FTSE 250 stocks are currently presenting a remarkable opportunity for investors in search of substantial dividends. These companies are offering some impressive forecasted yields that are hard to ignore.
- OSB Group: Specialist mortgage lender OSB Group is one such stock that stands out with its exceptional dividend forecast for 2024. City analysts are expecting a dividend payout of 31.8p per share, resulting in a generous yield of 8.3%. Additionally, with a high dividend coverage ratio of 2.6, OSB’s dividend payout appears to be secure in the near term. Moreover, the current forward-looking price-to-earnings (P/E) ratio of 4.8 suggests potential share price gains in the future.
Despite these promising aspects, there are some risks associated with OSB Group. The company’s heavy reliance on buy-to-let mortgages exposes it to uncertainties in the BTL market, which has become less appealing due to various factors like taxes, government regulations, and high interest rates. While there are no guarantees of long-term success, the attractive 8.3% yield may make it an intriguing option for income investors.
- Lancashire Holdings: Another FTSE 250 stock offering an impressive dividend forecast is Lancashire Holdings, a provider of global specialty insurance and reinsurance products. The company is expected to deliver dividends of 86.6 cents for 2024 and 96.8 cents for 2025, translating to yields of 9.7% and 10.8%, respectively. Although the dividend coverage ratios for 2024 and 2025 are lower compared to OSB Group, they still appear reasonable at 1.6 and 1.5 times, respectively.
There are risks to consider with Lancashire Holdings as well. The company’s earnings may be affected by the volatility of claims, particularly related to catastrophic events like hurricanes and wildfires. However, a positive outlook from management in the recent H1 results brings a sense of optimism for the future. With a current P/E ratio of 6.4, Lancashire Holdings is another undervalued stock that warrants a closer examination.
In conclusion, these FTSE 250 stocks present lucrative opportunities for investors seeking high dividends. While there are risks involved, the potential for significant yields and possible share price gains make them worth considering. Investors should conduct thorough research and carefully evaluate the risks before making investment decisions.
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