The overall FTSE 250 dividend yield is around 3.5% now, and that tells me it could be a good place to look for income stocks.
It’s not far behind the FTSE 100‘s 3.9%. And with the lower index usually having the better growth potential, it makes me think mid-cap stocks could be among today’s best buys.
I can’t help thinking ITV (LSE: ITV) might be one of them, after its share price has had such a terrible time. But that’s helped push up the dividend yield quite nicely.
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Big yield
We’re looking at a forecast 8.4% now, which is huge. But it does hide some risks.
The first half of 2023 saw adjusted earnings per share drop 62%, and that reflected a couple of things. The firm partly blamed weak advertising revenues for it, and that’s always a risk.
But advertising can be volatile, and 2023 wasn’t the best year to spend too much money on it. Not when inflation’s killing the cash that people have to spend.
In the long term? I reckon the advertising business is a strong one, and it could pick up when interest rates come down.
Future business
The planned investment in streaming service ITVX ate into the bottom line too. But that has to be a good thing, helping build future revenue streams.
Meanwhile, broker forecasts are upbeat, with dividends strong. They expect earnings to grow well in the next couple of years too.
So I expect some volatility. And the advertising uncertainty could keep the ITV share price down. But good for long-term income? I think so.
Finance income
On the same 8.4% dividend yield, I find abrdn (LSE: ABDN). Like most stocks related to finance and investment, abdn has had a tough time. And we should see a loss this year, with a net cash outflow.
But that happens when stock markets are down and people move their cash away.
Dividends good?
But analysts expect the dividend to hold. And abrdn seems to have plenty of cash to pay it.
I can see another tough year for the stock, maybe. That’s mainly because I think sentiment could be low for a while yet. And it’s a bit of a gamble banking on the dividend this year.
But I reckon this could be a great income stock to buy for the next bull market and beyond.
More cash cows
There are many big dividend yields in the FTSE 250 that I like right now. I’m out of space, so I’ll come back to them another time.
But I have to give a quick mention to Ashmore, another asset management firm. It has forecast yields of around 7.5%. And I need to dig into that, for sure.
NextEnergy Solar Fund needs some investigating too. It’s only small, with a £578m market-cap. But I want to check out its 8.7% yield. It’s too early to tell which renewable energy firms will win out. And that’s where a fund like this could help.
