The FTSE 250 is packed with stocks that investors can buy to target passive income. Indeed, this index currently has a higher average yield than the FTSE 100, despite historically being viewed as the more growth-oriented market.
Here are three mid-cap shares to consider than have forecast dividend yields above 4.5% today.
Dirt-cheap bank stock
TBC Bank (LSE:TBCG) is one of two dominant lenders in Georgia, the fast-growing country located at the crossroads of Eastern Europe and Western Asia.
The stock has done tremendously well, jumping almost 300% in five years, with dividends on top. Yet despite this, it still sports a sizeable 5.5% dividend yield.
But that’s the trailing yield. Looking ahead to 2026 and 2027, the figures jump to 6.7% and 7.7%, according to the latest forecasts. This shows how strongly the bank is growing (a 15% rise in net profit in Q1).
On top of this, the stock looks dirt cheap still. We’re talking about a forward price-to-earnings (P/E) ratio of 5.2!
Naturally, this is quite a rare setup, and I have to assume there’s a political risk premium being applied here. That’s because the political situation in Georgia remains tense, with more than 500 days of street protests in Tbilisi following 2024’s bitterly contested election.
Also, TBC is expanding into Uzbekistan. While this is another fast-growing economy with lots of potential, it’s also less developed. Net profit here actually dipped 4% in Q1.
Despite these risks, TBC continues to deliver excellent profitability, a high return on equity (25%), and is buying back shares. Pairing this with the cheap valuation and high dividend yield, this looks like an excellent dividend stock to consider.
Long-term growth potential
Unlike TBC, Hollywood Bowl (LSE:BOWL) is likely a much more familiar name. The company is the UK and Canada’s leading ten-pin bowling operator, with 93 centres.
The stock has jumped 16.5% in the past month. This follows a strong first half that showed revenue increasing 9.5% to £141.5m, with like-for-like growth of 2.6% in the UK (the firm’s largest market). Adjusted pre-tax profit rose 8.1% to £32.1m.
Hollywood Bowl did experience a decline in game volumes played, which is understandable given pressure on household budgets (an ongoing risk to bear in mind). But it was able to offset this with dynamic pricing and a 7.6% increase in spend per game.
Currently, the forward yield is an attractive 4.7% (the interim dividend due in July was just hiked 10.2%). The company has a strong balance sheet, proven strategy for identifying prime locations, and is targeting 130 centres by 2035.
Healthcare property
Finally, I want to highlight Primary Health Properties (LSE:PHP), which is a real estate investment trust (REIT). It owns over 1,100 assets, primarily medical centres, GP surgeries, and private healthcare clinics across the UK and Ireland.
What I like here is that the vast majority of rental income comes from (indirectly or directly) from government bodies. This makes it more resilient than a lot of other REITs, as evidenced by 30 consecutive years of dividend growth.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.
That said, the stock won’t emerge unscathed if interest rates creep up over the next few years. This could cause refinancing pressure and put downward pressure on property valuations.
But the potential reward for taking on the risk? A massive 8% forward yield.
Should you invest £5,000 in TBC Bank right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if TBC Bank made the list?
Ben McPoland has no position in any of the companies mentioned.
Leave a comment