Have £2k to invest? I think these FTSE 250 dividend stocks could surge after Brexit

An international focus means these FTSE 250 (INDEXFTSE: MCX) companies could be the best Brexit protection for your portfolio.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The stocks that are best positioned to survive, or even profit from Brexit, in my opinion, are those companies with an international focus. Businesses like iron ore producer Ferrexpo (LSE: FXPO).

I reckon there is a strong chance that Brexit will have little to no impact on this company’s operations. The group is the world’s third largest exporter of iron ore pellets, and almost all of its operations are located in Ukraine. 

Insulated from Brexit 

No matter what happens when (and if) the UK leaves the EU at the end of March next year, it is highly unlikely it will have a significant impact on the world’s demand for iron ore. At the same time, virtually all of Ferrexpo’s income is in US dollars, so the company is insulated from sterling volatility. Some analysts have speculated that in the event of a no-deal Brexit, sterling could fall to $1.10, which would be bad news for importers, but it would be great news for Ferrexpo shareholders because profits, on a per share basis, would jump.

What’s more, Ferrexpo is a dividend champion. The company returns as much excess cash to investors as possible and today declared a special dividend of 6.6 US cents per share, for a total of $40m. Analysts are expecting a distribution of $0.13 for the full year, giving a potential dividend yield of 5.4% at the time of writing.

Global capital 

Ferrexpo is one possible option to protect your portfolio from Brexit. Another company is Man Group (LSE: EMG). Man is one of the world’s only listed hedge funds. Its speciality is automated trading strategies, which perform best in volatile markets.

Like Ferrexpo, most of Man’s business is conducted in US dollars, and the enterprise is attracting business from around the world. Back in October, the group reported that assets under management had hit a record level thanks to booming interest from large investors around the globe. Assets under management rose to a record $114bn in the third quarter, up 0.4% from the previous quarter.

This record level of assets should, City analysts believe, translate into a boom in management fees. Analysts have pencilled in earnings per share of $0.20 for fiscal 2019, which translates into a P/E of 8.9 at the current price and exchange rate.

And just like Ferrexpo, Man is committed to returning excess cash to investors. This year, analysts believe the group’s dividend yield will hit 6.6% as it distributes a total of $0.12. A similar level of dividend income is projected for fiscal 2019.

The bottom line 

So overall, if you’re looking for income stocks that should protect your portfolio from any Brexit fallout, then I reckon Man and Ferrexpo are two of the best picks in the FTSE 250. 

Both of these companies have an international presence and are committed to returning cash to investors. With this being the case, I believe that no matter what happens to the UK after March next year, they should continue to prosper.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves owns no share 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.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »