Iron curtain

The silver lining in the ongoing war for Ferrexpo is that it’s located in central Ukraine. Despite being stationed east of the Dnieper River, Ferrexpo’s facilities haven’t suffered any direct damage from Russian forces, allowing it to continue running its operations.

Having said that, logistical disruptions have impacted the company’s exports. In its most recent operations update, Ferrexpo mentioned that it decreased its commercial production. Ukraine’s Black Sea ports remain closed due to Russian presence in the south. As a result, the FTSE 250 firm has had to divert all its European shipments via Ukraine’s railway network and barging operations.

However, recent Russian airstrikes have damaged Ukraine’s railway and infrastructure in the south west. This has reduced Ferrexpo’s ability to utilise its barging operations to serve its European customers. Nevertheless, the group is in advanced discussions with additional port operators in central Europe for seaborne exports.

As flexible as wrought iron

Due to supply chain disruptions, the iron pellet producer reported a 0.4m tonne increase in iron ore inventories in May. Although the downturn in production hasn’t resonated well with shareholders, I believe this to be a masterclass in operating efficiency, as Ferrexpo is protecting its bottom line from unnecessary costs.

Management have also reiterated that production is expected to resume at peak capacity once damaged infrastructure is reopened, an alternative logistics route is agreed, and Ukraine’s Black Sea ports resume activities.

On track to £3.30?

I have no doubt that Ferrexpo has a long and treacherous road ahead. Analysts have set a price target of £3.30, but the firm faces strong political and economic headwinds. Apart from the ongoing war, a recession in Europe and America is within the realms of possibility. If this were to happen, it would negatively impact industrial production, affecting Ferrexpo’s top line.

On the flip side, there are also a couple of catalysts that could send the FTSE 250 stock flying. Firstly, the firm sees excess demand from Europe after countries imposed sanctions on Russia. Considering Europe accounted for more than half of Ferrexpo’s revenue in 2021, this could be a huge tailwind for Ferrexpo once it resolves its logistical issues. Secondly, iron ore prices could increase if China’s economy continues its recovery. With the group’s Wave 1 Expansion also on hold, its ability to produce 25% more pellets could boost Ferrexpo’s numbers if there’s sufficient demand.

Furthermore, the board recently reinstated its dividend, attracting dividend investors back into the stock. Its shares are going ex-dividend later this week at 6.60p per share. So, this could be an opportunity for me to earn some passive income.

Nonetheless, despite a potential 115% return, the geopolitical implications remain too ambiguous for me to have a long-term position in Ferrexpo. Instead, I’ll be looking to purchase other shares that could benefit my portfolio in this stock market crash.

The post Can this FTSE 250 income stock make me rich? appeared first on The Motley Fool UK.

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John Choong has no position in any of the shares mentioned at the time of writing. 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.

An unfashionable stock

boohoo (LSE: BOO) is one of the UK’s biggest fashion retailers. The online fashion retailer had already been 30% down this year, but plunged a further 12% after it released its FY22 results. Nonetheless, it’s managed to recover most of its post-earnings loss since then.

The firm had already been starting to see a slowdown in sales growth due to “Significantly longer customer delivery times as a result of the pandemic”. Nevertheless, its new distribution centre in the US is expected to go live in mid-2023. With next day and two-day express delivery options available, this could help ease the supply chain constraints that boohoo is currently facing, and help the stock price.

However, with inflation continuing to weigh on consumer spending, I expect sales growth to continue declining. Management shares my sentiment too, as guidance for FY23 is for low-digit revenue growth. Expensive freight costs have also impacted its bottom line as the firm saw its profit margin decline from 5.2% in FY21 to -0.2% in FY22. For that reason, I won’t be buying this stock for now.

In the eye of the storm

The unfortunate events of the Russia-Ukraine skirmish has battered the Ferrexpo (LSE: FXPO) share price. Commonly known for being a high-dividend yield stock, the stock is now trading at 65% off its all-time-high.

The Ukraine-focused firm faces a large amount of uncertainty given the ongoing war there. Any further escalation might run the company out of business as its mining operations are located just east of Kyiv, where it’s more susceptible to Russian attacks. Additionally, China’s city-wide lockdowns have driven iron ore prices down. This will inevitably impact Ferrexpo’s top line in the near to medium term. Most importantly, the firm decided to defer its dividend payments. The board said that it will continue to assess the situation in Ukraine and make a decision on dividends when appropriate. With many investors initially buying the stock for its dividend, this is a stock I’m avoiding.

Getting the boot

Aside from sky-high inflation, Dr Martens (LSE: DOCS) will also have to worry about the recent retail sales figures. Although positive for the month of April itself, retail sales for the three months to April fell 0.3% as high inflation hurt purchasing power. That’s one reason why its stock is down 50% this year.

The majority of the firm’s revenue stems from the Americas and EMEA region. With inflation continuing to spiral out of control, this doesn’t bode well for Dr Martens’ near-term outlook. As central banks in these regions rush to raise interest rates, its debt levels start to become even more alarming. The firm has a debt-to-equity ratio of 140%, a declining free cash flow, and higher operating expenditure. These aren’t factors that are favourable when I invest in UK stocks, especially in a high interest rate environment. As such, I’ll be looking to purchase other shares with much more favourable fundamentals.

The post 3 UK stocks to avoid this summer appeared first on The Motley Fool UK.

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John Choong has no position in any of the shares mentioned at the time of writing. The Motley Fool UK has recommended boohoo 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.

Mining its business

When in times of uncertainty, it always help when companies have solid fundamentals. Thankfully, Ferrexpo’s financials look great. With a 0.8% debt-to-equity ratio, decent levels of cash and equivalents, as well as heavy assets, I believe Ferrexpo is in a good financial position to withstand the current economic and political hardships.

Furthermore, the firm boasts an extraordinary profit margin of 46% in its most recent earnings report, showing good quality earnings. This allows the company to pay a generous annual dividend of £0.43 per share. Nonetheless, I attribute this to the spike in iron ore prices in recent times.

Ferrexpo troubles

Despite the iron ore exporter’s solid fundamentals, I see its revenue stream remaining choppy in the short-to-medium term. There are several reasons for this. I worry that Ferrexpo might not be able to continue its mining operations at optimal levels. This would limit potential revenue, as its latest trading update cited an 11% decline in production from the previous quarter. Additionally, it faces logistical issues with almost half of its products sitting in inventory. This is due to the closure of the Pivdennyi port in south west Ukraine. Having said that, management is “reviewing alternative methods of delivering products to seaborne markets.”

Until these logistical issues can be resolved, Ferrexpo’s outlook remains uncertain. I expect revenue to take a hit for the foreseeable future. This could in turn affect the firm’s future dividend payments. On top of that, Ferrexpo normally declares a dividend in March, but it is yet to do so this year. Hence, dividend investors are steering clear for now, despite its attractive yield.

Ironing things out

There were silver linings from its latest trading update though. Firstly, Ferrexpo is still running its operations, provided that it’s safe to do so. This comes as a bit of a relief to me because its operations are located outside the main conflict zones. Secondly, the delivery of pellets to customers in Europe has also resumed via rail and barge. These customers have historically represented approximately 50% of its revenue. This should give investors some hope that the dividend giant can resume payments soon. Finally, with iron ore prices currently trading at $145 a tonne, this should push the company’s margins higher.

Nevertheless, I think this cheap dividend stock still remains a high risk one to invest in. Although the firm has historically declared a dividend in April, I do not see it happening this time due to the current climate. So with all that in mind, I will not be buying Ferrexpo shares for my portfolio.

The post Can this cheap dividend stock help me beat inflation with an 18% yield? appeared first on The Motley Fool UK.

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John Choong has no position in any of the shares mentioned at the time of writing. 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.

What is causing this enormous growth? And should I add the stock to my Stocks and Shares ISA? Let’s take a look.

An explosive UK share

Ferrexpo (LSE:FXPO) is a supplier of high-quality iron ore pellets for the global steel industry. The UK share is currently the third-largest supplier of blast furnace pellets worldwide. But what makes it so unique compared to other iron mining stocks?

There are two aspects of the business that make it stand out to me. Firstly it operates nine mines along a single ore body. This is quite significant as it practically eliminates most of the site discovery expenses mining companies typically have to deal with.

