Bank of Georgia is paying £2.31 per share in dividends: time to buy the income stock? 

Jon Smith explains why a particular income stock has such a generous dividend yield right now, as well as noting the share price gains.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

We’re nearly through the first quarter of the year. I’m still trying to get my finances up to speed for 2024, which means that I’m on the hunt for some good income stocks that could provide me with solid dividends. From the FTSE 250, the Bank of Georgia (LSE:BGEO) stands out for several reasons.

Clear momentum

First, let’s talk through the key details about the bank. As the name suggests, it operates in Georgia, providing retail and corporate banking services. It has been able to grow market share considerably in recent years, with a strong push towards digital banking. This might sound obvious to us here in the UK, but providing such online banking facilities in Eastern Europe is a lot more impressive.

The latest annual report showed that the number of monthly digitally active users grew by 31.5% year on year.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

With a more engaged client base, it was able to grow deposits by 30.1% versus the previous year. Thanks (in part) to higher interest rates, this boosted its profit level by 55.7%. So I can see that this is very much a bank that’s outperforming at the moment.

High share price growth

Even though I’m talking about a dividend stock here, I can’t ignore the incredible share price performance over the past year. The stock has almost doubled in this time period.

Naturally, when I consider the surge in profits and active users, this makes sense. Yet with a price-to-earnings ratio of just 5.19, I’d hardly call the stock overvalued.

The benefit here is that on top of any dividends I receive, I could enhance my yield further by future share price gains. For example, the current dividend yield is 4.79%. If I assume that the share price also gains a similar amount over the next year, my overall yield could hit 10%.

Of course, the risk is that the past performance of the stock doesn’t continue. If the share price drops by 5% over the next year, all of the yield from dividends would be wiped out.

Focusing on the income

The dividend per share for the past year equates to £2.31. This was made up of two payments. Looking forward, I’ll have to wait until the late summer before the next interim dividend gets announced. However, I’d expect that based on the current outlook, it should at least be the same as before, if not higher.

The stock currently trades at £47.25. So if I purchased 100 shares, I’d spend £470.25 and expect to receive £23.10 in dividends each year. Over time, I can take this income and buy more, further compounding my gains.

I have to be aware that the dividend figures are based on the past. There’s a risk that some black swan event could happen that could cause the dividend to be cut going forward. Even though this risk is slim, I still need to be aware of it.

Overall, I really like the stock and am thinking about adding it to my portfolio now.

Created with Highcharts 11.4.3Lion Finance Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Investing in AI: 3 Stocks with Huge Potential!

🤖 Are you fascinated by the potential of AI? 🤖

Imagine investing in cutting-edge technology just once, then watching as it evolves and grows, transforming industries and potentially even yielding substantial returns.

If the idea of being part of the AI revolution excites you, along with the prospect of significant potential gains on your initial investment…

Then you won’t want to miss this special report inside Motley Fool Share Advisor – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And today, we’re giving you exclusive access to ONE of these top AI stock picks, absolutely free!

Get your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith 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.

More on Dividend Shares

Investing Articles

6.5% yield! Is this FTSE 100 stock my ticket to a growing second income?

REITs were literally designed to help ordinary investors earn a second income from real estate. And one in particular has…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

This 10.6% yielding dividend share goes ex-dividend tomorrow (3 April)!

Our writer considers the pros and cons of investing in a high-yielding oil and gas dividend share before its ex-dividend…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

2 dividend shares to consider in what could be a bumpy April!

Searching for solid passive income stocks in uncertain times? Here are two rock-solid dividend shares to consider this month.

Read more »

Investing Articles

These 3 dividend shares may be better buys than FTSE 100 income stocks!

Looking for great dividend stocks to buy in April? Scouring the FTSE 100 is not the only option when it…

Read more »

Investing Articles

9% income a year! Are these 3 FTSE dividend shares no-brainer buys to consider for an ISA?

Harvey Jones picks out 3 dividend shares that now pay the highest yields on the entire FTSE 100. Are they…

Read more »

Mature couple in a discussion while eating a meal in a restaurant.
Investing Articles

£100 daily passive income? With the right shares in a Stocks and Shares ISA, it’s possible!

Earning £100 in passive income every day is a goal worth aiming for -- and our writer has a plan…

Read more »

Investing Articles

This FTSE 100 insurer’s 6.8% dividend yield is forecast to keep rising. Is it time to add it to my passive income portfolio?

This top-tier FTSE stock raised its dividend 86% after terrific 2024 results, which means its very high yield can now…

Read more »

Investing Articles

Why are investors ignoring this FTSE 250 dividend stock with a near-10% yield?

Despite offering a near double-digit yield, this dividend stock appears unloved. Our writer tries to understand why it seems to…

Read more »