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2 cheap FTSE 250 dividend stocks I’d buy for my ISA

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It’s hardly surprising that Greene King’s (LSE: GNK) share price has slumped over the past year as the pressure on Britons’ spending power has mounted.

The pub operator has seen its market value shrink by more than a third over the past year alone, the release of disappointing sales figures last September worsening the fears of already-jittery investors and reflecting the growing stress on our wallets.

While conditions have shown little sign of picking up, things aren’t exactly getting worse. Latest trading details released in January showed that, while like-for-like sales rose 1.6% in the fortnight spanning the Christmas period, sales on a comparable basis during the first 37 weeks of the fiscal year were still down 1.4% from a year earlier.

7%+ yields!

Now some City analysts are expecting this tough trading environment to have some ramifications on Greene King’s progressive dividend policy. In fact, consensus suggests that, with earnings expected to slide 12% during the 12 months to April 2018, the full-year payout will slip to 33p per share from 33.2p last year.

However, investors need to bear in mind that this projection still yields a mighty-impressive 7.1%. And with the pub giant expected to steady the ship thereafter — a 1% profit improvement is suggested for fiscal 2019 — the dividend is expected to get marching higher again too, to 33.3p. This means the yield moves to a quite stunning 7.2%.

Clearly Greene King is not without its share of risk. But in my opinion this is more than reflected in its bargain-basement forward P/E ratio of 7.4 times. In fact, with the company doubling down on cost-cutting measures, as well as taking steps to improve the customer experience, I reckon this lowly valuation provides plenty of upside.

Escape to the country

Having said that, share pickers seeking investments on a sounder footing should take a close look at Countryside Properties (LSE: CSP), in my opinion.

Britain’s housing shortage isn’t going to solve itself any time soon, after all. This, combined with the support for first time buyers created by the mortgage rate wars being fought by all of the country’s major lenders, as well as the government’s Help To Buy purchase scheme, is helping sales continue to surge at new-build specialists.

Countryside itself declared in January that completion numbers had risen 47% between October and December, to 852 units, whilst its private forward order book stood at a robust £242.9m. And against this backdrop City analysts are expecting earnings to rattle 24% higher in the year to September 2018, with a further 18% rise forecasted for next year.

As a consequence the FTSE 250 firm can be picked up on a forward P/E ratio of just 9.2 times. Moreover, these perky projections also lead to expectations of further sizeable dividend improvements — last year’s 8.4p per share dividend is predicted to skip to 10.6p in the present period, and to rise to 13p in fiscal 2019. Investors can subsequently gobble up chunky yields of 3.4% and 4.1% for this year and next respectively.

Buy-And-Hold Investing

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.