Secondly, the extracted metal is magnetite ore rather than the more common hematite ore. Without going too deep into the realm of chemistry, turning magnetite into iron pellets is an exothermic reaction. Meaning the process releases heat. Therefore, the energy requirement of this reaction is lowered, ultimately reducing the production cost.

Combined, this grants Ferrexpo significant cost-saving advantages over its competitors that lead to higher margins.

The price of iron ore is surging

China recently began issuing a stimulus package to reboot its economy. And since the steel industry is a large driving force of that economy, the demand for iron pellets has skyrocketed. Yet the supply continues to be restricted. And when demand outweighs supply, prices begin to rise.

The price of iron ore is now at the highest point in almost a decade. Needless to say, this is fantastic for Ferrexpo which, despite disruptions from Covid-19, appears to be at full operating capacity. In fact, total pellet production for this UK share actually increased by 7% in 2020. That’s quite impressive, in my opinion, but there are always risks to consider.

Nothing lasts forever

Just as quickly as iron ore prices go up, they can come back down. As the world begins to return to normality, the supply restrictions on iron and other metals will start to ease. If demand starts to fall, the prices of iron ore will fall in a similar fashion.

After all, the market determines metal prices, not the company. Having virtually no pricing power is a weakness all mining stocks share. And it can have a profound impact on the business. Just take a look at what happened between 2011 and 2016. Iron ore prices plummeted from $188/tonne to $41/tonne, and the Ferrexpo share price dropped by nearly 95% alongside it.

A UK share to buy today?

Iron ore prices will undoubtedly stop climbing eventually. However, the world appears to be in the middle of a technological shift. Self-driving cars, electric batteries, renewable energy all of these technologies require a lot of precious metals — including iron – to manufacture.

So, while supply may increase, I believe demand will remain high for many years to come. And with a P/E ratio of 7, Ferrexpo is one cheap UK share I’d consider adding to my portfolio.

The post 1 cheap UK share I’d buy in my Stocks and Shares ISA today appeared first on The Motley Fool UK.

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• How much do I need in a Stocks and Shares ISA to target a £13,400 annual income?

Zaven Boyrazian does not own shares in Ferrexpo. 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.

The share rally’s biggest risers seem to have been the companies the suffered the heaviest falls since the pandemic began in earnest, back in March. This includes the travel, hospitality and leisure industries, along with the banking sector. In some cases, share prices have now more than doubled from their spring lows.

One result of this stock market rally is that there are now considerably fewer attractive investment opportunities available. Where previously, share prices looked oversold and cheap, many now look more fairly valued. However, I think there are still noticeable areas of the market where value does exist to help me build a portfolio poised for growth.

In my opinion, some of the most attractive investment opportunities right now are the shares that didn’t sell off wildly during the depths of the pandemic. Likewise, they are the shares that didn’t get swept up in the recent rally. Instead, I believe they are the companies that looked cheap before the pandemic and remained so during it.

Overlooked by the stock market rally

I’m talking about the likes of Yellow Cake. The uranium investment company that is valued at a 23% discount to its net assets. This savvy company has spent the last few months selling its uranium holdings to fund a buy-back of its own shares. That way it gains exposure to the uranium price at hefty discount. Yellow Cake looks even more attractive to me after the announcement that Rolls-Royce plans to build up to 16 small modular reactors (mini-nuclear plants) in the UK. This looks set to revitalise the nuclear sector in both the UK and beyond.

Ferrexpo is another share that I like. As well as coming with an 8% dividend, it’s also cheap, trading at just three times last year’s earnings. I’m actually surprised the shares have not been caught up in the stock market rally, since demand for its iron pellets should benefit significantly from a vaccine-enabled return to worldwide economic growth.

Vaccine improves investment prospects

Shares in Finsbury Food Group are also still looking good value to me. The shares are valued at eight times pre-Covid (FY 2019) earnings. A return to normality would surely put the bread and cake manufacturer back on its growth trajectory. Meanwhile, I think both Aviva and Tesco look attractive. Aviva is trading at a 33% discount to its net asset value. Speculation of asset disposals only reinforces the value on offer. Owing to its own disposals, Tesco appears to be on the verge of announcing a huge 20% special dividend payment.

