For me, recent market weakness makes it a good time to target passive income from dividend-paying shares. And if I had spare cash I’d buy some more.

For example, I like the look of Moneysupermarket.Com (LSE: MONY). The company operates price comparison websites for insurance, money, home services and other products.

On 18 October, the third-quarter update showed 15% growth in revenue and 6% for the year so far. And as with many businesses, such a positive performance disagrees with the fallen share price.

Ahead of expectations

The directors said the outcome was “ahead of expectations”. And they predict full-year earnings before interest, tax, depreciation and amortisation (EBITDA) will likely come in “towards the upper end of market expectations”.

I see this enterprise as a ‘cash cow’ rather than a growth proposition. And that reflects in the record of steady shareholder dividend payments. Indeed, payments continued even through the pandemic. 

There’s competition in the sector. And that could threaten the progress of the business in the years ahead. However, this is a well-established brand. And that will be hard to replicate for would-be challengers.

Meanwhile, with the share price in the ballpark of 178p, the forward-looking dividend yield is around 6.8% for 2023. I think the stock could make a useful addition to my diversified portfolio.

But I’m also keen on DS Smith (LSE: SMDS). The firm provides sustainable packaging solutions, paper products and recycling services worldwide.

Very good trading

On 10 October, Smith surprised the market with an upbeat trading statement. Performance had been “very good” and the directors said they expect full-year trading to April 2023 to be “ahead of expectations”.

The company skipped dividend payments in the depths of the pandemic. But cash flow held up well. And, since then, the company has made payments and they are set to rise. 

Smith faces competition in the sector, and there’s quite a bit of debt on the balance sheet. Those factors could make life difficult for the business in any severe economic turndown.

Nevertheless, I’d embrace the risks to include this stock in my portfolio. And with the share price around 290p, the forward-looking dividend yield is about 6% for the trading year to April 2024. 

I’d also go for National Grid (LSE: NG), the operator of energy transmission and distribution systems in the UK and the US.

Steady operational progress

On 10 October, the company delivered its pre-close update. And trading had been “in line” with directors’ expectations. We’ll find out more with the interim report due on 10 November.

I think the firm occupies a well-defended niche within the power systems at home and abroad. But there is a lot of debt on the balance sheet. Although that’s not unusual for utility companies that need to plough a lot of capital into maintaining and improving networks.

However, rising interest rates and regulatory demands could make it difficult for the company to keep up its shareholder dividend payment in the future. Nevertheless, the multi-year dividend record is robust. And I’d embrace the risks and aim to hold this stock for the long term.

With the share price near 940p, the forward-looking yield is near 6% for the trading year to March 2024. And that’s attractive to me.

Comparison services

As a quick reminder, Moneysupermarket.com is a leading comparison website for consumers to compare the best insurance products as well as other services too. Consumers are able to fill in their details and select the best offer for them and switch products too. I’ve used it in the past when looking for car, home, and travel insurance.

So what’s happening with Moneysupermarket shares currently? Well, as I write, they’re trading for 190p. At this time last year, the stock was trading for 240p, which is a 20% decline over a 12-month period. Many stocks have fallen in recent months due to macroeconomic headwinds as well as the tragic events in Ukraine.

The bull and bear case

Let’s take a look at some of the bull and bear aspects of Moneysupermarket shares. I’ll start with some positives.

Firstly, I’m buoyed by Moneysupermarket’s presence, profile, as well as brand power. Last year it helped consumers save approximately £1.6bn. In addition to this, it continues to grow its business with strategic acquisitions of smaller sites and amalgamates these into its offering to grow the business. A prime example of this is its purchase of leading cashback site Quidco.

Next, I believe that Moneysupermarket is in a prime position to benefit from the current economic outlook. The cost-of-living crisis, created by soaring inflation, should lead to consumers looking for cheaper deals on essential household bills. In turn, this could boost its performance and returns.

Furthermore, I like the look of Moneysupermarket’s performance track record. I am aware that past performance is not a guarantee of the future. However, looking back, I can see its recent update for the six months ending 30 June 2022 was impressive. It reported earnings rose by 10% and it saw increased demand for insurance products especially.

Finally, Moneysupermarket shares would boost my passive income stream through dividends. The current dividend yield on offer stands at over 6%. This is higher than the FTSE 250 average of 1.9%. I am conscious that dividends are never guaranteed, however.

