The Motley Fool

A dirt-cheap FTSE 250 dividend stock with bigger yields than Lloyds Bank

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.

Hand holding pound notes
Image source: Getty Images.

Regular readers will know that Lloyds Banking Group and its monster dividend yield (which currently sits at a chubby 5.2%) don’t move me in the slightest.

Given the probability of sinking revenues and soaring impairments as the UK drives itself off the Brexit cliff, I’m not tempted to buy in for even a second. Indeed, my bearish take on the business was reinforced by the terrible first-quarter financials released by industry rival Barclays today, numbers which underlined the intense pressures on the banking sector applied by the tough political and economic environment.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

I’d much rather buy FTSE 250 income hero 888 Holdings (LSE: 888) because of its superior profits outlooks for the near term and beyond. And oh yes, its forward yields soar above those of Lloyds too.

Roll the dice

888 is a great play on the online gambling explosion and latest results in March proved just why.

Adjusted pre-tax profits at the business swelled 11% in 2018 to $86.7m, thanks to the progress being made on foreign shores and particularly so in Continental Europe (excluding the UK, revenues at its core Casino and Sports divisions swelled 17% and 18% last year).

There’s plenty of evidence to suggest that the trading environment should remain conducive to more excellent profits growth looking down the line too. 888 cited recent research from H2 Gambling Capital predicting that the value of the global online gambling industry will swell from $50.8bn in 2018 to $70.3bn within the next five years, reflecting the increased use of mobile devices, better internet connectivity for users, and regulatory changes which are opening up new markets to the online operators.

And the FTSE 250 firm is well placed to capitalise on these favourable conditions by bolstering its geographic footprint. Over the past year it’s secured new gaming licences in Sweden, Malta and Portugal and introduced new platforms like in Italy. Meanwhile, away from Europe, 888’s also engaged in further acquisition activity to enhance its operations in the hot growth market of the US and rolled out new websites like 888Sport in New Jersey.

6%+ dividend yields

The impact of competitive and regulatory troubles in the UK are expected to push earnings heavily to the downside in 2019 — a 24% drop is predicted by City analysts, in fact. However, the bottom line is anticipated to bounce back next year and a 10% rise is forecast.

And with 888’s overseas operations creating a bright profits outlook beyond the immediate term, the number crunchers expect dividends to remain on the right side of generous. This means that dividend yields of 6.3% and 6.7% for this year and next can be enjoyed.

At current share prices, the company sports a forward P/E ratio of 12.6 times, more expensive than Lloyds but a figure I consider to be attractive value given the growth rate of the market in which it operates and the ambitious steps it’s taking to boost customer numbers. All things considered I reckon, unlike the banking giant, that 888 is a terrific buy right now.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and Lloyds Banking Group. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.