2 hot dividend stocks I’m eyeing up for March with £500

Jon Smith considers two dividend stocks from the FTSE 250 that yield a minimum of 5.5% at the moment for his income 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.

UK money in a Jar on a background

Image source: Getty Images

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.

It’s going to be March next week, which means a new month to find investing opportunities. I always try to get a head start each month. I work out how much free cash I’ll have over the next four-and-a-bit-weeks to invest, along with what I think the topic theme could be. At the moment, I’m anticipating having £500, which I want to put to work in hot dividend stocks. Here are two options I’m considering.

Shopping around for deals

The first is Moneysupermarket.com Group (LSE:MONY). The main website offers a price comparison service to users on a broad range of financial products. The company also owns MoneySavingExpert.com, a famous site that include tips on how to manage expenses and find the best deals.

It currently has a dividend yield of 6.04%, making it one of the highest-yielding dividend stocks in the FTSE 250. The share price is down 32% over the last year. In the latest full-year results just released, the business kept the dividend per share unchanged at 11.71p. This is interesting as revenue and profitability actually fell last year. Yet the decision to keep the same payout amount shows that it values income investors and wants to keep them onboard.

Results were softer in 2021, with revenue down 8% on the prior year and adjusted EBITDA down 7%. This was mostly driven by the fall in travel and home services. This isn’t surprising, given the lockdowns over the past year. However, the Money arm (ie cards) did show growth. Looking forward, I think that Money can continue to grow, and travel and home services should rebound in 2022 as people get out more.

One risk to this dividend stock is in the Energy sector. Lower wholesale prices are needed to provide product availability. Current high prices will negatively impact revenue.

A growing dividend stock

The second stock I might buy is IG Group (LSE:IGG). The retail trading platform is also a member of the FTSE 250 index, with a dividend yield at the moment of 5.56%. Over the past year the share price has fallen by 2%

I like the business model for several reasons. First, it’s continuing to branch out into new areas, something that’ll help to diversify and grow revenues in the future. This has come from external acquisitions such as tastytrade, and from internal moves such as pushing into Japan. Second, it’s a fairly low-risk model. It makes a small commission when clients buy and sell. As long as it maintains a strong platform and can retain customers, revenue should follow.

One risk is that as retail investing has become more popular in recent years, so has the competition. Fellow FTSE 250 constituents CMC Markets and Plus500 are just two players vying for the same customers as IG, with little to differentiate them. However, for the moment it appears IG is doing well in this regard, with active client numbers jumping 42% in the half-year results compared to the previous six months. Some of this is due to the tastytrade acquisition, but some is natural growth.

I’m considering putting my £500 to work split between both dividend stocks.

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.

Jon Smith has no position in any share mentioned. The Motley Fool UK has recommended Moneysupermarket.com. 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

Can the filthy cheap BP share price rocket in 2025? Here’s what the experts say

Harvey Jones took advantage of a tough year for the BP share price to add the stock to his portfolio…

Read more »

Investing Articles

I aim for a million buying just 10 or so shares!

Rather than investing in dozens of different companies, our writer is focussing on finding a few great ones to help…

Read more »

British Pennies on a Pound Note
Investing Articles

Has this 6% yielding penny share fallen too far?

After a testy few days for a penny share our writer holds, he revisits the investment case and weighs management…

Read more »

Investing Articles

These are the 3 top-yielding FTSE 250 stocks in my passive income portfolio

Mark Hartley explains why these three mid-cap stocks make good additions to his passive income portfolio, despite lacking the stability…

Read more »

Investing Articles

3 stock market pitfalls for beginners to look out for

When investing in the stock market it's easy to fall foul of these three big mistakes. Our writer considers some…

Read more »

Growth Shares

The second phase of AI’s started. I expect these UK shares to benefit

Edward Sheldon believes these UK shares could do well as artificial intelligence solutions are introduced within the corporate world.

Read more »

Investing Articles

How much will be needed to start buying shares in 2025?

Christopher Ruane explains why he thinks it need not cost the earth to start buying shares and details some considerations…

Read more »

Investing Articles

Can the Next share price defy the odds and grow another 25% next year?

Harvey Jones is in awe of the Next share price, which has shrugged off the troubles hitting retail for another…

Read more »