A 6%+ yield but down 24%! Time for me to buy more of this hidden FTSE 250 gem?

After a rapid share price fall, this FTSE 250 stock’s dividend yield has risen, leaving me wondering whether I should double down.

| 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.

Chalkboard representation of risk versus reward on a pair of scales

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.

Bank of Georgia Group (LSE: BGEO) has been one of the unsung heroes of the FTSE 250. Up 269% in three years, it’s the joint top-performing stock in the index over this period (along with Breedon Group).

After following the firm’s progress for some time, I finally invested earlier this year. The shares went up almost immediately, which was nice to see.

However, the bank stock has taken a big tumble recently. It’s down 24% since the start of May, putting me in the red.

Should you invest £1,000 in Bank of Georgia right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bank of Georgia made the list?

See the 6 stocks

Should I buy more of this sliding FTSE 250 stock, or stay away? Let’s take a look.

Created with Highcharts 11.4.3Lion Finance Group Plc PriceZoom1M3M6MYTD1Y5Y10YALL16 May 201916 May 2024Zoom ▾Jul '19Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '242020202020212021202220222023202320242024www.fool.co.uk

What is Bank of Georgia?

The company is one of the largest banks in Georgia and Armenia, two emerging nations whose respective economies grew 7.5% and 9.4% in 2023. They’re forecast to grow 5% and 6.2% in 2024.

A vibrant economy is obviously vital for a domestic lender, and the growth of Georgia has been very strong for years now.

Tourism is booming and the capital, Tbilisi, is regularly cited as among the world’s best cities in which to work remotely.

Last year, the bank’s adjusted profits rose 21.4%, while its loan portfolio has now expanded at a compound annual growth rate of 30.7% since 2018.

First thing to check

When a dividend stock suddenly drops, I always check if it’s gone ‘ex-dividend’. This refers to the period after a dividend has been declared by a company but not yet paid out to shareholders.

During this time, if I buy shares, I’m not entitled to receive the next dividend payment. In other words, the stock trades ex-dividend, or ‘without dividend’.

In the case of Bank of Georgia though, this hasn’t happened. The stock is due to go ex-dividend on 4 July before a payment on 19 July.

A controversial bill

In fact, this sharp sell-off appears directly related to mass street protests over a controversial ‘foreign agent’ bill that passed its final reading in Georgia’s parliament on 14 May.

It resembles a law in Russia used by the Kremlin. So this has sparked concerns over government suppression of its opponents.

While the bank’s operations won’t be directly impacted by the proposed law, it may lead to a decline in foreign investment in Georgia’s economy. Obviously, that wouldn’t be ideal for growth.

Worryingly, the EU has said this new law could harm Georgia’s bid for membership. It was only granted candidate status in December 2023.

So this is all a bit concerning, though the bill hasn’t become law yet and there are parliamentary elections due later this year. More volatility could be ahead.

My move

After the fall, the stock is trading on a dirt cheap price-to-earnings (P/E) ratio of 4.5. And the forward-looking dividend yield is 6.8%, rising to an attractive 7.4% in 2025.

The bank is due to report its Q1 2024 earnings tomorrow (17 May). I’ll be interested to hear management’s views on recent developments.

Depending on what is said, the stock could be catapulted one way or the other.

My strategy is to sit tight and see how things develop in the upcoming elections. I may get a far better price to buy more shares, with a higher dividend yield. Meanwhile, I’ll focus on other stocks.

But what does the head of The Motley Fool’s investing team think?

Should you invest £1,000 in Bank of Georgia right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bank of Georgia made the list?

See the 6 stocks

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.

Ben McPoland has positions in Bank Of Georgia Group Plc. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

I’m in 2 minds about the Vodafone share price. What should I do?

With the Vodafone share price seemingly stuck in a never-ending loop of doom, our writer’s thinking about selling up. But…

Read more »

Investing Articles

£10,000 invested in Greggs shares 10 years ago is now worth…

Greggs shares have performed well over the long run, but recently performance isn’t impressive. Dr James Fox explores the waning…

Read more »

Investing Articles

With a 9.5% yield, could this FTSE 250 share be a dividend gold mine?

Christopher Ruane is eyeing a FTSE 250 with a dividend yield approaching double digits. Here's what he likes about it…

Read more »

Investing Articles

2 key reasons Nvidia stock could still soar from here

Even after the chipmaker's stunning performance in recent years, this writer sees reasons that could potentially help propel its share…

Read more »

Investing Articles

Here’s how £10k could set a stock market beginner on the path to riches in 2025!

Christopher Ruane sets out how taking a considered approach could mean even a stock market novice with £10k to invest…

Read more »

Investing Articles

The BAE share price struggles despite strong earnings and a 10% dividend increase. Is it still a buy to consider?

The BAE share price dipped 3% in early morning trading after posting its full-year 2024 results. Our writer considers if…

Read more »

Investing Articles

Could this Nvidia-backed growth stock be a millionaire-maker at $10?

This little-known artificial intelligence growth stock is backed by chipmaker Nvidia and recently jumped nearly 24% in a single day!

Read more »

US Stock

£10,000 invested in the S&P 500 the day before the presidential election is now worth…

Jon Smith explains how the S&P 500 has performed since last November and identifies a key winner in the months…

Read more »