So to the bear case. I notice that due to the recent events around energy prices, the energy comparison market is closed. This could impact demand for Moneysupermarket’s services and have an effect on performance and returns. This service is expected to be closed for the remainder of the year at least.

Finally, some comparison sites have come under pressure in recent years after the Competitions and Markets Authority shone a light at what it deemed some questionable practices. Some firms were even fined. This can have an adverse effect on a balance sheet, as well as investor sentiment and damage to a brand.

My verdict

To summarise, for me the positives outweigh the negatives when it comes to Moneysupermarket shares. I would be willing to add the shares to my holdings. The passive income opportunity, its position in the comparison marketplace, as well as performance track record, help build my investment case.

The two FTSE 250 shares that I’d buy today both have market capitalisations of around £1bn today.

A FTSE 250 top pick

First, I’m looking at Moneysupermarket.com (LSE:MONY). This comparison website business looks attractive in the middle of a cost-of-living crisis. As food and energy bills continue to rise, I’d expect households to put a greater focus on cutting costs and saving money.

That bodes well for Moneysupermarket, in my opinion. Last year, it helped its users to save an estimated £1.6bn of their household bills.

It recently reported a good trading performance with earnings up by 10% in the six months to 30 June. This was driven by a jump in sales for its travel insurance products, following a return to more holidays and trips post-covid.

Bear in mind that an economic recession could impact demand for travel next year. More money going towards bills could mean less money available for holidays.

Also, the energy comparison market has been closed in recent months and the company expects that to be the case for the rest of the year.

Impressive metrics

That said, its strategy of buying smaller websites and efficiently integrating them into the brand looks promising. Last year it made several acquisitions including leading cashback site Quidco.

Overall, I reckon it’s a quality business with a return on capital employed of over 25% and profit margin of over 20%. It even pays a market-leading 6% dividend.

Its share price has fallen by 15% over the past year along with the rest of the market. But I reckon it could be a great opportunity to buy these quality shares for my Stocks and Shares ISA today, in preparation for the next bull market.

Printing dollars

My next FTSE 250 top pick that I reckon could double over the coming years is 4imprint (LSE:FOUR). Like Moneysupermarket, 4imprint is a profitable company. But that’s where the similarities end.

4imprint is a marketer of promotional products, mainly in the US. Businesses and organisations buy its pens, bags and other products to use for marketing campaigns.

What’s so special about this business? Sales and profits have doubled over the past five years. Stellar performance has seen its share price grow by 30% a year over the past decade. That’s enough to turn a £2,000 investment into a whopping £27,500. Impressive.

More recently, it reported that customer demand is at record levels and trading momentum remains strong. As such, it should reach its long-standing sales target of $1bn this year.

Bouncing back

Profits took a hit during the pandemic but it has since experienced a bounce-back. That said, an economic slowdown could affect sales over the coming months. The US central bank has embarked on a journey of higher interest rates to tackle surging inflation. That typically leads to higher business costs, potentially leaving less investment for promotional activities.

Overall though, this company looks well-managed and has a good track record over many years. I’d certainly be happy to buy some shares today.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Scottish Mortgage Investment Trust 

What it does: Scottish Mortgage invests in a global portfolio of companies through a mix of listed and unlisted shares.  

By Charlie Keough. My top British stock for August is Scottish Mortgage Investment Trust (LSE: SMT). I’ve long been a fan of this equity. And with its share price taking a hit this year, I think this offers a great time for me to buy. 

The management team aims for growth over a five-year period. And while past performance is no guarantee of future returns, the last five years have seen the trust return around 100% to shareholders.  

Scottish Mortgage has suffered this year due to its focus on growth stocks. While these may continue to stall in the near run, over a more extended period I think the trust has the potential to provide me with some substantial returns (like it did when buying Tesla in 2013). 

Ongoing struggles in China, along with the likely potential of inflation continuing to dampen investor confidence, could see the stock slip. However, I’d buy the stock in August as a long-term hold.  

Charlie Keough does not own shares in Scottish Mortgage Investment Trust. 

Premier Foods 

What it does: Premier Foods manufactures a broad range of foods and ingredients like cakes, custard, cooking sauces and gravy.

By Royston Wild. Purchasing shares in food producers like Premier Foods (LSE: PFD) has traditionally been a popular play for investors during tough economic times. Food is one thing that people don’t stop spending on when times get tough. 

