3 FTSE 250 dividend shares I’d buy as the UK avoids recession

The gloomy outlook for the UK economy has weighed heavily on it FTSE 250 during the past year.

Unlike those that focus on international FTSE 100, London’s second-tier stock index – whose constituents generally provide greater exposure to Britain – has been lower over the past 12 months. It’s down 10% over the past year in fact.

How did preventing the UK recession last year affect the broken index?

Recession averted!

To recap, official figures on Friday showed the UK economy recording zero growth in the last quarter of 2022. If it has contracted as predicted, the country will fall into a technical recession. This is defined by two consecutive quarters of decline.

However, this is unlikely to improve the outlook for many FTSE 250 stocks.

Ben Laidler, global market strategist at eToro, said that “any celebration will be short-lived. The economy remains below pre-covid levels and December growth slowed sharply, down 0.5% compared to November.” Last month’s decline was actually larger than economists had expected.

Meanwhile, analyst Sophie Lund-Yates of Hargreaves Lansdowne say so”while not having an official label would be seen as a victory, there’s an argument to be made for saying that the can was just kicked down the road..”

He added that the situation for consumers remains very difficult, noting that “around 7m households are still expected to struggle to pay energy and food bills, technical recession or not.”

The city still expects the UK economy to move into a technical recession by 2023 amid high inflation and rising interest rates. The Bank of England for example is forecasting a recession that will last until next year.

3 FTSE 250 stocks in 2023

Investors should be careful when choosing stocks of companies with high exposure to the UK. Earnings can be disappointing and the size of dividends many stocks pay out can fall short of forecast.s

That said, I do not believe this makes the FTSE 250 a no-go zone to find income. There are still many stocks that I think will pay big dividends in 2023.

Greencoat UK Wind it shows UK I will be looking to buy with spare cash to invest. Profits in wind farm owners can suffer during calm conditions. But the essential nature of electricity production still, for the most part, makes it a reliable generator of profits.

Greencoat Corporation’s dividend yield is 5.3%. And a FTSE 250 real estate investment trust (REIT) Assura carrying an even larger 6.1% one.

The stream of government-backed rents that Assura receives allows it to pay big dividends in good times and bad. Indeed, this record continues despite the recent increase in construction costs.

I would also look to buy the 4.8%-yield Tritax Big Box. A lack of a decent acquisition target can achieve long-term earnings growth. But in the meantime, the blue-chip customer base (incl AmazonDHL and Tesco) must submit reliable rental income.