Many investors seeking big dividends flock to the FTSE 100, but there are tasty ones on offer from FTSE 250 stocks too. Here are three that might tempt you.
No search for bargain dividends would be complete without a housebuilding share, and I’m looking at Crest Nicholson Holdings (LSE: CRST). Brexit fears have gripped the whole sector, but I see that as seriously overdone at a time when we’re reminded almost daily of the housing shortage the country faces.
Crest Nicholson completed 5% more homes in 2016, hiking pre-tax profit by 27%. The firm moved into a net cash position and lifted its dividend by 40% to 27.6p, and told us it’s “on target to deliver £1.4bn sales and 4,000 homes by 2019“.
With, in the words of chief executive Stephen Stone, “strong demand for new homes, a benign land market and government policies to improve access to housing,” I don’t see any real risk to the company’s dividend prospects over the next few years.
With the shares down at 551p and on a forward P/E of only 8.2, locking in predicted dividend yields of 6.4% and 7.1% for this year and next could be a very smart move.
Shares in direct home shopping retailer N Brown Group (LSE: BWNG) have been through a torrid few years, and with them depressed as low as 205p we’re looking at forward P/E multiples of only around nine.
The dividend is expected to fall a little for the year just ended, but it should still yield around 6%. And if the mooted return to modest earnings growth comes off in 2019, the City suggests it will rise as high as 6.8%. Cover by earnings looks reasonable at around 1.times, so is there any reason for optimism?
Full-year results to February 2017 are due on 27 April, and the firm’s recent Q3 update suggested its “strategic transformation” is on track. Overall revenue was up 4.1% with “77% of new customer demand generated online,” and the firm saw its Power Brands doing well and enjoying a good Christmas.
Although the company is in a bit of a transition phase right now with all the attendant uncertainty, I can see N Brown’s performance improving nicely over the next few years as it increasingly moves its customer base to its internet offerings. I reckon we’re seeing an overlooked dividend bargain here.
If you’re uncomfortable making profit by lending money to poor people in developing countries, you might want to look away from International Personal Finance (LSE: IPF).
But there’s no doubt it’s bringing in cash and paying big dividends. The firm, which lends mostly in eastern Europe and Mexico, reported a fall in profits in 2016, but that was largely expected and reflected a number of issues — including reduced home credit profit, investment in IPF Digital, foreign exchange movements, regulatory changes in Poland, and other things.
The dividend was maintained at a well-covered 12.4p per share, and though it’s predicted to drop a little this year to 12.2p, with the shares on a very low P/E of 5.6 we’re looking at a yield of 6.6% — set to improve to a P/E of only 5 on 2018 forecasts, with the yield climbing to 6.9%.
While I wouldn’t invest for personal reasons, I see a strong likelihood of an upwards re-rating if we see the expected turnaround starting to materialise in 2018. And those dividend yields do look attractive.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.