But businesses like this aren’t risk-free at the moment. Spending is plummeting at an alarming rate as the cost-of-living crisis worsens. The Office for National Statistics says that 50% of Brits are buying less food when doing the food shop. 

But in this climate I’m encouraged by how resilient trading at Premier Foods has remained. Revenues here rose 6% in the 13 weeks to 2 July, meaning the business remains on track to meet full-year expectations. 

I like Premier Foods because it sells food at the value end of the market under brands like Batchelors. Furthermore, I appreciate the excellent brand power of products like Mr Kipling cakes and Homepride cooking sauces. Volumes of beloved labels like these tend to remain more stable during downturns.

Premier Foods trades on a forward P/E ratio of just 10.2 times. I think this makes it a top value stock to buy in August. 

Royston Wild does not own shares in Premier Foods. 

Experian

What it does: Experian is a British technology company that specialises in consumer credit data.

By Edward Sheldon, CFA. FTSE 100 company Experian (LSE: EXPN) has seen its stock price pull back in 2022 and I think this has provided an attractive buying opportunity in August.

A trading update posted in mid-July showed that the company has momentum at present. For the three-month period to 30 June, total revenue was up 7% year on year. Meanwhile, looking ahead, the company said that it expects total revenue growth of 8-10% for the year ending 31 March 2023.

As for the stock’s valuation, it seems quite reasonable to my mind. With analysts currently expecting the group to generate earnings per share of around $1.36 this year, the P/E ratio here is around 25. I don’t see that as excessive given Experian’s market dominance, growth rate, and high level of profitability.

Of course, if the tech sector continues to experience weakness, Experian shares could underperform in the near term. Taking a long-term view, however, I see the risk/reward profile here as attractive.

Edward Sheldon owns shares in Experian.

International Consolidated Airlines Group

What it does: This company is an airline conglomerate that operates across the entire globe. It owns a number of well-known airlines, including British Airways, Aer Lingus, and Iberia.

By Andrew Woods. International Consolidated Airlines Group (LSE:IAG) was battered as the pandemic made its way around the world. This was primarily because countries shut their borders and virtually all commercial flights were grounded.

The result was that IAG swung to a €7.8bn pre-tax loss in 2020 as its income sources became ever more limited. This forced the firm to issue new shares to raise capital in the midst of the crisis.

In 2021, however, pre-tax losses more than halved to €3.5bn. During an update for the first three months of 2022, it stated that it may even return to profitability in the middle of this year. In those first three months, revenue climbed to €3.4bn compared to €963m for the same period in 2021.

Although passenger capacity is improving, recent cancellations due to staff shortages could delay progress. Nevertheless, I think August may reveal that IAG has once again hit calmer skies and I’ll be adding more shares if it does.

Andrew Woods owns shares in IAG.

Fresnillo 

What it does: Fresnillo is the world’s largest primary silver producer and Mexico’s largest gold producer, with seven operating mines. 

By G A Chester. Fresnillo (LSE: FRES) has been through a difficult few years. Covid disrupted its operations quite severely at times. And the introduction of new labour legislation last September also presented challenges. 

However, management recently reported a solid second quarter of production in line with its expectations. It said this was despite some continued impact from the pandemic. 

The company’s also made good progress in adapting to the Mexico labour reform. This required it to internalise a high proportion of its contractor workforce. It said its recruitment and training campaigns are proving effective and that it should complete the process by the end of the year in its underground mines. Meanwhile, it said its open pit mines are now fully staffed. 

With operations normalising, a Covid-delayed major growth project ready to ramp-up, and a good pipeline of further development projects and exploration prospects, I think Fresnillo is ripe for a recovery. 

G A Chester does not own shares in Fresnillo. 

Ibstock

What it does: Ibstock is the UK’s leading manufacturer of clay bricks and concrete products used by the construction industry.

By Zaven Boyrazian. The property market is notoriously cyclical. And with the Help-To-Buy scheme coming to an end soon, it’s possible for a downturn to be arriving soon. However, when it comes to long-term demand, the need for housing isn’t going anywhere. And that’s terrific news for my top stock to buy for August, Ibstock (LSE:IBST).

The brick manufacturer has suffered quite a few disruptions from Covid-19. However, those woes seem to be in the past and business has begun to ramp up again.

Its latest interim results demonstrated double digit growth for revenue and profits thanks to an uptick in sales volumes. Meanwhile construction for its new Atlas and Aldridge redevelopments continue to be on track for completion for the end of 2023.

