In a recent article I discussed three FTSE 250 growth stocks that are in great condition to deliver exceptional profits growth during the next 10 years at least.
Today, I’m looking to build on this by discussing three shares from Britain’s second-tier index that offer strong earnings potential as well as big dividend yields. The first of these is Big Yellow Group (LSE: BYG), the self-storage provider predicted to pay big rewards as citizens’ insatiable quest for additional space to hold their valuables — as well as, let’s face it, junk — drives trade.
This phenomenon was underlined by January’s financial update in which Big Yellow reported a 2.4% year-on-year improvement in closing like-for-like occupancy as of the end of December, to 82.1%. This, in turn, helped underlying revenues for the last quarter jump 6.4% to £31.5m.
And the company, through its perky acquisition and construction programmes (the latter of which has seen it recently break ground on new sites in Manchester and Camberwell) is creating the backdrop for sustained profits growth in the years ahead.
A bright earnings outlook means that City brokers are predicting dividend increases, to 36p per share in the 12 months to March 2019, and to 38.3p in fiscal 2020. Consequently, Big Yellow carries chubby 3.7% and 4% yields for these respective periods.
Tritax Big Box (LSE: BBOX) is another storage expert I’m tipping for great things. In this case, the holding of retail products before they’re stuck on trucks and transported to shops, or straight to the customer.
The company offers space to blue-chip customers including the likes of Amazon, giving it the long-term security to keep growing rental revenues and to ride out temporary blips in the domestic economy, such as now. As a result, 100% of its property portfolio is currently let or pre-let, and this stability is encouraging it to keep on expanding (it acquired eight new ‘big box’ sites in 2018 alone).
Reflecting this bright outlook, the number crunchers expect Tritax to deliver steady earnings expansion through to the end of next year at least, meaning dividends are expected to keep rising too. Thus payments of 7p and 7.3p per share are estimated for 2019 and 2020, respectively, figures that yield a stunning 5% and 5.2%.
The biggest yields of all!
The stars appear aligned for Polymetal International (LSE: POLY) to also keep paying market-mashing dividends, because of the great gold price outlook that City brokers expect to underpin double-digit percentage profits growth this year and next.
For 2019, a total 42.6p per share dividend is expected, translating through to a jumbo 5% yield. And next year, a 47.7p reward is being touted, thus nudging the yield to a titanic 5.6%.
These perky profits forecasts are supported by Polymetal’s surging production too. An anticipated 1.55m ounces for last year is predicted to rise to 1.7m this year, and to 1.8m in 2020. And the quality of its assets like Nezhda in Russia — a complex at which the gold digger upgraded its reserve estimates in November — convince me that profits, and subsequently dividends, can keep tearing higher beyond the medium term.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Tritax Big Box REIT. 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.