The Motley Fool

2 cheap FTSE 250 dividend stocks I’d buy today and hold for the next 20 years

For investors scouring the London stock bourses for hot dividend shares, both SThree (LSE: STHR) and MJ Gleeson (LSE: GLE) could fit the bill. I’ve been fans of both FTSE 250 shares for many years, and they continue to go from strength to strength.

Global giant

Let’s start off with SThree. As I mentioned last time out, the recruitment play is predicted to keep the full-year dividend on hold at 14p per share for the 12 months to November.

Two things to remember, however. This projection still yields an inflation-busting 3.7%. Secondly, a combination of robust earnings growth forecasts (the City is expecting profits jumps of 9% and 15% in fiscal 2018 and 2019, respectively), and solid balance sheet strength, suggests that dividends should march higher again from next year.

For the approaching period, a 14.9p per share dividend is anticipated by brokers, meaning that the yield marches to 4%.

Regular readers will know my bullish take on the business on account of its impressive progress in overseas markets, as well as a more specific focus on the areas of science, technology, engineering and mathematics. Latest trading details reinforced my positivity as well.  SThree declared last week that group gross profit leapt 13% from June to August, to £82.7m. That was assisted by a 24% improvement in profits in Continental Europe, 16% in the Asia Pacific/Middle East combined territory, and 8% in the US.

The company remarked that “trading conditions in the majority of our markets are encouraging”. And as it bulks up its global headcount (it was up 7% year-on-year as of the close of August), I’m backing SThree to continue impressing long into the future. Considering it trades on a forward P/E ratio of just 13.4 times, I also believe it’s too good to miss right now.

Housing star

As I’ve mentioned more recently, and looking further afield, housebuilders remain at the mercy of housing ministers and the future of the critical Help To Buy purchase scheme. I’m convinced that fears of a serious alteration, or even termination, are overblown, however. Indeed, I think that MJ Gleeson’s  (LSE: GLE) forward P/E ratio of just 13.4 times more than bakes in these risks.

The City sees no reason for earnings growth at the FTSE 250 firm to hit the skids any time soon, and they’re forecasting a 5% earnings rise in the year to June 2019. And this leads to predictions of a 29p per share dividend, too, a figure that yields a chunky 3.7%.

MJ Gleeson’s share price exploded this week as it painted a bright trading picture looking ahead, commenting that “demand for low-cost homes in the North is strong” and added that “our homes continue to remain highly affordable despite the recent increase in bank rates and mortgage finance remains readily available.”

In this environment, I see plenty of scope for current profits and dividend projections for the builder to be upgraded. And this, allied with the multitude of problems that will keep Britain’s housing shortage stretching long into the future, makes MJ Gleeson a great stock to buy now… and to hold for years to come.

You Really Could Make A Million

Of course, picking the right shares and the strategy to be successful in the stock market isn't easy. But you can get ahead of the herd by reading the Motley Fool's FREE guide, "10 Steps To Making A Million In The Market".

The Motley Fool's experts show how a seven-figure-sum stock portfolio is within the reach of many ordinary investors in this straightforward step-by-step guide. Simply click here for your free copy.

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.