According to my research, the best instant access Cash ISA rate available on the market today is just 1.47%. This dismal rate of interest does not even compensate for the rate of inflation, which is currently 1.9% per annum.
With this being the case, I highly recommend ditching cash and investing your money in dividend stocks instead. Here are three FTSE 250 dividend stocks I’ve got my eye on today.
NewRiver Reit (LSE: NRR) saw its shares crash to a five-year low last year as investors rushed to dump any investments with significant exposure to the UK high street.
As one of the largest publicly traded retail and leisure property investors in London, NewRiver has more exposure to retail bankruptcies than most, but despite its retail exposure, the company is holding up relatively well.
It has relatively limited exposure to the most significant failures, such as Debenhams. Its total exposure to the struggling department store is just 0.1% of its gross rent roll, meaning that the company’s collapse is likely to have a minimal impact on the firm.
In January, it reported occupancy of its retail portfolio of 95.5% and pub occupancy of 98.9% — robust metrics considering the state of the high street.
These occupancy figures, coupled with the company’s low level of gearing (35% loan to value) lead me to conclude that investors can rely on NewRiver’s 9.4% dividend yield.
Another FTSE 250 high-yield stock that’s on my radar is Hastings Group (LSE: HSTG).
Hastings is taking on the UK’s car insurance market by using technology to deliver better outcomes. This approach has helped the firm increase profits from £41m to £128m over the past six years. Revenues have risen from £252m to £814m over the same period.
Despite this impressive growth, the stock recently dived after the firm warned that profits growth would slow this year as claims inflation has been outpacing insurance premium growth. Following the update, analysts are now forecasting flat earnings for 2019, which is disappointing, but I see these as temporary headwinds.
The whole UK car insurance industry is facing the same issues, and this should mean premiums start to grow over the next 12 months to reflect the higher level of claims. With that in mind, I reckon now could be an excellent time to snap up the shares at a historically low valuation of just 9.6 times forward earnings. The dividend yield of 7.3% looks pretty safe as well.
My last FTSE 250 income pick is Dixons Carphone (LSE: DC). Another company that has fallen out of favour with investors recently, Dixons is still the first point of call for many shoppers looking for electricals on the high street.
Analysts have pencilled in a decline in earnings of 23% for 2019, the second straight year of declining profits. However, stability is projected to return next year, and I think this could be a catalyst for the stock. Moreover, the shares are changing hands at just 7.3 times forward earnings, 37% below the sector average, implying there’s a near 40% upside for investors when confidence returns.
In addition to capital growth, there’s also the 5% dividend on offer, although, with the payout now covered 2.8 times by earnings per share, I think there’s a good chance the yield could jump back to its historic level of 7% during the next year or two.
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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.