Once brought on-line, these facilities will expand the firm’s manufacturing capacity by 115 million bricks per year. And given Brexit has made importing bricks far more expensive, the firm may be in a prime position to capitalise on the opportunity.

Zaven Boyrazian does not own shares in Ibstock.

Moneysupermarket.com

What it does: Moneysupermarket.com operates price-comparison sites for money, home services, money, insurance and other products

By Paul Summers: I’ve been banging the drum on Moneysupermarket.com (LSE: MONY) for some time now. Unfortunately for me, other investors haven’t agreed with my bullish view and the share price is still down 18% in the last year. The inability of consumers to switch energy suppliers hasn’t exactly helped.

Despite this, I’m in no mind to sell my holding. Quite the opposite.

Earlier this month, the company stated that revenue had grown 19% over the first six months of 2022. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 10%, which was ahead of expectations. The interim dividend was maintained too.

With consumers trying to save money where they can, I think this positive momentum can continue. At just below 16 times earnings as I type, the stock still trades at an attractive valuation and there’s a 5.7% yield in the offing if the full-year payout is kept steady.

Paul Summers owns shares in Moneysupermarket.com

Airtel Africa

What it does: Airtel Africa is a leading operator of telecoms networks and mobile money services in Africa.

By Roland Head. Shares in Airtel Africa (LSE: AAF) have doubled since the company floated on the London Stock Exchange three years ago. I think further gains are likely.

Recent first-quarter results showed revenue up by 13% to $1,257m during the three months to 30 June. This growth was mainly due to a 25% increase in mobile money revenue and a 20% rise in data revenue.

Many African countries lack the formal banking networks and fixed-line telecoms services we take for granted. I think that demand for internet and financial services will continue to be driven by rising mobile usage.

One possible risk is that Airtel Africa carries a fair amount of debt — $3,056m at the last count. However, debt is falling, and cash generation is strong.

Airtel shares trade on 11 times forecast earnings, with a 3% dividend yield. I see the stock as a long-term buy in August at this level.

Roland Head owns shares in Airtel Africa.

Compass Group 

What it does: Compass Group is a FTSE 100 global leader that runs workplace canteens for thousands of organisations across 44 countries.  

By Harshil Patel. Given soaring food prices, some might be surprised that I think it’s a good idea to buy food services provider Compass Group (LSE:CPG). But it’s rising food and energy costs that are pushing more organisations to outsource this function.  

As a specialist in the field, Compass has a better chance to provide catering functions at lower cost and greater flexibility. 

Compass says that it’s winning new business. And that has helped it to raise its sales growth predictions for the second time this year. I reckon it’s a trend that could continue into next year.  

Whereas finding the right staff is a challenge plaguing many organisations right now, Compass seems to be managing relatively well.  

Now, as it’s a physical business, any further pandemic-related disruptions could affect earnings. However, all things considered, I’m banking on its strong cash flow, earnings growth and dividend growth to provide me with solid shareholder returns. 

Harshil Patel does not own shares in Compass Group. 

Moneysupermarket.com

I’ll hold my hands up and say that I didn’t time my entry to comparison website Moneysupermarket.com (LSE: MONY) particularly well. In the last year, the share price has slumped 36%.

Of course, trying to time the market is a mug’s game. As an experienced Fool, I know not to beat myself up too much. It’s impossible to predict the short-term direction of share prices. Besides, there’s still a lot to like here.

The valuation remains compelling. Having been impacted by the Covid-19 pandemic and the reduction in demand for motor and holiday insurance, Moneysupermarket shares now trade at an analyst consensus of 13 times forecast earnings. Naturally, this assumes analysts have got their sums correct.

Personally, I’m optimistic about this. Actually, I wonder if the company could pleasantly surprise before long. After all, the rise in the cost of living has likely pushed many to at least check if they could save money by switching insurance policies, loans, mortgages and credit cards. Moneysupermarket is one of the biggest players out there, helped by its ownership of the Martin Lewis-driven site Moneysavingexpert.com. The acquisition of cashback site Quidco not long ago is another string to its bow.

This is not to say the shares are without risk. Given the lack of deals, one big headwind for the FTSE 250 member right now is that it’s not making much money from energy switching. This could continue for a while yet.

Then again, I’m in no rush. The dividends also provide some comfort. While the extent to which profits cover the bi-annual payouts could be higher, a near-7% yield isn’t to be sniffed at.

