I’ve been trawling the FTSE 250 for the best dividend stocks to buy. Here are two I think could be too cheap for value investors like me to ignore.
Centamin
Having exposure to gold can be a good idea for any investor’s portfolio. It can help protect one’s wealth during periods of political, economic, and social crisis. Demand for the safe-haven metal usually picks up in such times.
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But I myself wouldn’t invest in physical gold. I also wouldn’t purchase a financial instrument like an exchange-traded fund (ETF) that tracks the commodity price. This is because these assets don’t supply an income. They can only provide a positive return through capital appreciation.
For this reason I’d rather buy Centamin (LSE:CEY) shares today. And especially given the size of its current dividend yields.
For 2023 the gold miner carries a yield of 3.7%. This is comfortably above the FTSE 250 average of 2.9%. Encouragingly this year’s projected dividend is covered 2.4 times by expected earnings, too. This is above the minimum safety benchmark of two times.
Investing in commodity producers like this can be risky business. Problems at the exploration, project development, and production phases are common and often very damaging to profits.
Still, I believe this threat is balanced out by Centamin’s bright expansion plans that could supercharge long-term earnings. The Africa-focused business is progressing plans to produce 500,000 ounces of gold each year.
Buying Centamin could be an especially good idea today as demand for precious metals rockets. The World Gold Council says that global gold demand hit record levels of 1,337 tonnes in the fourth quarter.
Bank of Georgia Group
Dividends from London’s banking sector could disappoint given the uncertain economic environment. Revenues growth could lag forecasts while bad loans might also rocket as consumers and businesses feel the pinch.
But I’d still buy Bank of Georgia (LSE:BGEO) shares for my portfolio today. Dividends for this year are covered more than three times over by expected earnings. And the Eurasian country’s economy is tipped to grow strongly in the short term. This in turn might propel group profits.
The World Bank, for example, reckons Georgian GDP will increase 4% and 5% in 2023 and 2024 respectively. By comparison, the World Bank tips the global economy to advance by a more modest 1.7% and 2.7% over the same period.
In fact I’d buy Bank of Georgia shares for long-term passive income. As personal wealth levels and business activity there grows, demand for its retail banking services should also grow strongly. Most recent government data shows Georgia’s international trade hit a record $166.11bn in 2021.
I’m also encouraged by steps regulators have taken to strengthen the country’s banking sector. This makes Bank of Georgia a much more stable investment.
For 2023 the business trades on a forward price-to-earnings (P/E) ratio of 4.1 times. It also offers a 7.4% dividend yield at current prices. This represents excellent all-round value in my opinion.
