When looking for dividend potential in the FTSE 250, investors often turn to banks and mining stocks. This is for good reason, given the generous payments and high yields. Yet there’s another stock I’ve spotted that (as far as I can tell) hasn’t got much attention at all. This despite it being a really good dividend stock for investors to consider. Let’s discuss further.
Details of the firm
The company I’m talking about is the International Public Partnership (LSE:INPP). Over the past year, the share price is down by 20%. The current dividend yield is 6.55%.
The firm aims to invest responsibly in social and public infrastructure that delivers long-term benefits for all. What this means in practice is that it has a portfolio spread around the world of commercial properties and infrastructure. This ranges from sectors such as health to transportation. It also includes some promising new areas within digital infrastructure.
Given the income it receives from the rent and leasing, it can afford to pay out dividends to shareholders. It typically pays two dividends a year. These have been growing year on year and should continue to do so. A key factor in this is that the business aims to link the dividend to inflation.
Recent performance
The share price has fallen below the net asset value (NAV) of the properties in the fund over the past year. At the moment, it trades at a 25% discount. Granted, the NAV value is only updated twice a year, so this discount needs to be taken with a pinch of salt.
Factors that have hindered the company relate to higher interest rates and an uncertain property market. Higher rates makes taking on new debt to fund new projects more expensive. This eats into profits.
The uncertain property market means that the valuations of commercial sites aren’t great right now.
Even though this is a risk going forward, the property market is cyclical. I think that’s why this stock hasn’t received a lot of media coverage or recommendations recently. This is because the sector isn’t in a great spot right now.
Yet I think that’s what makes it a gem. To buy now allows investors to enjoy the elevated yield. At the same time, in years to come I’d expect the share price to rally back to the NAV value. This could result in a profit for early investors.
Why quiet stocks are sometimes the best
I’ve found in the past that sometimes when a stock is all over the news for good reasons, the share price has already jumped. In other words, I’ve missed the boat.
That’s why finding stocks that are flying under the radar can be great for investors. Of course, the risk is that the company never gets the attention it deserves. But if others pick up on the value and income that I believe there is at the International Public Partnership, it could do very well in coming years. That’s why I think investors should consider buying the stock now.
