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Since 1986, I have invested my own money, sometimes with mixed results. But over the decades, my investment strategy has evolved into a clean and simple approach. Simply put, I’m looking to buy cheap stocks that pay big dividends. And look a lot of this in the middle cover FTSE 250 current index.
Dividend hunter
As a value/dividend/income investor, my goal is to generate returns in two ways. First, from the regular cash dividends the company pays me as a shareholder. Second, from the capital gains I recorded by selling shares with future profits.
While sifting through the FTSE 250 earlier today, I found over 60 stocks that pay dividends of more than 5% per annum. But almost half of these shares are investment trusts (ie registered investment funds). Removing this leaves me with around 30 high-yielding mid-cap stocks.
Four mid-cap movers
Sieving through the mid-cap high-yield stocks, I found these four stocks. Each offers an annual dividend yield of more than the sub-3.5% offered by the wider FTSE 250 index. I’ll start with price action (in A-Z order):
| Company | Bank of Georgia | Close Sibling Group | Intermediate Capital Group | ITV |
| Sector | Banking | Finance | Finance | Media |
| stock price | 2,835 pp | 1,002 pp | 1,410.56 p | 89.32 p |
| 52-week high | 3,015 pp | 1259 pp | 1,867 pp | 111.74 p |
| 52-week less | 960 p | 872 pp | 937 pp | 53.97 p |
| Market value | £1.3 billion | £1.5bn | £4.1bn | £3.6bn |
Each of these four companies is a large business in its own right, with market values ranging from £1.3bn to £4.1bn. Interestingly, three are financial companies, while the fourth (ITV) is the UK’s leading terrestrial broadcaster.
For the record, I already have shares in ITV, as my husband bought this share for the family portfolio in June 2022. This share has risen almost 30%, so we are happy with this purchase.
Four high cash returns
Now to review the basics of these four stocks, as follows:
| Company | Bank of Georgia | Close Sibling Group | Intermediate Capital Group | ITV |
| Price / earnings ratio | 2.9 | 9.1 | 12.9 | 7.6 |
| Earnings yield | 34.2% | 11.0% | 7.8% | 13.1% |
| Dividend yield | 7.2% | 6.6% | 5.9% | 5.6% |
| Close the dividend | 4.9 | 1.7 | 1.3 | 2.3 |
The table shows that all four stocks pay annual dividends, ranging from 5.6% in ITV to 7.2% in Bank of Georgia Holdings. The average cash yield across all four is a healthy 6.3% per year. To me, this looks like an attractive cash reward for taking on the risk of owning shares.
What’s more, each cash payment is guaranteed between 1.3 and 4.9 times by earnings. The highest dividend cap – 4.9 times that of Bank of Georgia – offers a very wide margin of safety.
So, which stocks should I buy today? As mentioned, we already have ITV stock, so there is no need to buy any more. Therefore, my choice of these four stocks is Bank of Georgia. And I know a few other Fool writers who share my views. I will look again when the new tax year starts on April 6th.
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