The FTSE 250 index is a popular hunting ground for growth investors. What attracts less attention is the index’s ability to provide a solid and growing passive income.
This is a bit of an oversight, in my opinion. After all, at 3.4%, the FTSE 250’s forward dividend yield is roughly in line with the FTSE 100 average of 3.5%.
Today, I’m looking for some of the FTSE 250‘s best high-yield dividend shares to consider. And I’ve come across the following:
| Dividend share | Dividend yield |
|---|---|
| Greencoat UK Wind (LSE:UKW) | 7.1% |
| Lion Finance (LSE:BGEO) | 5.1% |
As you can see, the dividend yields on these mid-caps sail comfortably past the index average. It means that someone who invested £20,000 equally across them today could — if broker forecasts prove accurate — generate £1,220 in passive income alone.
Green machine
Green energy stocks like Greencoat UK Wind play a critical role in Britain’s long-term energy policy. And the government’s making it easier for stocks like this to do business.
Last Friday (21 February), the Department for Energy Security and Net Zero announced further changes to the planning system, this time relaxing planning consent rules for fixed-bottom offshore wind.
This provides added opportunities for the likes of Greencoat by speeding up new wind farm delivery. By 2030, the government hopes to have 70-79 GW of onshore and offshore wind farm capacity. That’s more than double current levels.
Energy producers like Greencoat UK offer significant benefits to dividend investors. Profits and cash flows remain stable across the economic cycle, allowing them to provide a reliable long-term passive income.
Purchasing UK- or European-focused renewable energy shares could be a safer bet than buying those with US operations, given changing energy policy under President Trump. In fact, the likes of Greencoat could benefit from changes in the States by making it cheaper and easier to source wind power technology.
That’s not to say adverse political changes could be coming down the line later on. But until 2029 at least and the next general election, the trading landscape should, in my view, remain largely favourable.
Hear it roar
Lion Finance — which until this month traded as Bank of Georgia — is currently more vulnerable to political conditions at home. Its earnings could be negatively impacted if civil disorder persists in its core Georgian market. On top of this, the government’s choice between pivoting toward Europe or Russia will also have substantial long-term consequences.
But all things considered, I believe Lion can expect profits to continue rising strongly. A blend of Georgia’s booming economy and low product banking product penetration gives the company significant scope to continue growing earnings and dividends.
Latest financials on Tuesday (25 February) showed adjusted profits in Georgia leap 20.6% in 2024, driven by growth of 19.3% in its loan book. This encouraged it to raise the annual dividend by a hefty 12.5% year on year.
With a strong balance sheet, I expect Lion to keep paying large cash rewards in 2025, even in the unlikely event that earnings begin to weaken. Its CET1 capital ratio was 17.1% in December, far ahead of popular UK banking shares like Lloyds and Barclays.
