and Singapore Telecommunications. It also has a smattering of Australian dividend stocks including Telstra Group (Australia’s biggest telecoms provider).

The share price is up 20% year to date. Despite this, the trust still offers a decent 3.7% starting yield.

Of course, investors would have to take the long view here, as US tariffs aren’t ideal for many Asian firms in the near term. There could be some volatility in 2026 if trade tensions flare up once more.

Again though, I see this trust as having solid dividend growth prospects. By 2050, emerging Asia could account for more than 50% of global growth. Plus, with holdings like leading chip foundry TSMC and China’s NetEase (a video game powerhouse), I think the share price will also do well.

Schroder Oriental Income Fund is currently trading at a near-5% discount to NAV.

Foolish takeaway

As mentioned, these two trusts don’t have huge 10%+ yields like some others in the FTSE 250 today. Yet through a combination of growth and income, I reckon considering them can build wealth inside a diversified ISA portfolio.

The post 2 investment trusts from the FTSE 250 worth digging into for passive income appeared first on The Motley Fool UK.

Here are UK two stocks that have a solid track record of rising payouts. And while there’s no guarantee that their impressive runs will continue, I reckon both are worth checking out today.

Coca-Cola HBC

Let’s start with Coca Cola HBC (LSE:CCH). This is a FTSE 100 bottling partner for the US soft drinks giant, selling the likes of Fanta, Schweppes, Sprite and Coca-Cola across 29 nations in parts of Europe, Asia and Africa.

The stock yields 2.4%, which might not seem very attractive. But that jumps to 3.3% on a forward-looking basis, with a near-10% rise forecast next year. This is broadly in line with the past few years, which have seen the payout grow by a compound annual rate of 10.7%.

In H1, organic revenue grew 9.9% to €5.62bn, with sales of energy drinks jumping 30%. The company sells leading energy brands like Monster and Predator, as well as Costa through its coffee segment.

For the full year, Coca-Cola HBC expects growth at the top end of its original forecasts, for both organic revenue (6%-8%) and operating profit growth (7%-11%). That looks solid to me, though sticky inflation and ongoing consumer spending pressures add risk.

Also, the firm operates in Egypt, and a consumer boycott of US brands could grow there depending on what happens with the Israel-Gaza conflict.

On balance though, I think this is an excellent dividend growth stock. The portfolio of top-tier brands should offer both resilience and diversification, as well as long-term growth opportunities across developing and emerging markets.

The valuation also doesn’t look stretched to me, despite the share price rising 33% over the past year. Based on next year’s forecast, the stock is trading at 14 times forward earnings.

3i Infrastructure

Moving onto 3i Infrastructure (LSE:3IN), this FTSE 250 investment trust sports a higher yield of 3.6%. But what does it do?

3i Infrastructure owns large stakes in 11 assets across the UK and Europe. These range from companies providing fibre-optic cables under the sea to renewable power generation (like biogas) and services for offshore wind farms. So it targets themes like the energy transition and digitalisation. 

This year, the dividend is forecast to rise 6.5% to 13.5p per share, then another 5.8% to 14.2p. This puts the forward yield at 4%.

Risks include interest rates staying higher for longer than expected, or even rising. In this scenario, debt servicing costs for portfolio companies may increase. This wouldn’t help investor sentiment for infrastructure assets.

Still, I think the long-term dividend prospects remain solid here. The trust has expert management in the form of the FTSE 100’s 3i Group, and a strong long-term record of creating value.  

Reflecting this, the trust has traded at a premium to net asset value (NAV) in the past, meaning investors were willing to pay up for quality. Right now though, the shares are trading at a 9.5% discount to NAV. I think this offers an attractive entry point to consider investing. 

The post 2 dividend growth shares offering a rising passive income stream appeared first on The Motley Fool UK.

Here, I’ll spotlight two dividend-paying investment trusts that I think are worth checking out for income.