IG Group

Another FTSE 250 stock I’d continue to buy is trading platform provider IG Group (LSE: IGG). Like its index peer, IG’s share price chart hasn’t been a thing of beauty over the last year or so. Again, this isn’t completely surprising.

Like its listed peers CMC Markets and Plus 500, IG benefited from the explosion in trading activity as the pandemic hit. Unsurprisingly, a purple patch like this couldn’t last forever and many investors decided to cash out.

Do I wish I’d done the same? Honestly, no. This still remains a fundamentally excellent business that consistently achieves great margins and high returns on the money it invests in itself (otherwise known as Return on Capital Employed). The acquisition of US-based Tastytrade for $1bn last year also gives the firm a runway for growth across the pond.

Earnings are expected to slip in the current financial year. On top of this, there’s always the threat of more regulations being imposed on this industry to protect clients (mostly from themselves).

Even so, a big shift in market sentiment is likely to be great news for IG when it does (inevitably) come. In the meantime, a well-covered 6.6% dividend yield will do just fine.

This £1bn FTSE 250 company caught my eye

While hunting for cheap shares today in the mid-cap FTSE 250 index, I spotted one business that I know well. This company is Moneysupermarket.Com Group (LSE: MONY), a leading British financial price-comparison website. You may know Moneysupermarket from its extensive TV advertising, or from using its site to buy or switch financial products.

Moneysupermarket is a very popular resource for consumers looking to compare products including gas and electricity tariffs, car and home insurance, travel policies, home mortgages, personal loans and credit cards. The firm also owns the hugely popular Money Saving Expert website, founded by consumer champion Martin Lewis (who’s an old friend and rival of mine).

The Moneysupermarket share price slumps

Here’s how this company’s shares have performed over seven different timescales:

As you can see, this FTSE 250 stock has had a poor 2022 so far, losing around a seventh of its value. The share price has also crashed by almost a third over one year and by almost half over five years. Oh dear. But buying a share now means buying a company’s future and not its past share-price performance.

The dividend yield looks tasty to me

On Wednesday, the share price closed at 185p, valuing the group at just short of £1bn. Just over a year ago, this share hit 280p on 2 June 2021. It’s since crashed by 95p, or 33.9% of its value. However, at its 52-week low on 12 May 2022, the stock slumped to 162.3p, so it’s bounced back from this bottom over the past four weeks.

Here’s how its fundamentals stack up today:

The first thing I see is its trailing earnings yield of 5.3% fails to cover its dividend yield of 6.3% a year. But on a forward basis, this company’s price-to-earnings ratio is expected to fall to 11.9, boosting its earnings yield to 8.4%. This would cover the current dividend yield by 1.33 times.

What’s more, I know from experience that company dividends aren’t guaranteed, so they can be cut or cancelled at any time. And Moneysupermarket has frozen its yearly dividend at 11.71p for the past three years. Also, new rules since January surrounding insurance renewals may hit the company’s future earnings. Even so, I would gladly buy this share today for its market-beating dividend yield!

Here’s how I’d aim to earn passive income from UK dividend stocks.

1. Getting started

The first step in my plan would be to set a savings target and stick to it. Saving and investing under £5 per day should still yield a total cash distribution that I’d be pleased with.

With objectives set, portfolio optimisation is my next consideration. To protect passive income streams for life, I’d shelter my investments in a Stocks and Shares ISA. This ensures all capital gains and dividend payments are tax-free.

Finally, I’d start researching dividend stocks to buy before investing £150 per month. In reality, this is an ongoing process. Thorough due diligence is prudent, particularly in periods of elevated share price volatility.

2. Buying dividend stocks for passive income

Now I’m set up, it’s time to start investing. Let’s explore two dividend shares on my watchlist.

Legal & General (LSE: LGEN) is a financial services and asset management firm. Down 8% over 52-weeks and -14% in 2022, the Legal & General share price strikes me as oversold. Indeed, the FTSE 100 company’s price-to-earnings (P/E) ratio of around eight suggests it’s a value investing opportunity. I’m especially keen on LGEN stock’s reliable dividend distribution history as well as the current 6.8% dividend yield.

For FY2021, Legal & General delivered post-tax profit over £2bn — up 28% year-on-year. It’s on track to achieve its cumulative dividend ambition of £5.6-5.9bn by 2024. The business isn’t immune to the threats of high inflation and a possible recession, which could dampen demand for the company’s insurance products. However, in my view, LGEN looks like it could provide shareholders with decent returns from here. I consider Legal & General shares an excellent choice for passive income.

