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Summary
- FTSE250 index comprises 250 companies selected based on their market capitalisation.
- There are many companies in FTSE 250 index that pay a good dividend.
FTSE250 is one of the popular indices of the London Stock Exchange, which comprises 250 companies after FTSE 100, selected based on market capitalisation. The companies selected in FTSE 250 rank from 101 to 350 in terms of market capitalisation. The current net market capitalisation of FTSE250 companies stood at £415,604 million, ranging from the smallest company with £332 million to the largest company with £4779 million of market capitalisation as of 22 June 2021. The reshuffling of companies occurs quarterly in March, June, September, and December.
What is Dividend, and why companies pay them?
The dividend is a distribution of the company’s profit to its shareholders, which can be given in the different forms, such as cash payment or stocks. However, it is not mandatory to distribute dividend, and the company can choose to re-invest the profit in the business to expand further. Generally, an annual dividend yield of 4-6% is considered good.
Large and financially stable companies pay dividends to reward their shareholders with an aim to maximise their wealth. Therefore, the investors get attracted towards a dividend-paying company as it acts as an add-on income generation source. On TTM basis as of 31 December 2020, FTSE 250 dividend yield stood at 2.34% compared to 3.77% of FTSE 100’s dividend yield. However, some FTSE 250 listed companies have outperformed FTSE 250 and stand at a comparatively higher dividend yield; let us look at a few of them:
Vectura Group Plc (LON: VEC)- Annual Dividend yield of 13.95%
- Vectura Group Plc is a UK-based Pharmaceuticals and Biotechnology company engaged in the R&D and commercialisation of therapeutic products and drug delivery systems for human use.
- To expand its business, the group has signed 18 new CDMO contracts during 2020, contributing £3 million to revenues in H2 2020.
- The last interim dividend paid by the company was 19 pence per share with an ex-dividend date of 01 June 2021; however, no dividend was declared in 2020.
Direct Line Insurance Group (LON: DLG)- Annual Dividend yield of 7.52%
- Direct Line Insurance Group is a UK-based insurance company that mainly operates in the division of motor insurance and home insurance.
- The group has acquired its 22nd new auto services repair centre to support the competitive advantage in the vehicle repairs segment.
- The final dividend paid by the company was 14.7 pence per share, while it had paid an interim dividend of 7.4 pence per share in August 2020.
CMC Markets Plc (LON: CMCX)- Annual Dividend yield of 6.76%
- CMC Markets is an online financial services provider for the retail segment.
- To diversify its business, the company will soon launch its retail Investment Platform for UK Clients, offering investment products such as ISAs and self-invested personal pensions.
- The company’s board has re-affirmed its commitment to pay a total dividend of 50% of profit after tax. The next dividend due is 21.43 pence per share to be paid on 9 September 2021 with an ex-dividend date of 05 August 2021.
