Forget rising gilt yields, I’m sticking with these FTSE 250 dividend stocks yielding 7.2%

Rising gilt yields have unsettled UK income investors. The 10-year gilt yield reached 5.5%, its highest level since July 2007, while the 30-year yield climbed to 6.02%, a level last seen in early 1998.

That matters because government bonds now offer competitive income without share price swings.

When gilts become more attractive, investors can rotate out of equities, especially large dividend payers. Higher borrowing costs can also pressure profits and valuations. Still, I don’t think rising gilt yields automatically make every dividend stock unattractive.

The useful question is whether a business can keep generating cash and supporting shareholder returns. That’s why I’m sticking with OSB Group (LSE:OSB) and MONY Group (LSE:MONY), which together offer a prospective yield of roughly 7.2%.

Attractive income, real risks

OSB is a specialist mortgage lender, so higher interest rates and funding costs matter. The latest results weren’t perfect, but they showed a business still producing solid numbers:

• Net interest income rose 1% to £339.8m in the six months to 30 June 2026.
• The net loan book grew 1.3% to £26.3bn, helped by £2.3bn of originations, up 10%.
• The interim dividend increased 5% to 11.8p per share.
• A £100m buyback was announced, with approximately £69m completed by the reporting date.

The risk is that profitability is being squeezed. Net interest margin fell to 223 basis points, and it reduced its 2026 guidance to 215–220 basis points. Its impairment charge also rose to £15.8m from £2m.

Those figures could explain why the dividend yield is high. However, continued loan growth and capital returns suggest management isn’t simply disguising a failing business.

Clearly, the bank has been facing challenges, but the recent recovery reduces the likelihood of a dividend cut.

Steady progress matters

MONY’s latest half-year figures were less dramatic, but that’s part of the attraction. The comparison website owner reported revenue of £227.1m for the six months to 30 June, up 1% on a reported basis. Adjusted EBITDA increased 1% to £75.5m, while adjusted basic earnings per share rose 5% to 9.7p.

The company declared a 3.36p interim dividend and says it intends to maintain a progressive policy while keeping appropriate dividend cover.

Its projected yield is roughly 7.2%, and it expects to return more than £90m to shareholders in 2026, including a £25m buyback.

There are risks. Comparison markets are competitive, and pressure on household finances could affect consumer activity and customer acquisition costs. A high yield isn’t guaranteed if earnings or cash generation deteriorate. Even so, MONY’s modest growth, automation savings and shareholder returns give me more confidence than a headline yield alone would.

Why I’m staying the course

Rising gilt yields are a genuine risk, not irrelevant noise. Investors shouldn’t buy any stock purely because the dividend yield looks tempting. It’s critical to always check dividend cover, balance sheet strength, earnings resilience and valuation.

For me, though, the argument hasn’t changed. OSB offers recovery potential if margins stabilise, while MONY provides a steadier income case.

Gilts may be safer, but they don’t offer the same possibility of dividend growth or share price recovery. That’s why I see these stocks as worth considering and I’m prepared to ignore the bond-market anxiety for now — plus there’s another dividend share that also looks appealing for income today…

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Mark Hartley owns shares in OSB Group and MONY Group.