The Motley Fool

2 FTSE 250 dividend growth stocks I’d buy right now

Image source: Getty Images

While the FTSE 100 is generally considered to be one of the best places to find dividend growth stocks, I don’t think investors should overlook the FTSE 250.

Indeed, this index is stuffed full of growth stocks. These organisations may offer better dividend growth potential in the long run. Today, I’m going to take a look at two FTSE 250 companies I’ve been eyeing up based on their dividend credentials. 

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...

FTSE 250 dividend growth stocks

Gold miner Centamin (LSE: CEY) might not appear to be a traditional dividend candidate. However, the company is highly cash generative as it’s one of the most efficient gold miners on the London market. 

The company’s production costs are incredibly low, which means it has benefited significantly for the rising gold price in 2020. During the second quarter, the cash cost of each ounce of gold produced was $682. That’s compared to the current gold price of $1,800. 

Centamin also boasts a robust cash-rich balance sheet with over $360m with net cash at the end of the third quarter. 

The group’s fat profit margins and solid balance sheet have allowed it to return considerable sums to investors. Management is proud of this track record, with the company’s website boasting that Centamin has “generated over $1.2bn of returns for its stakeholders over the last six years.” 

Those are the reasons why I’m considering adding the FTSE 250 dividend growth stock to my portfolio. At current levels, the stock supports a dividend yield of around 8%.

Cash-flow king 

I’ve also been taking a closer look at Moneysupermarket.com (LSE: MONY) recently. This FTSE 250 business, which owns the price comparison website of the same name, operates a relatively simple business model. It connects potential buyers of financial products and utilities with sellers. It receives money for each transaction between the two parties. 

Consumers like the offering because it allows them to compare different providers. Meanwhile, providers like the business because it gives them exposure. Smaller companies, for example, would struggle to compete in the market against larger peers if price comparison websites didn’t offer a way to stand toe-to-toe with the competition. 

The great thing about this business model is it’s incredibly cash generative. Last year, Moneysupermarket generated £100m of free cash from operations. With no debt to pay off, management was able to return all of this profit to investors. 

I reckon the FTSE 250 firm will follow the same path next year, and for the foreseeable future. That’s why I’ve been taking a closer look at the shares recently. I believe this business could be a long-term income buy that will provide a steady stream of cash for my portfolio.

Cash flow forecasts suggest Moneysupermarket’s dividend yield will average 4.5% for the next two years. In my opinion, this level of income is incredibly attractive in the current interest rate environment.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

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

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Moneysupermarket.com. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- 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.