Moneysupermarket.com (LSE: MONY), the online price comparison business, is a FTSE 250 dividend champion, currently yielding 6.5%. The Moneysupermarket share price has experienced heavy selling in recent years — it’s nearly halved over five years and is down 20% in 2022.

Moneysupermarket might be a rare beneficiary from the cost of living crisis as consumers seek out the best deals. However, the latest financial results reveal some weakness. Adjusted EBITDA fell from £141.5bn in 2019 to £100.5bn in 2021 and basic earnings per share declined to 9.8p from 17.7p over the same period. Nonetheless, dividends have increased or remain unchanged for six years in a row. I believe Moneysupermarket shares would make a good addition to my passive income portfolio despite the risks.

3. Compound interest

My aim is to build a diversified portfolio covering a range of market sectors. Taking Legal & General and Moneysupermarket as indicative of my envisaged overall holdings, with a fiver-a-day’s investment, I’d expect £120+ in annual passive income after just one year.

It’s tempting to spend the income, but I’d strive to reinvest as much as possible within the tax-free ISA wrapper. This would allow me to take advantage of the power of compound interest with a view to building a sizeable dividend portfolio over time from small everyday savings.

Here are three that jump out at me, two of which I already own in my Stocks and Shares ISA. All are from the FTSE 250.

IG Group

I’ve held stock in trading platform provider IG Group (LSE: IGG) for a few years now, partly due to the income on offer. I’ve never gone so far as to calculate the actual figure. However, this company must have increased the value of my ISA by thousands of pounds in dividends alone. And with the shares yielding a forecast 6%, I’ve no intention of selling yet.

Another thing I really like about IG is that it’s geared to perform well in choppy markets. Sure, we might not see a repeat of the explosion in trading that we saw during the pandemic. Even so, the firm must be making healthy profits from the volatility we’ve seen on an almost daily basis in 2022.

An investment here isn’t devoid of risk. Companies often find themselves subject to scrutiny from regulators and new rules can temporarily dent earnings while it adapts. IG is also far from the only option available to market participants in this space.

Nevertheless, a P/E of just 8 looks brilliant value.

Moneysupermarket.com

A second FTSE 250 dividend share that I’d buy more of is price-comparison specialist Moneysupermarket.com (LSE: MONY). That’s despite the shares losing over a third of their value in the last 12 months.

One silver lining for me throughout this is that Moneysupermarket has continued to pay dividends. It now offers a massive 7% dividend yield.

Of course, this may be reduced if trading doesn’t improve soon. As things stand, the payout is covered only 1.2 times by profit. Ideally, I’d be looking for something in the region of two times profit.

On a positive note, CEO Peter Duffy remarked last month that the company had seen a “strong recovery” in its Money and Travel divisions in Q1. I reckon the rise in the cost of living we’ve seen since has pushed more households to save money where they can by visiting its site.

At 13 times earnings, Moneysupermarket looks cheap for an otherwise high-quality share. I’m more than prepared to wait for a recovery, enjoying the income stream in the meantime.

Vistry

A final big dividend share from the FTSE 250 I’ve got my eye on is housebuilder Vistry (LSE: VTY), formerly known as Bovis Homes.

I’m usually wary of owning stocks like this. The housing market is notoriously cyclical and I do wonder if fears over a UK recession (not to mention a return to normal working conditions for many) could bring the post-pandemic property boom to an end in 2022.

Again however, a lot of this looks priced in. Vistry’s stock currently trades at just five times forecast earnings. That’s even cheaper than FTSE 100 rivals such as Taylor Wimpey and Persimmon. A stonking 9.1% yield, safely covered by profit, could be worth the risk.

Vistry would also help to diversify my portfolio, allowing me to mitigate the impact of any dividend cuts elsewhere.

I’ve scoured the FTSE 250 index to find three dividend shares with 5%+ yields. A yield is calculated by taking the dividend cover as a proportion of the share price. Why am I adding these firms to my portfolio? Let’s take a closer look.

Dividend share #1: A FTSE 250 asset manager

Jupiter Fund Management (LSE:JUP) is an asset management business operating in the UK, Europe, and Asia.

It most recently had a dividend yield of 6.7%. This equated to dividend cover of around 17.1p per share. The current share price is 195.6p.

