FTSE 100 stocks tend to dominate my passive income portfolio because I trust them more for long-term gains. With huge market-caps and decades’ worth of business behind them, I feel more confident in their future.
However, there are a few FTSE 250 stocks I’ve added over time because I find their prospects appealing. Whether it’s a solid dividend track record or a competitive market position, these stocks have made their case to secure their place in my portfolio.
OSB Group
With a 7.72% yield, OSB Group‘s (LSE: OSB) the highest-yielding FTSE 250 stock on my list. I recently bought the stock because I like its valuation. Along with loans and savings accounts, this small British challenger bank offers specialist mortgage services.
But its exposure to the mortgage market also adds risk. Not only does it face tough competition from the big banks but could be hit hard by defaults if the economy tanks again.
That may be why its price looks lower than most banks, at only 5.3 times forward earnings. And its price-to-book (P/B) ratio’s only 0.7. Revenue and earnings declined last year but forecasts for next year are good. Analysts expect the price to rise by around 30% on average.
It may be slightly riskier than some of my other bank stocks, but it shows promise. If I had the cash, I’d buy more shares today.
Primary Health Properties
Primary Health Properties (LSE: PHP) is my second-highest yielder, at 7.32%. As a real estate investment trust (REIT), it’s obligated to return 90% of profits to shareholders as dividends. This has helped to ensure it has an excellent track record, increasing dividends at an average rate of 3.4% a year since 2014.
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Property’s a slightly risky sector which has suffered recently under high inflation. This has dragged the share price down 37% in the past five years. The recent interest rate cuts are helping turn things around but it could fall further if inflation resumes.
For now, things look good, with earnings forecast to grow at 40% a year. If the price holds steady, the dividends should deliver decent returns next year. I don’t plan to buy more of the shares though as I have sufficient allocation in property.
ITV
ITV‘s (LSE: ITV) had a rollercoaster time since Covid, fluctuating wildly between 50p and 150p per share. Several takeover bids last month added to the fun, with the stock bouncing between 61p and 74p.
No offer has been accepted yet but regardless of whether it sells, the vote of confidence could give it a boost. The board believes it’s still on track to make record profits this year, attributing the recent slump to US writer strikes.
Analysts are generally optimistic, with Citigroup reiterating a Buy rating on 5 December. The stock’s fairly undervalued with a forward price-to-earnings (P/E) ratio of 9.5. However, earnings are forecast to decline next year which could threaten dividends.
But if it decides to sell, that’s all perhaps irrelevant to me as a shareholder. So far it’s been a good dividend earner with a 6.83% yield. So I’ll hold my shares and see what unfolds.
This post was originally published on Motley Fool