136 years old

Established in 1889, Merchants Trust (LSE:MRCH) is one of the UK’s oldest investment trusts. It’s listed in the FTSE 250 and aims to provide above-average income growth, as well as long-term capital appreciation.

Merchants holds 53 dividend stocks, including FTSE 100 staples such as GSK, Lloyds, Shell and BP. However, it isn’t afraid to bank profits and take positions in lesser-known companies.

For example, it recently trimmed strong performers including British American Tobacco, Barclays and Burberry. With the proceeds, Merchants started a new position in MONY Group, the company behind websites such as MoneySuperMarket and MoneySavingExpert.

Portfolio manager Simon Gergel says MONY “is attractive, given potential future growth and efficiency opportunities. This is backed by a strong balance sheet, healthy cash generation and a 6% dividend yield.”

The fact that Merchants’ portfolio is full of UK stocks adds some risk, because the economy is currently in a fragile state. Some of the holdings might struggle in this tough environment, resulting in weaker earnings and dividend growth.

The flip side to this, of course, is that tons of UK shares are cheap. And this inevitably creates opportunities, as Gergel points out: “We are finding numerous cheap UK companies to invest in, especially among the medium-sized businesses. These have been largely shunned by investors and many are offering compelling value, even allowing for subdued domestic growth in the short term“.

In this spirit, Merchants recently added three building-related companies: building products supplier Marshalls, housebuilder Barratt Redrow and building materials distributor Grafton.

The stock sports a decent 5.4% dividend yield. And it’s currently trading at an 8.2% discount to net asset value (NAV), suggesting there’s solid value here.

Of course, no dividend is guaranteed. But I find it encouraging that Merchants has increased its annual payout for 43 consecutive years.

Infrastructure

3i Infrastructure (LSE:3IN) is also in the FTSE 250, but has stakes in unlisted infrastructure companies across the UK and Europe. These range from offshore wind vessels and fibre communications networks to biogas plants.

One immediate risk here is that these are illiquid, private infrastructure assets. In other words, they can’t be easily offloaded if something goes wrong, and the portfolio’s quite concentrated (just 11 companies).

However, infrastructure assets tend to generate stable cash flows, and last year the dividend increased 6.3% to 12.65p per share. For this year (FY26, which ends in March), the payout’s expected to rise another 6.3% to 13.45p. Then goes up to 14.2p next year.

This put the forward dividend yield at a respectable 4%.

3i Infrastructure has a strong track record of successful investment exits. Since going public in 2007, it has generated a 14% annualised NAV total return.

The trust’s excellently managed by the FTSE 100’s 3i Group, which has a 29% stake. And it’s currently trading at an 8.6% discount to NAV, suggesting value is also on offer.

The post 2 top UK dividend stocks offering effortless passive income appeared first on The Motley Fool UK.

What’s more, this income would be tax-free inside a Stocks and Shares ISA, and the same goes for any capital gains. Few things in investing are genuine no-brainers — I’ve learnt that the hard way — but I would say an ISA is. 

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. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Compounding

How I see it, someone has basically two routes to aim for that £1,500 a month from an ISA portfolio in retirement. 

There’s the 4% withdrawal rule, which suggests an investor can safely withdraw around 4% a year without (in theory) running out of money. To get to £18,000 a year, they would need roughly £450,000 invested.

Then there’s living off dividends (true passive income). In this case, an investor doesn’t need to sell shares because the portfolio throws off enough dividends to pay £18,000 a year.

Neither approach is perfect. The 4% rule isn’t really passive income, as it depends on selling down the portfolio gradually. And while the second strategy leaves the capital intact for loved ones, it relies solely on dividends, which are never guaranteed.

In reality, most retirees will probably mix the two. They’ll take dividends as they come, as well as small withdrawals when needed (ideally when markets are high). 

The £450,000 could be reached by investing £500 a month for 25 years. This assumes an 8% average return, with dividends reinvested to fuel compounding magic. 