Despite the pandemic, all of these companies are currently performing well. In fact, I think that’s precisely why they missed out on the stock market rally. Investors were attracted to the companies that had been struggling the most, the ones that really needed some positive vaccine news. I believe we now have a situation where the companies that have actually been managing well are now looking under bought and very attractive. They are the shares that I would buy now.

The post Stock market rally: 5 shares that still look cheap to me appeared first on The Motley Fool UK.

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Thomas owns shares in Finsbury Food Group and Aviva. The Motley Fool UK has recommended Tesco. 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.

Today, I’m going to take a look at three of these high-yield champions and explain why I think they’re great at current prices.

High risk 

My first high-yield FTSE 250 pick is Ukrainian iron ore miner Ferrexpo (LSE: FXPO). This isn’t one for the faint-hearted. It’s currently without a CEO after Kostyantin Zhevago stepped aside to resolve issues at one of his other firms earlier this week. The company has also been hit by corruption allegations and corporate governance concerns. 

Still, despite these issues, Ferrexpo’s underlying business is throwing off cash. Between 2016 and 2018, the group reported free cash flow from operations of $690m. Of this, $150m was paid out to investors via dividends, and $335m was used to pay down debt.

City analysts are expecting this trend to continue. They’re forecasting a net profit of $468m, implying the stock is currently dealing at a forward P/E of 2.1. Analysts also believe Ferrexpo will distribute around 30% of its earnings to investors with dividends, giving a yield of 13.6% on the current share price.

All in all, I think Ferrexpo’s low valuation and high dividend yield more than make up for the risks surrounding the business.

Property bargain 

Newriver REIT (LSE: NRR) is also a dirt-cheap FTSE 250 dividend bargain. With its extensive exposure to commercial property, investors have been giving Newriver a wide berth recently. However, despite these investor concerns, the business has managed to outperform expectations.

At the beginning of September, the group announced it had agreed £58m of property sales in its portfolio on terms 1.2% above book value, on average. 

This seems to suggest the market has oversold shares in Newriver. Indeed, at the time of writing, shares in the real estate investment trust are changing hands at a price to book value of 0.8. Recently-agreed property deals suggest the multiple should be closer to 1. These figures indicate the stock could rise by more than 20% from current levels when confidence returns to the commercial property market. 

As well as the capital growth potential, investors can also look forward to a dividend yield of 10.6%, provided by income from Newriver’s diversified commercial property portfolio.

Construction giant

My final FTSE 250 income play is construction group Galliford Try (LSE: GFRD). After five years of growth, Galliford’s earnings slumped in its 2019 financial year, following the collapse of its joint venture partner Carillion. 

The costs of this collapse have forced the company to restructure itself and reconsider how much money is paid out to shareholders every year. The dividend was cut in 2018 and reduced further in 2019.

City analysts believe Galliford’s earnings will decline further in its current financial year, but growth is expected to return in fiscal 2021. Analysts are also forecasting a dividend increase, although I’m not so optimistic on this front. I would rather see management take a conservative line and prioritise balance sheet strength over shareholder payouts. 

Still, at current levels, the dividend yield is highly attractive. The stock supports a yield of 7.8%, and the distribution is covered twice by earnings per share. 

The post Looking for income? I’d buy these FTSE 250 dividend stocks yielding 10% appeared first on The Motley Fool UK.

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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.

Investors have been selling for a couple of reasons. Firstly, Direct Line is also set to leave the FTSE 100 at the end of September. As a result, it’s likely fund managers, who are not allowed to hold stocks outside the index, have been selling over the past few weeks. On top of this, Direct Line is also suffering from declining earnings expectations. EPS are set to decline 15% this year, according to City forecasts.

However, despite this downbeat outlook, the stock is still expected to support a dividend yield of 9.7%. On top of this, even after factoring in the earnings decline, shares in this household name are still trading at a highly-attractive multiple of just 10 times forward earnings. In my opinion, the combination of the company’s low valuation and market-beating yield is just too good to pass up.

Risk vs reward

Another high-yield dividend stock that’s also on sale today is iron ore pellet producer Ferrexpo (LSE: FXPO). This is an interesting business. For the past five years, the company has been on a roller-coaster ride of falling profits and scandal. Investors haven’t stayed around to find out what will happen next. They’ve been eager to jump ship, which is why the stock is currently dealing at a forward P/E of just 2.8.

