How would you like to earn a 7.7% annual yield on every £1 you invest?
In this article, I’ll take a look at five well-known FTSE 250 firms with proven dividend track records, which currently offer an average prospective yield of 7.7%.
Lancashire Holdings (LSE: LRE) is an insurance firm that provides specialist cover in sectors such as oil and gas, aviation and shipping.
These specialist activities generate attractive profit margins, but Lancashire’s earnings and dividend payments can be quite lumpy, and do not rise consistently each year.
However, Lancashire is expected to declare a total dividend of $1.40 for 2014, giving a prospective yield of 15%. I believe this is worth a closer look.
India-based Vedanta Resources (LSE: VED) is a diversified miner with a big interest in oil production. Unsurprisingly, profits (and the share price) are down, due to slumping commodity prices.
Vedanta also has a lot of debt, but there’s plenty of cash on hand and the firm’s founder and chairman, Anil Agarwal, owns 70% of the shares. This suggests to me that he is unlikely to cut the dividend, which currently provides a prospective yield of 9.1%.
Housebuilder Berkeley Group Holdings (LSE: BKG) is enjoying bumper profits at this stage in the housing cycle, and is in the process of returning some of its excess cash to shareholders.
The firm is targeting returns of 434p per share by September 2015, followed by 433p per share by September 2018 and a further 433p by September 2021.
Berkeley is expected to pay a dividend of 183p per share in 2015, giving a prospective yield of 7.4%.
Car insurance firm Esure Group (LSE: ESUR) is well known and should be a fairly straightforward investment: most of us need car insurance.
Although motor insurers have been struggling with falling insurance rates over the last year or so, this softness won’t last forever, and I believe now could be a good time to buy.
Esure currently trades on an undemanding 10.3 times 2015 forecast profits and offers a 2015 prospective yield of 6.8%.
Sin stock Ladbrokes (LSE: LAD) won’t be for everyone, and does carry measure of risk: the firm’s recovery plan, which started in 2010, is taking longer than expected to bear fruit.
As a result, profits are down and Ladbroke’s dividend is expected to be cut this year. However, the shares still offer a 6.0% prospective yield, and with a new chief executive expected later this year, Ladbrokes could be one to watch.
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