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One of life’s little pleasures is receiving cash from companies just for owning their shares, otherwise known as dividends. But this gets even sweeter if the passive income increases every (or nearly every) year. Today, I’m looking at three examples from the FTSE 250 whose records on this front are exemplary.
Always needed
3i Infrastructure (LSE: 3IN) owns stakes in European and North American businesses that operate and manage assets in areas such as energy and utilities, transportation and communications. The fact, demand for things such as water and waste management and telecom towers is about as steady as it gets, meaning the £3.2bn-cap can provide investors with a stable income stream.
Right now, the shares yield a forecast 3.8%. That’s more than an investor would get from simply buying a fund that tracks the UK’s mid-cap index.
Of course, operating in a defensive part of the market doesn’t mean those dividends are ever guaranteed. Arguably the biggest risks here are things that management has absolutely no control over, such as inflation, interest rates and commodity prices.
Capital gains have also been modest over the years. So those looking for a nice dollop of growth to accompany that income might wish to consider other stocks as part of a diversified portfolio.
Meaty dividends
Meat supplier Cranswick (LSE: CWK) might be worth looking at. It’s another firm that’s consistently hiked dividends year after year. But the business has also delivered stellar share price growth over a very long period. And that’s Fool UK’s preferred time horizon when it comes to judging the merits of an investment.
There have been wobbles along the way, to be sure. Between August 2021 and October 2022, the stock fell roughly 35% in value as higher costs squeezed margins. That sort of drop’s worth bearing in mind given the shares currently change hands at a not-exactly-cheap price-to-earnings (P/E) ratio of 19 and inflation’s climbing again.
One other thing to note here is that the dividend yield of 2% is on the low side. However, that income will still compound over time. And personally, I much prefer a company to be disciplined with its capital over one that is offering high-but-stagnant distributions, possibly due to poor trading. The latter tends to be cut eventually.
Strong growth
A final dividend growth stock that might be one to investigate further is Morgan Sindall (LSE: MGNS). Investors in the housing and construction services provider will have enjoyed substantial hikes in recent years (ignoring the pandemic-related anomaly that was 2020).
The forecast yield for FY25 stands at 3.3% — on par with the average in the FTSE 250. But note that this will fall in the event of the share price rising. Out of interest, the stock’s up 11% in 2025 — double that of the index.
The long-term rise in value has been even better. Those investing five years ago will now be looking at a capital gain of around 240%! That’s brilliant considering that Morgan Sindall’s also exposed to the macroeconomic uncertainties mentioned earlier.
Naturally, any delays or issues with contracts could cause a shift in sentiment. But the shares still don’t look excessively priced relative to the wider market (P/E of 14).
