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There’s a lot to be said for companies that dish out more passive income to investors as each year passes, even if their dividend yields remain fairly average.
Any business that can do this shows the sort of reliability that many higher-yielding stocks lack, making the former an arguably less risky proposition.
With this in mind, I’ve picked out three examples from the FTSE 250 for Fools to ponder buying.
Uninterrupted growth
As a business, meat supplier Cranswick (LSE: CWK) isn’t remotely sexy. But it’s been a wonderful source of rising and uninterrupted dividends over the years. Even a global pandemic couldn’t stop management from returning more cash to shareholders.
A “record Christmas trading period” suggests this form shows no sign of ending. I also like how Cranswick’s vertically integrated business model gives it a significant amount of control over its supply chain.
So what are the downsides? Well, Cranswick shares yield just 2%. A valuation of 18 times forecast FY25 earnings, while not exactly frothy, could also come back to haunt new buyers. That’s if inflation bounces for longer than expected or there are any unexpected operational disruptions.
Still, I see no reason why it can’t continue to outperform its index over the long term. The shares are up almost 47% in five years compared to a near-6% rise in the FTSE 250. And that’s not including the income investors will have compounded over that period.
Profits (and dividends) jump
Wealth manager Rathbones (LSE: RAT) is another dividend-growth superstar. Out of interest, it announced some analyst-beating full-year numbers yesterday (26 February).
Underlying pre-tax profit hit £227.6m in 2024. That’s a rise of 79% compared to 2023 — no mean feat considering the multiple headwinds it faced last year, including a change of UK government and armed conflict in the Middle East.
A lot of this uplift is down to what appears to be a very successful integration of Investec Wealth and Investment (UK) with only 0.3% of the latter’s clients declining to move to Rathbones.
But it’s the 6.9% uplift to the final dividend that caught my eye, bringing the full payout to 93p per share. That gives a yield of 5.6% at the current share price.
Dividends can never be guaranteed, especially if they operate in a cyclical sectors such as finance. But Rathbones has shown itself to be more reliable than most of its peers.
Trading ahead
A final FTSE 250 stock to consider is shipping services provider Clarkson (LSE: CKN). The 2.5% forecast yield isn’t huge. However, at least some of this is down to the share price enjoying some great positive momentum. It’s up 14% in 2025 so far, significantly outperforming the index.
Much of this movement has come thanks to an encouraging, if exceptionally brief, recent update. Back on 10 January, the firm announced that full-year numbers for 2024 would now be “slightly ahead of current market expectations” with underlying pre-tax profit coming in at “not less than £115m“.
One key risk here would be an increase in global trade tensions. However, knowing that Clarkson managed to weather the storm during President Trump’s first term in the White House bodes well. In fact, it recently registered 21 years of consecutive dividend growth!