Have £2k to invest? I think these FTSE 250 dividend stocks could surge after Brexit

An international focus means these FTSE 250 (INDEXFTSE: MCX) companies could be the best Brexit protection for your portfolio.

| 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.

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.

The stocks that are best positioned to survive, or even profit from Brexit, in my opinion, are those companies with an international focus. Businesses like iron ore producer Ferrexpo (LSE: FXPO).

I reckon there is a strong chance that Brexit will have little to no impact on this company’s operations. The group is the world’s third largest exporter of iron ore pellets, and almost all of its operations are located in Ukraine. 

Insulated from Brexit 

No matter what happens when (and if) the UK leaves the EU at the end of March next year, it is highly unlikely it will have a significant impact on the world’s demand for iron ore. At the same time, virtually all of Ferrexpo’s income is in US dollars, so the company is insulated from sterling volatility. Some analysts have speculated that in the event of a no-deal Brexit, sterling could fall to $1.10, which would be bad news for importers, but it would be great news for Ferrexpo shareholders because profits, on a per share basis, would jump.

What’s more, Ferrexpo is a dividend champion. The company returns as much excess cash to investors as possible and today declared a special dividend of 6.6 US cents per share, for a total of $40m. Analysts are expecting a distribution of $0.13 for the full year, giving a potential dividend yield of 5.4% at the time of writing.

Global capital 

Ferrexpo is one possible option to protect your portfolio from Brexit. Another company is Man Group (LSE: EMG). Man is one of the world’s only listed hedge funds. Its speciality is automated trading strategies, which perform best in volatile markets.

Like Ferrexpo, most of Man’s business is conducted in US dollars, and the enterprise is attracting business from around the world. Back in October, the group reported that assets under management had hit a record level thanks to booming interest from large investors around the globe. Assets under management rose to a record $114bn in the third quarter, up 0.4% from the previous quarter.

This record level of assets should, City analysts believe, translate into a boom in management fees. Analysts have pencilled in earnings per share of $0.20 for fiscal 2019, which translates into a P/E of 8.9 at the current price and exchange rate.

And just like Ferrexpo, Man is committed to returning excess cash to investors. This year, analysts believe the group’s dividend yield will hit 6.6% as it distributes a total of $0.12. A similar level of dividend income is projected for fiscal 2019.

The bottom line 

So overall, if you’re looking for income stocks that should protect your portfolio from any Brexit fallout, then I reckon Man and Ferrexpo are two of the best picks in the FTSE 250. 

Both of these companies have an international presence and are committed to returning cash to investors. With this being the case, I believe that no matter what happens to the UK after March next year, they should continue to prosper.

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.

Rupert Hargreaves owns no share 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

How many National Grid shares must I buy for a £100 monthly second income?

I think National Grid could be one of the safest options for investors seeking a dividend income. And today its…

Read more »

Blue NIO sports car in Oslo showroom
Investing Articles

NIO stock is down 90%. Will it recover?

NIO stock has fallen significantly from its 2021 all-time high. But could now be a chance for this Fool to…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

These 2 UK shares could help me reach £1,000,000 in my Stocks and Shares ISA

A FTSE 100 compounding machine and a FTSE 250 value stock are the UK shares Stephen Wright thinks could help…

Read more »

Middle-aged Caucasian woman deep in thought while looking out of the window
Investing Articles

If I’d invested £1,000 in Lloyds shares at the start of the year, here’s what I’d have now

The stock market is unmoved, but Stephen Wright thinks last year’s record profits might give Lloyds shares a long-term boost.

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

I’ll snap up shares in this growth stock in March if others don’t get there first

This Fool says shares in this growth stock are stable, full of profit, and might be undervalued. But there are…

Read more »

Rainbow foil balloon of the number two on pink background
Investing Articles

My 2 top energy investment trust picks for a passive income

I'm aiming to buy more of these investment trusts for a passive income and the reasonably stable energy sector returns…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

5.5% dividend yield! Shares like these could be great for my retirement

Oliver Rodzianko thinks this company with a stellar dividend yield could be very useful when looking for income from his…

Read more »

Investing Articles

Should I buy this FTSE 250 stock as it soars back to the FTSE 100?

This FTSE 250 stock has rallied following its pandemic woes. This Fool thinks now could be a good time to…

Read more »