I’d buy this FTSE 250 share for its 6%+ dividend yield

This FTSE 250 stock has crashed by almost a third in the past year and nearly halved in five years. But I’m drawn to its tasty 6.3% dividend yield!

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With the London Stock Exchange closed for the Jubilee holiday since Wednesday’s close, the UK stock market has had a quiet week. In the previous five trading days, the FTSE 100 index added a mere 10.2 points (0.14%) to close at 7,532.95 points. But it’s outside of the Footsie that I’ve been looking for value and/or high-yielding shares to add to my family portfolio. I’ve found a suitable candidate lurking in the FTSE 250 index that I don’t own, but would buy and hold today for its juicy dividend yield.

This £1bn FTSE 250 company caught my eye

While hunting for cheap shares today in the mid-cap FTSE 250 index, I spotted one business that I know well. This company is Moneysupermarket.Com Group (LSE: MONY), a leading British financial price-comparison website. You may know Moneysupermarket from its extensive TV advertising, or from using its site to buy or switch financial products.

Moneysupermarket is a very popular resource for consumers looking to compare products including gas and electricity tariffs, car and home insurance, travel policies, home mortgages, personal loans and credit cards. The firm also owns the hugely popular Money Saving Expert website, founded by consumer champion Martin Lewis (who’s an old friend and rival of mine).

The Moneysupermarket share price slumps

Here’s how this company’s shares have performed over seven different timescales:

One day-0.6%
Five days6.3%
One month7.4%
Year to date-14.4%
Six months-9.8%
One year-31.6%
Five years-47.7%

As you can see, this FTSE 250 stock has had a poor 2022 so far, losing around a seventh of its value. The share price has also crashed by almost a third over one year and by almost half over five years. Oh dear. But buying a share now means buying a company’s future and not its past share-price performance.

The dividend yield looks tasty to me

On Wednesday, the share price closed at 185p, valuing the group at just short of £1bn. Just over a year ago, this share hit 280p on 2 June 2021. It’s since crashed by 95p, or 33.9% of its value. However, at its 52-week low on 12 May 2022, the stock slumped to 162.3p, so it’s bounced back from this bottom over the past four weeks.

Here’s how its fundamentals stack up today:

Price-to-earnings ratio18.8
Earnings yield5.3%
Dividend yield6.3%
Dividend cover0.8

The first thing I see is its trailing earnings yield of 5.3% fails to cover its dividend yield of 6.3% a year. But on a forward basis, this company’s price-to-earnings ratio is expected to fall to 11.9, boosting its earnings yield to 8.4%. This would cover the current dividend yield by 1.33 times.

What’s more, I know from experience that company dividends aren’t guaranteed, so they can be cut or cancelled at any time. And Moneysupermarket has frozen its yearly dividend at 11.71p for the past three years. Also, new rules since January surrounding insurance renewals may hit the company’s future earnings. Even so, I would gladly buy this share today for its market-beating dividend yield!

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 considered so you should consider taking independent financial advice.

Cliffdarcy has no position in any of the shares 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.

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