2 FTSE 250 dividend stocks I’d buy before July

Royston Wild identifies two terrific FTSE 250 (INDEXFTSE: MCX) income shares that could surge next week.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I believe that these two FTSE 250 dividend dynamos could well explode during July. Here’s why.

Silver star

Hochschild Mining (LSE: HOC) may not be the flavour of the month right now, the stock sinking in June on the back of deteriorating silver values.

But I remain bullish on the company’s long-term earnings prospects despite the current weakness in commodity values as I believe the broad collection of geopolitical and macroeconomic troubles swirling around should support demand for so-called store-of-value assets like precious metals.

And in the meantime, I believe second-quarter production results scheduled for July 18 could give Hochschild’s beleaguered share price some fresh zip. The digger declared last time out that “better than expected contributions from Inmaculada and Pallancata” helped total attributable production swell to a record first-quarter total of 9.8m silver equivalent ounces, up 14% year-on-year.

Another solid result for Q2 could prompt a re-rating of the stock should the firm upgrade its full-year target of 38m attributable silver equivalent ounces.

City analysts are expecting earnings at Hochschild to detonate in the medium term, and this supports expectations of surging dividends. Last year’s payout of around 3.35 US cents per share is anticipated to rise to 3.5 cents this year and again to 4.5 cents next year.

Subsequent yields may stand at a handy-if-unspectacular 1.4% and 1.8% for 2018 and 2019 respectively. That said, the rate at which Hochschild is likely to continue growing dividends still makes it an excellent pick for income seekers today, on the back of its excellent profits outlook and fast-improving balance sheet (net debt fell 45% in 2017 to $102.8m).

The BIG yielder

Hochschild’s elevated forward P/E ratio of 31 times wouldn’t deter me from investing today, although this may prove to be rich for many investors.

Some classic value-seekers may be more interested in recruitment specialist Hays (LSE: HAS) instead, a stock which deals on a P/E ratio bang on the accepted value benchmark of 15 times (and below) for the new year beginning July.

This multiple is created by a predicted 9% earnings advance and follows a forecast 14% bottom-line improvement for the 12 months ending June 2018. What’s more, these estimates lead to predictions of even more special dividends being forked out.

Thus fiscal 2017’s 7.47p per share total payout is anticipated to rise to 7.88p in the closing period, and again to 9.6p in fiscal 2019, the latter prediction leading to a smashing 5.3% dividend yield.

As I noted when chronicling Hays’ most recent trading statement in April, the FTSE 250 giant continues to make terrific progress in foreign markets. In the first quarter, its international businesses (collectively responsible for in excess of three-quarters of total net fees) saw those net fees rise 15% year-on-year, despite tough comparatives.

I reckon another strong financial statement in the coming weeks — fourth-quarter numbers are slated for July 13 — could provide Hays’ share price with a solid boost.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

2 powerful passive income stocks investors should consider snapping up

Building a passive income stream via dividend-paying stocks is possible, according to our writer, who details two picks to take…

Read more »

Silhouette of a bull standing on top of a landscape with the sun setting behind it
Investing For Beginners

This UK stock has gained 42% since I bought it, but I think it’s still a bargain

Jon Smith outlines his reasons for thinking that a UK stock he owns has the potential to keep rallying for…

Read more »

Investing Articles

1 under-the-radar value stock I’m eyeing up for returns and growth

This Fool is looking for quality stocks at bargain prices and reckons this potentially overlooked value stock could be a…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

National Grid shares have plunged — but if I’d bought 2 years ago, would I be in profit?

National Grid shares are about 22% lower than in May, but that may just be a small blip for long-term…

Read more »

Investing Articles

This FTSE 250 stock looks unmissable — but buying shares now could be a mistake for me!

It’s tough when a stock looks fundamentally sound, but there’s a cloud hanging over it. This is what’s happening with…

Read more »

A Black father and daughter having breakfast at hotel restaurant
Investing Articles

Raspberry Pi shares are piping hot! Should I invest right now?

Raspberry Pi shares are certainly bearing fruit for those lucky enough to have invested early. Have I missed the boat…

Read more »

Dividend Shares

How much passive income from stocks could I make with a £37k salary?

Jon Smith takes a look at how much passive income he could make by squeezing all the juice out of…

Read more »

Young female analyst working at her desk in the office
Investing Articles

The Ashtead share price falls on FY results. Is it a good long-term buy?

High interest rates are bad for companies with high debt, especially if it's growing. But the effect on the Ashtead…

Read more »