This valuation says quite a lot about Ferrexpo. Investors don’t seem to be happy to take on the risk of investing here. Nevertheless, company stock owners who’ve stayed with it over the past five years have been well rewarded.

Including dividends, the shares have produced a total return of 13% per annum, outperforming the FTSE 100 by a substantial margin of 8% per year. City analysts are expecting more of the same going forward. They’ve pencilled in a dividend yield of 8.7% for the company this year and 8.1% for 2020. This return could be worth the risk of investing in Ferrexpo.

Undervalued property

The final company I’m going to profile is real estate investment trust RDI (LSE: RDI). This is another unloved income champion which seems to have fallen out of favour with the market.

Investors have been selling shares in real estate investment trusts with any exposure to commercial property since the Brexit vote in 2016. RDI is no exception. The stock has lost around a third of its value since the beginning of September last year.

The good news is, these declines have taken shares in the business down to a level that looks too good to pass up. It’s currently dealing as a price to tangible book ratio of just 0.5 and a forward P/E ratio of 8.6. On top of this, the shares yield 11%.

These numbers suggest RDI could be worth up to 100% more than its current price when confidence returns to the real estate market. In the meantime, investors can pick up that juicy 11% dividend yield.

The post 3 high-yield dividend stocks I’d buy that are on sale today appeared first on The Motley Fool UK.

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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.

Glencore, though, appears to offer a wide margin of safety, as well as the potential to generate improving financial performance. Alongside another resources stock that released results on Tuesday, it could be worth buying right now.

Continued progress

The stock in question is iron ore pellet producer Ferrexpo (LSE: FXPO). Its results showed a rise in total pellet production of 1.6%, while revenue moved 6.4% higher to $1,274m versus the previous year. This reflected higher pellet premiums and freight rates. However, due in part to higher costs, its profit for the year declined by 15% to $335m.

The company plans to reduce debt further over the medium term. Its improving balance sheet means that it is well-placed to deliver the next stage in its planned expansion. It expects to increase investment yet further in order to reach its medium-term production target of 12m tonnes per annum by 2021.

Although Ferrexpo’s share price could experience further volatility, investors appear to have factored in the risks it faces. It trades on a price-to-earnings (P/E) ratio of just 9.5, which suggests that it offers a wide margin of safety. With ambitious production growth targets over the long run and what could prove to be growing demand from across the world economy, the stock could offer value investing potential.

Low valuation

As has been the case with many of its industry peers, the Glencore share price has shown signs of recovery in 2019. However, such was the scale of its decline in 2018, it is still down by 11% over the last year.

As well as concerns surrounding the prospects for the world economy, investors seem to be adopting a cautious stance towards the company’s strategic shift towards cleaner operations. This essentially involves limiting its coal production over the medium term, with it seeking to expand its operations that are focused on cleaner forms of energy. They could prove to be increasingly popular over the long run.

This could entail a challenging transition for Glencore due to its historic reliance on coal. However, with its P/E ratio currently standing at around 9, it seems to offer a sufficiently wide margin of safety to merit investment.

Therefore, while further mixed data from the US and China could hurt its share price performance at a time of significant change for the business, in the long run, its strategy shift may provide it with a tailwind that leads to a rising bottom line and valuation. As such, now could be a good time to buy it.

The post Here’s why I’d buy FTSE 100-member Glencore’s share price right now appeared first on The Motley Fool UK.

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Peter Stephens 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.

However, this performance has thrown up some fantastic bargains. Shares in some of the UK’s largest businesses are now trading at valuations not seen since the financial crisis, which is excellent news for investors.

Today I’m looking at one FTSE 100 stock that I think has been oversold and could be worth including in your portfolio.

Rock-solid income

Rio Tinto (LSE: RIO) is a Footsie 100 staple. The business is one of the most significant constituents of the index and one of the largest mining companies in the world. Unfortunately, the firm’s size didn’t stop investors dumping shares in the business during 2018. The stock is down around 11% from its 52-week high of 4,500p printed on June 6.

I think this presents a compelling opportunity for investors to buy the shares today. After recent declines, the stock is trading at a forward P/E of just 9.6 and supports a dividend yield of 6% based on analyst payout expectations for 2018.

