I’m searching for the best FTSE 250 stocks to buy to boost my passive income. Here are two top income stocks on my radar today. I’d like to buy them if I had some cash to spare.
Grainger
Grainger (LSE:GRI) is the UK’s largest listed residential landlord. It has around 9,700 homes on its books and a build-to-rent pipeline of more than 6,800 properties.
High building costs represent a danger to profits. But I still think it could be one of the best dividend stocks to buy in these uncertain times. People need to spend money on rent at all points of the economic cycle. Having a roof over our heads is one of life’s non-negotiables.
So profits at Grainger are likely, in my opinion, to remain stable, giving it the financial firepower to continue paying dividends. The same cannot be said for many other UK-focused FTSE 250 shares as the UK economy struggles.
I believe Grainger’s earnings will also remain strong as a shortage of available homes pushes rents higher. Market scarcity pushed occupancy levels at its properties to record highs of 98% in the 12 months to September. Like-for-like rents, meanwhile, rose by a solid 4.7% too, the business also noting that rental growth “continues to accelerate”.
It’s my opinion that property shortages will drive solid rental growth for years to come. Britain’s population will keep on expanding. Yet inadequate housing policy means construction rates are unlikely to meet growing accommodation demand.
In December, the government dropped its target to build 300,000 new homes each year. Since then, a slew of additional local authorities have reportedly shelved or axed their housebuilding plans.
Grainger doesn’t offer the biggest dividends out there. For this fiscal year, the business carries a decent-if-unspectacular 2.6% yield. But I’d still invest for passive income as I expect shareholder payouts to grow strongly over the long term.
Primary Health Properties
Demographic changes also bode well for profits at Primary Health Properties (LSE:PHP). Steady growth in the country’s elderly population means demand for medical services will also trek higher.
As its name implies, this FTSE 250 share owns and operates primary healthcare sites such as GP surgeries. It has a portfolio of more than 500 properties spanning the UK and Ireland and is expanding rapidly to maximise this huge market opportunity.
In recent days, the company acquired Irish property management company Axis Technical Services. It also inked an agreement with Axis Heath Care Assets for the option to acquire its development pipeline within five years.
Possible changes to NHS policy could derail long-term profits growth at the real estate investment trust (REIT). But I expect the government to keep investing in primary care as it seeks to reduce the strain on hospitals.
Under REIT rules, the company is required to distribute 90% of annual profits in the form of dividends. Consequently, its yield for 2023 sits at a bumper 5.9%.
