The Motley Fool

£10k to invest? I’d buy these FTSE 250 dividend shares in an ISA today

Image source: Getty Images

If you have £10,000, or any other amount, to invest today, then I highly recommend taking a look at FTSE 250 dividend shares.

Unlike their larger blue-chip peers in the FTSE 100, many of these stocks may offer higher income and growth potential in the long run. 

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...

With that in mind, I’m going to highlight two FTSE 250 shares I think could be worth buying. 

FTSE 250 dividend shares

The first company on my watch list is iron ore producer Ferrexpo (LSE: FXPO)

This business has gone from strength to strength over the past six years. Earnings have increased at a compound rate of around 18% as the company has concentrated on improving the quality of its iron ore production and reducing costs.

I expect earnings to increase further over the next few years. Governments around the world are currently planning large stimuli plans to increase economic activity following the coronavirus crisis. These actions may lead to increased demand for steel, which could push up the price of iron ore. That would help boost Ferrexpo’s bottom line and profit margins.

The business is also very shareholder-friendly. It has consistently paid out a large chunk of profits to investors every year with dividends. City analysts don’t expect this trend to come to an end anytime soon. They’ve pencilled in a dividend yield of 11% for the current financial year.

However, despite the company’s potential, shares in the FTSE 250 dividend stock are currently changing hands at a forward price-to-earnings (P/E) multiple of less than 4. That suggests the stock offers a wide margin of safety at current levels. As such, I think it could be a great addition to any portfolio of FTSE 250 dividend shares.

Direct Line Insurance

The second company I’ve got my eye on right now is Direct Line Insurance (LSE: DLG)

This insurance giant has been a public company for less than a decade. Nevertheless, during this time it’s quickly established itself as an FTSE 250 dividend stock. City analysts are forecasting a dividend of 32.9p for the group’s current financial year. That suggests investors are in line for a near 12% yield.

Unfortunately, it doesn’t seem as if this is sustainable. Direct Line has benefited this year as its customers have been driving less, which means the organisation has paid out less in insurance claims. With activity on the roads back to normal, it’s likely the group will see higher payouts in 2021.

Still, despite this fact, analysts are forecasting a 23.9p dividend distribution in 2021. That gives a prospective dividend yield of 8.6% on the current share price. 

In addition to this attractive level of income, the stock also looks cheap. It’s dealing at a forward P/E of just 10.3. 

All of the above suggests to me Direct Line could be an attractive FTSE 250 income and growth investment for long-term ISA investors.

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Rupert Hargreaves has no position in any of the shares 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.

Our 6 'Best Buys Now' Shares

The renowned 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 enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.