The FTSE 250 offers some of the bulkiest dividend yields out there. For investors seeking income, I think it’s one of the best places to look.
Seventeen companies on the index offer a yield of 8% or higher. That’s compared to just six on the FTSE 100. While the latter index gains most of the attention, I reckon it’s smarter to go shopping for under-the-radar buys.
While 8%+ payouts are certainly eye-catching, I’ve got my sights set on yields I reckon are sustainable and in good stead to rise in the years to come.
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Here are two stocks I hold and think investors should consider snapping up today.
ITV
First on my list is ITV (LSE: ITV). It doesn’t make the top 25 highest payouts on the FTSE 250. Nevertheless, a 7.1% yield is nothing to scoff at.
In all fairness, its yield has been pushed higher by a lower share price. A 47.8% loss over the last five years as a flagging traditional advertising market has dented revenues doesn’t make great viewing. Going forward, this could continue to be an issue for the business.
But at 70.3p, I sense value. That means its shares are trading on just 12 times earnings. That’s below the FTSE 250 average (14). What’s more, that’s expected to drop to nine times in 2025 and 7.5 in 2026.
It has been facing issues in traditional advertising. But to counter that the business is shifting to digital, and I think that’s a move that makes sense.
Last year digital revenues rose 19% and the firm is on track to achieve its 2026 target of £750m in sales.
Alongside that, management reiterated it remains committed to “creating shareholder value and applying a disciplined approach to capital allocation”.
We’ve already seen this in action with the firm returning the net proceeds of the sale of BritBox through a £235m share buyback scheme.
Games Workshop
Next up is Games Workshop (LSE: GAW). At 4.2%, it doesn’t offer the highest payout. But what draws me to the business is that it pays its shareholders with “truly surplus cash”.
That’s because the business is in a healthy position that allows it to do so, with zero debt on its balance sheet. Furthermore, in the last five years, its revenue has grown at an annual average rate of 16.7%. Bearing in mind that’s through the pandemic and a cost-of-living crisis, that’s seriously impressive.
Like its revenue, its dividend has also grown in recent times. Last year, it rose to 420p per share, up from 415p the year prior.
There are other reasons I like Games Workshop. In the miniature wargames industry, it’s the leader by some margin. Looking ahead, it has major plans for expansion by building out its licensing business.
Trading on 22 times earnings, some may argue the stock is expensive, which is always a risk. Of course, further difficult spells for the economy could also harm sales.
But its growth prospects coupled with its yield make me very bullish on Games Workshop as a long-term investment. That’s why, like ITV, I’ve been adding to my position in the stock and plan to do so going forward.