For 2021, the company increased profits to £216.7m. This constituted growth of around 21%, year on year, following the pandemic.   

Furthermore, the firm’s assets under management increased by around 3%. This gives me confidence given that competitors, like Ashmore, saw assets under management decline over the same period.

However, the business still had net outflows of £3.8bn, showing the continued impact of macro events on client demand.

Dividend share #2: Micro Focus International

Secondly, Micro Focus International (LSE:MCRO) is a software and technology services company. At the time of writing, it is trading at 381.1p.  

Its most recent dividend yield was 6.4%, or ¢29 per share of dividend cover. For the year ended October 2021, pre-tax losses narrowed to $517.8m from $2.9bn. 

As a potential investor, this gives me confidence that the firm is swiftly recovering from the struggles of the pandemic. It is important to note, however, that past performance is not necessarily indicative of future performance.

Despite this, revenue over the same period dropped by around 5%. This is something I would like to see improve in the near future.

Nonetheless, the business successfully refinanced about $1.6bn of debt on better terms. This should make the company more efficient in the future.

Dividend share #3: Moneysupermarket.Com

Finally, Moneysupermarket.Com (LSE:MONY) is a price comparison website for products like insurance. It currently trades at 171.2p.

It most recently had a dividend yield of 5.4% and dividend cover of 11.71p per share. While this yield is slightly lower than the previous two companies, it is still competitive.

For the three months to 31 December 2021, revenue from its money segment was up 37%, while the travel segment rose 796%, owing to increased international travel. 

Many believe that the firm will inadvertently benefit from the cost-of-living crisis, because more people will be using the comparison site to find the best deals to reduce their expenditure. 

However, investment bank Barclays reduced its target price from 260p to 220p in April, because it believes there is “more upside on several other stocks”. 

Overall, these three companies could provide me with a source of income alongside my growth stocks. In addition, each of the businesses look to be in better shape after the pandemic. I will be buying shares in all three firms soon.

I already own some core FTSE 100 shares for long-term income, so today I’m widening my horizons a little and looking for smaller stocks. Maybe I can find some of the best in the FTSE 250.

Insurance dividends

I like the look of Direct Line Insurance Group (LSE: DLG). This company has had a rough few years, with earnings slipping. And the share price has fallen 13% over the past 12 months. That pushes the dividend yield up above 8%, though it was only thinly covered in 2021.

The company is in the midst of implementing FCA regulatory changes to pricing practices. But it says its “strong strategic progress and disciplined approach to trading throughout 2021 mean we were well placed as we entered 2022“.

My big fear is that if we see more pressure on earnings, the dividend could suffer. But Direct Line is engaged in a new share buyback, which suggests it expects to generate the cash to keep paying.

Insurance earnings can be cyclical, and that is among the risks too. But with a long-term investment horizon, I might buy Direct Line before the Stocks and Shares ISA deadline.

The business of investing

I like investing in companies that themselves are in the business of investing. By that I mean investment trusts, fund managers, and similar.

Today, I’m examining Jupiter Fund Management (LSE: JUP), and I am definitely considering buying its shares before the ISA deadline.

Earnings have been a bit flat for a few years. But with the turmoil surrounding the investment sector, that doesn’t surprise me too much. The dividend has remained steady and well covered.

Jupiter shares are down 24% in the past 12 months, with most of that happening this year. I’m guessing its mostly down to geopolitical factors. The fall puts the shares on a low P/E of 10 based on forecasts. And if the dividend is maintained again, it would yield 8.2%.

Strong competition and external threats could put pressure on the dividend. But, on balance, Jupiter is an ISA buy candidate for me.

ISA deadline

My third possible buy ahead of the 2021-22 ISA deadline is comparison site Moneysupermarket.com (LSE: MONY). Again I’m looking at a fallen share price, this time down 26%. And again, I’m drawn to the boost it has given to the dividend.

The yield reached 5.4% in 2021, but it was only barely covered by earnings. These earnings have been dropping, with fewer people comparing holiday prices, savings accounts, etc, under pandemic and other pressures.

We now face the prospect of soaring inflation, rising interest rates, and an economic squeeze. So business could be tough for the next year, or so. I reckon I’m seeing probably the greatest chance of a dividend cut here among those I’m examining today.

I think Moneysupermarket.com is possibly the riskiest investment of the three, at least in the short term. But I also see attractive long-term potential. And, again, I am tempted to buy before the ISA deadline.