The Motley Fool

3 FTSE 250 dividend stocks I’d buy and hold for half a century

In a recent article I looked at three hot income stocks from the FTSE 250 that investors could feel confident enough to hold for the next several decades.

This piece looks at another three from this index, starting off with Unite Group.

While the Brexit saga has cast some doubt over the level of overseas student numbers flocking here in future years, I don’t believe Britain’s future relationship with the European Union, however that may turn out, will deter the number of people travelling to study in this country from continuing to rise. As a consequence I’m backing demand for Unite’s student accommodation to keep rising.

Unite has supercharged dividends over the past five years and further significant growth is predicted by City analysts for 2018, resulting in a chunky 28.7p per share estimate which yields a bold 3.3%. A prospective P/E multiple of 25.4 times may make the stock expensive, but it’s a small price to pay given the likelihood that recent double-digit annual profits improvements look set to continue, helped by Unite’s expansion programme.

The 6%+ yielder

Most of the share price gains that I had enjoyed since buying into Ibstock last April have been eradicated, caused by the subsequent announcement of production problems that are set to hit near-term earnings.

The City may have downscaled its earnings projections in the wake of July’s worrisome update but, on the back of the brick-maker announcing that it was splashing out on special dividends in August’s half-time update, dividend projections have been scaled up. A 14.6p per share dividend is now forecast for 2018 and this yields a delicious 6.2%.

Ibstock can also be picked up on a forward P/E ratio of 12.4 times right now. In my opinion this makes it an irresistible pick given the size of the UK’s housing shortage, a problem that should keep sales of its bricks charging higher for many years to come.

The fallen angel

PZ Cussons (LSE: PZC) has been a darling for dividend chasers for the best part of a half a century. The firm had hiked the annual payout for a staggering 44 years in a row but, bowing to the pressure caused by tough trading conditions in Nigeria and Europe, it was forced to hold the dividend at 8.28p per share last year.

City brokers are convinced that, with earnings growth about to return after several years of profits reversals, that the dividend should start rising again immediately. An 8.4p reward is currently forecast for the year to April 2019, meaning a chubby 3.6% can be enjoyed.

Cussons may not be fully in the clear, but recent trading numbers suggest that it may now be past the worst of its troubles. For the three months to August it advised that “good performance in Europe and Asia has offset challenging trading conditions in Nigeria,” and with the business stepping up cost-cutting and product development, things could continue to improve.

The household goods play deals on a forward P/E ratio of 17 times which I consider to be quite low for a company of Cussons’ calibre. I believe in the star power of its labels like Imperial Leather, and I reckon that their age-old appeal should continue to make the FTSE 250 firm an impressive profits and dividend creator in the years ahead.

Want To Retire Early?

Do you want to retire early and give up the rat race to enjoy the rest of your life? Of course you do, and to help you accomplish this goal, the Motley Fool has put together this free report titled "The Foolish Guide To Financial Independence", which is packed full of wealth-creating tips as well as ideas for your money.

The report is entirely free and available for download today, so if you're interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?

Royston Wild owns shares of Ibstock. The Motley Fool UK owns shares of PZ Cussons. 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.