2 FTSE 250 dividend stocks with 10%+ yields!

Jonathan Smith outlines two FTSE 250 dividend stocks that offer a high dividend yield that could interest passive income investors like him.

| 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.

British bank notes and coins

Image source: Getty Images

There may be with expectations that the Bank of England could raise interest rates in a few weeks, but the income I’m making on my savings account is — and will remain — minimal. I don’t see this changing for at least a year or more. Instead, I can look to park some of my spare cash in FTSE 250 dividend stocks that offer me an attractive yield. Here are two companies that currently have yields above 10%.

An undervalued dividend stock

The first FTSE 250 dividend stock I’m considering is Ferrexpo (LSE:FXPO). The iron ore miner has operations in central Ukraine but processes and sells globally. To this end, it’s the third largest iron ore pellet exporter for the steel industry in the world.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

Over the past year, the share price is up 88%. However, over a shorter period, the price has been falling. This is one element that has helped to push the dividend yield higher. For example, over three months the share price is down almost 25%. The current dividend yield sits at 11.95%, making it one of the highest in the FTSE 250.

One of the main reasons for the slump in the short run has been issues with China. The country is one of the largest steel consumers in the world. Demand for iron ore is directly linked to the economic growth of China. In recent months, this growth has been questioned. Caution around a slowdown, along with a crackdown in certain sectors, has seen iron ore prices fall considerably. For example, in July it was trading at $220/T. Now it’s at $115/T.

This is the main risk I see for the FTSE 250 dividend stock going forward. However, the reward here could be large. As my colleague Zaven Boyrazian mentioned last week, the P/E ratio is just 2.4. This could indicate that the company is undervalued. 

Recent half-year results in August showed revenue up 74% versus H1 2020. It also increased capital investment by 48%. I think this investment should help the business in the long run, even if iron ore prices remain low.

Looking for trading volatility

The second FTSE 250 dividend stock I like is CMC Markets (LSE:CMCX). The business is an online trading company, servicing retail clients like you and I, but also having institutional clients. It offers products like spread betting, that allows me to bet on the direction of a stock, currency, bond and more.

Over one year, the share price is down 16%. In a similar way to Ferrexpo, the dividend yield has shot up recently due to the share price being down 35% in three months. This has pushed the dividend yield up to 11.06%.

The main reason for the fall was a trading update released in early September. It shifted the tone from previously being very bullish to much more conservative. For example, it commented that “overall market activity has remained subdued through July and August”

However, I think this is just a blip. The business has performed very well during the boom in retail trading since the start of the pandemic. Even if activity is lower right now, it has built up a large client base so that when volatility rises, it can capitalise again.

I think both FTSE 250 dividend stocks warrant a small investment for my portfolio at the moment.

Our #1 North American Stock For The ‘New-Age Space Race’

Billionaires like Jeff Bezos, Bill Gates, Elon Musk, and Mark Zuckerberg are already betting big money on the ‘new-age space race’, and for one very good reason…

…because this is an industry that according to Morgan Stanley could be worth $1 TRILLION by 2040.

But the problem is most of their investments are in private companies — meaning they’re largely off-limits for everyday investors.

Fortunately, our team of analysts have identified one little-known company that’s at the cutting-edge of the space industry, and is currently trading at what looks like a VERY reasonable valuation

for now.

That’s why I want to urge you to check out our premium research on this top North American space stock ASAP.

Simply click here to see find out how you can grab your copy today

jonathansmith1 and The Motley Fool UK have 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

Futuristic front of NIO car in Norwegian showroom
Investing Articles

Down over 50%, is NIO stock the best EV pick right now?

NIO stock has dipped over 50% in the past year. Does this create the perfect opportunity to buy or are…

Read more »

Buffett at the BRK AGM
Investing Articles

3 Warren Buffett techniques to build my wealth

Our writer shares a trio of Warren Buffett investing habits he hopes can help him build his own wealth.

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Aviva shares are in demand. Should I buy too?

Hargreaves Lansdown investors were piling into Aviva shares last week. This Fool is asking whether he should join the queue.

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

3 reasons why I think the IAG share price could rally this year

Jon Smith writes about how improving risk sentiment could help the IAG share price this year, but not without risks…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

A passive income stock I’ve bought to supercharge my wealth!

I think this UK dividend stock is one of the best to buy for healthy long-term passive income. Here's why…

Read more »

British Pennies on a Pound Note
Investing Articles

3 hot penny stocks I’m buying in June!

With their exciting growth potential, penny stocks can be great investments. I've found three to buy next month based on…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

2 green dividend shares I’d buy with £500

Jon Smith explains two dividend shares with a focus on renewable energy that have caught his eye at the moment.

Read more »

Young black woman walking in Central London for shopping
Investing Articles

Should I buy these cheap FTSE 100 shares before June?

Paul Summers considers whether he should add these cheap FTSE 100 stocks to his portfolio before their next updates.

Read more »