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2 FTSE 250 dividend shares I’d buy and hold forever

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I’ve never understood the allure of gambling, but it does seem to be irresistible for many. After all, the odds are arranged so the bookie or the house is guaranteed to win over the long term and the punters are guaranteed to lose.

But you could be the bookie yourself, by buying shares in GVC Holdings (LSE: GVC), the company behind Ladbrokes Coral. And you might even do very well out of it.

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The gambling business is being increasingly squeezed by legislation, with the reduction in the maximum stake allowed for fixed-odds betting terminals from £100 to £2 the most recent hit. But despite that, and though GVC’s net gaming revenue (NGR) in the UK dropped by 18% in the third quarter, sports wagers are up 7%.

Outlook upgrade

Worldwide, GVC saw a 2% drop in NGR for the quarter, but a 3% rise year to date. And it’s led the company to upgrade its full-year EBITDA guidance to £670m-£680m, from £650m-£670m previously.

Is it a stock to buy now? Forecasts will presumably be upgraded, but were already suggesting a forward P/E of 12.5 and a 4.6% dividend yield — with a drop to a multiple of 10 for 2020, and the dividend rising to 5.1% with two times cover.

I’m always wary of investing in regulated industries but, whatever restrictions are placed on it, I can’t help seeing the gambling business as remaining a strong cash generator. As long as you’re happy with investing in gambling, I see GVC as a firm dividend buy.

Top dividend

At the end of 2018, fellow Motley Fool writer G A Chester tipped Primary Health Properties (LSE: PHP) as one of his top FTSE 250 dividend picks for 2019 and beyond. That’s proven to be rather prophetic. The company, which invests in healthcare real estate in the UK and Ireland let on long-term leases, has been paying regular and progressive dividends, which reached a yield of 4.9% in 2018.

It’s also provided the added bonus of strong share price growth, with a climb of 21% so far in 2019. That’s around twice the progress made by the FTSE 250, and three times the FTSE 100‘s performance.

That combination of growth plus dividends doesn’t come cheap though, and PHP’s shares are now trading on a forward P/E of 23, which is well ahead of the market average. But a couple of things make me think such a high valuation is deserved and sustainable.

Growth opportunities

One is the dividend record. At the halfway stage this year, managing director Harry Hyman told us “we are on course to deliver our 23rd consecutive year of dividend growth” as the interim dividend was raised 3.7%.

The other is that I see plenty more opportunities for growth in what is a relatively stable part of the property sector. To that end, the company’s recent new placing raised approximately £100m (at the top of its expectations), after telling us it has “seen a rise in the number of opportunities for funding new developments both in Ireland and in the United Kingdom.”

With a relatively high share valuation, we could see some volatility along the way. But this is one where I’d be tempted to make a modest investment with a view to topping up on any dips.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings and Primary Health Properties. 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.