A few years ago, management adopted a new dividend payout policy, abandoning the old progressive dividend policy in favour of a more flexible plan whereby Rio would pay out a certain percentage of earnings every year. Under the new policy, investors have pocketed an average dividend yield of 6% for the past two years, and it looks as if this will continue in 2018 and 2019, based on current analyst estimates.

This level of income and predictability is, in my mind, worth a premium valuation and when the market sentiment improves, I think it is only going to be a matter of time before shares in Rio return to their previous highs as investors pounce on the opportunity. 

So, 2019 could be the year that Rio’s shares explode, and if they continue to languish, then investors are set to receive a dividend yield of around 6% — what’s not to like?

50% upside 

Another undervalued mining company I’ve got my eye on is Ferrexpo (LSE: FXPO). This business does not have the same kind of income credentials as its larger peer, but what it lacks in income, the stock more than makes up for in valuation. 

Specifically, right now, shares in Ferrexpo are trading at a forward P/E of just 4.8. 

Granted, City analysts have pencilled in a decline in earnings per share of 22.1% for 2018, so I agree that the stock deserves a discount to the rest of the mining sector. However, a discount of 36% (the rest of the mining sector is trading at an average P/E of 7.5) seems too steep. 

I reckon a multiple of around seven times forward earnings is more appropriate. This implies a share price of 301p or an upside of 52% from current levels. In addition to this possible capital gain, analysts believe the company will distribute a total of $0.12 per share to investors in 2019 implying a dividend yield of 4.6% on the current share price. 

Once again, it looks to me as if this is a deeply undervalued and unloved stock that is just waiting to stage a recovery in 2019.

The post One FTSE 100 stock yielding 5.7% I think could explode in 2019 appeared first on The Motley Fool UK.

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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.

I reckon there is a strong chance that Brexit will have little to no impact on this company’s operations. The group is the world’s third largest exporter of iron ore pellets, and almost all of its operations are located in Ukraine. 

Insulated from Brexit 

No matter what happens when (and if) the UK leaves the EU at the end of March next year, it is highly unlikely it will have a significant impact on the world’s demand for iron ore. At the same time, virtually all of Ferrexpo’s income is in US dollars, so the company is insulated from sterling volatility. Some analysts have speculated that in the event of a no-deal Brexit, sterling could fall to $1.10, which would be bad news for importers, but it would be great news for Ferrexpo shareholders because profits, on a per share basis, would jump.

What’s more, Ferrexpo is a dividend champion. The company returns as much excess cash to investors as possible and today declared a special dividend of 6.6 US cents per share, for a total of $40m. Analysts are expecting a distribution of $0.13 for the full year, giving a potential dividend yield of 5.4% at the time of writing.

Global capital 

Ferrexpo is one possible option to protect your portfolio from Brexit. Another company is Man Group (LSE: EMG). Man is one of the world’s only listed hedge funds. Its speciality is automated trading strategies, which perform best in volatile markets.

Like Ferrexpo, most of Man’s business is conducted in US dollars, and the enterprise is attracting business from around the world. Back in October, the group reported that assets under management had hit a record level thanks to booming interest from large investors around the globe. Assets under management rose to a record $114bn in the third quarter, up 0.4% from the previous quarter.

This record level of assets should, City analysts believe, translate into a boom in management fees. Analysts have pencilled in earnings per share of $0.20 for fiscal 2019, which translates into a P/E of 8.9 at the current price and exchange rate.

And just like Ferrexpo, Man is committed to returning excess cash to investors. This year, analysts believe the group’s dividend yield will hit 6.6% as it distributes a total of $0.12. A similar level of dividend income is projected for fiscal 2019.

The bottom line 

So overall, if you’re looking for income stocks that should protect your portfolio from any Brexit fallout, then I reckon Man and Ferrexpo are two of the best picks in the FTSE 250. 

Both of these companies have an international presence and are committed to returning cash to investors. With this being the case, I believe that no matter what happens to the UK after March next year, they should continue to prosper.

The post Have £2k to invest? I think these FTSE 250 dividend stocks could surge after Brexit appeared first on The Motley Fool UK.

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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.