High-quality assets

One UK stock I think is worth digging into is 3i Infrastructure (LSE:3IN). This FTSE 250 investment trust has controlling stakes in 11 assets across Europe and the UK. These include green energy service providers and fibre communications network firms.

The top portfolio position is Belgium’s TCR, which is the largest independent lessor of airport ground support equipment. It operates in more than 230 airports across 20 countries, and most readers have probably encountered its kit. Think aircraft stairs, baggage carts nipping about, and those tractors that push or tow planes.

Now, one thing to note here is that the portfolio is quite concentrated, with TCR accounting for around 16.5% of it. The second-largest holding — Denmark’s ESVAGT, which supplies service vessels to the offshore wind and oil and gas sectors — also has a meaty 15% weighting.

If any of these key holdings ran into trouble, this might be a problem.

However, these assets have tended to generate reliable cash flows. And since going public in 2007, 3i Infrastructure has served up a 14% annualised net asset value (NAV) total return. So it has a fantastic long-term record.

Last year, the trust hiked its dividend by 6.3%. And it expects a similar rise this year. The forecast dividend yield is around 4%, and the shares are trading at a 9% discount to NAV.

To my mind, there’s decent value on offer here. I think it could help contribute towards the 8% target return inside a diversified ISA.

The post How much do you need in an ISA to aim for a £1,500 monthly passive income? appeared first on The Motley Fool UK.

Always needed

3i Infrastructure (LSE: 3IN) owns stakes in European and North American businesses that operate and manage assets in areas such as energy and utilities, transportation and communications. The fact, demand for things such as water and waste management and telecom towers is about as steady as it gets, meaning the £3.2bn-cap can provide investors with a stable income stream.

Right now, the shares yield a forecast 3.8%. That’s more than an investor would get from simply buying a fund that tracks the UK’s mid-cap index.

Of course, operating in a defensive part of the market doesn’t mean those dividends are ever guaranteed. Arguably the biggest risks here are things that management has absolutely no control over, such as inflation, interest rates and commodity prices.

Capital gains have also been modest over the years. So those looking for a nice dollop of growth to accompany that income might wish to consider other stocks as part of a diversified portfolio.

Meaty dividends

Meat supplier Cranswick (LSE: CWK) might be worth looking at. It’s another firm that’s consistently hiked dividends year after year. But the business has also delivered stellar share price growth over a very long period. And that’s Fool UK’s preferred time horizon when it comes to judging the merits of an investment.

There have been wobbles along the way, to be sure. Between August 2021 and October 2022, the stock fell roughly 35% in value as higher costs squeezed margins. That sort of drop’s worth bearing in mind given the shares currently change hands at a not-exactly-cheap price-to-earnings (P/E) ratio of 19 and inflation’s climbing again.

One other thing to note here is that the dividend yield of 2% is on the low side. However, that income will still compound over time. And personally, I much prefer a company to be disciplined with its capital over one that is offering high-but-stagnant distributions, possibly due to poor trading. The latter tends to be cut eventually.

Strong growth

A final dividend growth stock that might be one to investigate further is Morgan Sindall (LSE: MGNS). Investors in the housing and construction services provider will have enjoyed substantial hikes in recent years (ignoring the pandemic-related anomaly that was 2020).

The forecast yield for FY25 stands at 3.3% — on par with the average in the FTSE 250. But note that this will fall in the event of the share price rising. Out of interest, the stock’s up 11% in 2025 — double that of the index.

The long-term rise in value has been even better. Those investing five years ago will now be looking at a capital gain of around 240%! That’s brilliant considering that Morgan Sindall’s also exposed to the macroeconomic uncertainties mentioned earlier.

Naturally, any delays or issues with contracts could cause a shift in sentiment. But the shares still don’t look excessively priced relative to the wider market (P/E of 14).

The post 3 FTSE 250 dividend growth stocks to consider for long-term passive income appeared first on The Motley Fool UK.