Looking to load your Stocks & Shares ISA with dividend heroes? I’d be very happy to buy shares in Bank of Georgia Group (LSE: BGEO) today, in anticipation of some bright newsflow that could drive the share price higher.
The bank’s preliminary results on scheduled for Thursday, 13 February. The financial giant certainly impressed the market with news in November that pre-tax profits (excluding one-off costs) soared more than 30% in quarter three. I’m expecting news of a solid end to the year next week, and a bright outlook for 2020 too.
On the march
The eggheads at the ISET Policy Institute in Tbilisi estimate Georgian real GDP expanded by 5.3% in the fourth quarter. The World Bank expects the country’s economy to swell a further 4.3% for 2020. Rises of 4.5% are also predicted for 2021 and 2022.
Compare that with the mediocre economic conditions the likes of Lloyds and Barclays have to tolerate today. The Bank of England expects UK GDP to edge just 0.8% higher this year. And sub-2% rises are expected in the following two years.
Bank of Georgia is making the most of this fertile environment by developing its position in the high-growth digital banking arena too. And investors can be increasingly confident of the firm’s robustness following recent regulatory action intended to improve the quality of its loan portfolio.
Great growth, big dividends
It’s not a shock to see City analysts forecasting breakneck profits growth over the next couple of years then. A 12% bottom-line rise is predicted for 2020 and a further 13% advance has also been pencilled in for next year.
These forecasts provide plenty more to cheer. Firstly, they leave Bank of Georgia trading on a rock-bottom forward P/E ratio of 5.6 times, a shockingly-cheap reading, in my opinion, given its bright medium-to-long-term opportunities. And secondly, they lead brokers to tip some monster dividend increases too.
A full-year reward of 337 Georgian lari per share reward is expected for 2020. A chunky 404-lari payout is also anticipated for 2021. And, consequently, the FTSE 250 firm rocks up with market-mashing yields of 6% and 7.2% for this year and next respectively. Compare this with the 3% forward average which UK mid-caps currently offer up.
Stay away!
The yields over at some of the FTSE 100 banking giants get much closer to those of Bank of Georgia. In fact, Lloyds offers an even-better yield of 6.2% for 2020. Meanwhile, Barclays boasts a reading of 5.6%.
But I wouldn’t touch either of these two shares with a bargepole. Bank of Georgia isn’t without risk, sure, with rising inflation posing a particularly big problem. However, these UK-focussed banks are enduring a steady flow of rising bad loans and revenues pressure. And their troubles look set to last through 2020, and possibly well into the next decade, as Brexit plays out and competition mounts.
