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2 FTSE 250 dividend stocks I’d buy with my last £1k

Royston Wild — Tue, 26 Feb 2019 14:13:25 +0000

In a recent article I sang the praises of Hargreaves Lansdown, a FTSE 100 share whose scintillating profits outlook means I’d be happy to buy it with my final investment pennies.

The financial services star offers the perfect blend of growth and income, not just now but in the years ahead. This great combination makes Countryside Properties (LSE: CSP) from the FTSE 250 a great stock to buy today too. And thanks to the scale of the UK’s housing shortage, an ultra-safe place to stash your hard-earned cash.

The housebuilding colossus certainly impressed last time it unveiled trading numbers in January, and a string of market updates from its peers since then has underlined just how robust conditions remain for these construction stocks.

Just this week, Persimmon celebrated a 13% pre-tax profit jump in 2018, to £1.1bn, and lauded government policy that is “very supportive of the housebuilding industry.” Government policy needs to remain so in order to solve the country’s yawning supply/demand imbalance too, a point underlined by the Conservative’s vow to keep its Help To Buy support scheme for first-time buyers running until 2023 at least.

Dividends boom

This provides investors in the likes of Countryside with some peace of mind for the coming years. Questions remain over the impact that Brexit will have on the broader housing sector, but I would argue that these concerns are more than reflected by this firm’s low, low forward P/E ratio of 7.7 times. Besides, I’m not expecting profits to tank for the newbuild specialists, given that the government still hasn’t delivered a robust plan to supercharge build rates to meet soaring demand in the coming years.

Reflecting this bright outlook, City brokers expect Countryside Properties to deliver earnings growth of 13% and 12% in the years to September 2019 and 2020, respectively. Given that the homes market is currently at its weakest for decades, this is a pretty encouraging endorsement, right?

And the good news continues with predictions of more tasty dividend growth, last year’s 10.8p per share reward anticipated to rise to 12.3p this year and again to 13.8p for fiscal 2020. Such projections yield a massive 3.9% and 4.4% and cement my opinion that Countryside is a great income share to snap up today.

Social climber

Civitas Social Housing (LSE: CSH) is another big-yielder that I’d snap up today on the back of Britain’s housing crunch.

Indeed, a lack of adequate supply in the affordable homes space in particular, an area in which this FTSE 250 firm specialises, has become a particularly hot political potato in recent years, and huge government investment here gives Civitas’ profits prospects a huge shot in the arm.

City analysts expect the real estate investment trust to keep swelling over the next few years at least, helped by the company’s thirst for acquisitions (Civitas acquired another 36 properties during the three months to December alone). And this supports predictions of further dividend growth too, the 3p per share payout of the year to March 2018 expected to rise to 5p and 5.2p in fiscal 2019 and 2020, respectively.

Its bright long-term outlook means that I don’t care about a slightly toppy forward P/E ratio of 19.6 times. I’d happily buy it and cling close for many years to come. Besides, jumbo dividend yields of 5.1% and 5.3% for this year and next, respectively, help to take the sting out of its expensive rating.

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Royston Wild 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.

Forget buy-to-let! I’d much rather buy these property stocks and their BIG dividends

Royston Wild — Wed, 28 Nov 2018 14:32:17 +0000

In years gone past, buy-to-let was one of the best places that one could stash their cash. Ordinarily speaking there have been few investment destinations as effective as bricks and mortar, with surging property prices also helping to drive rents sky high, and physical property, of course, proving far less volatile than, say, investing in cyclical commodities or the stock market.

But diving mortgage demand for rental purposes more recently suggests that the popularity of buy-to-let is heading through the floor. And it’s no surprise to this Fool as rising regulation and increasing tax liabilities (a government response to the chronic homes shortage for first-time buyers), provide landlords with an increasingly-painful headache.

Housing hero

There’s no shortage of stocks out there which, in my opinion, are better ways to get exposure to property-based investments. And right now I consider real estate investment trust (REIT) Civitas Social Housing (LSE: CSH) to be one of the best.

The creation of affordable housing is a hot topic for government. There simply isn’t enough of it to go around, and this is illustrated by changing policy towards it at Number 10. Amongst the measures announced recently is the creation an extra £2bn worth of funding earmarked for housing associations to boost build rates over the next decade, giving the long-term trading outlook at Civitas an extra boost.

What’s more, the FTSE 250 company’s robust balance sheet is allowing it to aggressively build its property portfolio. It’s embarked on a flurry of further acquisitions over the past few months, the latest of which in early November saw it snap up three regulated social housing properties leased to Auckland Home Solutions for £3.7m.

Its rampant M&A drive is expected to deliver a 270% earnings bump in the year to March 2019, and I believe the likelihood of more action in the New Year could see the 4% increase forecast for fiscal 2020 upgraded sooner rather than later.

It deals on a dirt-cheap forward PEG reading of 0.1 and carries bulky dividend yields of 4.7% this year and 4.8% next year too.

Student digs

GCP Student Living (LSE: DIGS) is another attractive REIT worthy of investment today, I feel. Like Civitas, its cheap, an anticipated 30% earnings improvement for the provider of student accommodation in the year to June 2019 producing a prospective PEG reading bang on the bargain benchmark of 1.

And in the current period, it also sports an inflation-bursting dividend yield of 4% too, and I’m confident that it can keep delivering impressive profits growth and market-beating dividends long into the future.

Britain has always been, and will remain, an attractive destination for students from all over the world, a point perfectly illustrated by strong admissions from foreign visitors even in spite of the uncertainties created by Brexit. And with more than nine-tenths of GCP’s portfolio (which comprises of 10 assets housing some 3,600 beds) by value being in and around London, the demand outlook for its accommodation is given that little extra security.

As of June 2018 the value of the company’s property portfolio was £784.4m, up 7.3% on a like-for-like basis and driven by full occupancy rates, rental growth and yield compression. GCP has proven it has the knack of outperforming the broader student accommodation market and I am confident that it will prove a great share to buy today and hold in the years to come.

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