6.8% dividend yield! Is this the best FTSE 250 bargain stock?

The numbers come from FTSE 250 global fintech company IG group (LSE: IGG) looks promising.

And the most shocking figure is the 6.8% dividend paid out for the trading year to May 2024.

What’s more, the company has a strong multi-year dividend track record with no recent cuts and increases. And it doesn’t stop shareholder payments during the pandemic.

strong cash performance

Strong cash flow performance with a compound annual growth rate of close to 28% has supported the dividend flow. And the revenue has been compounding every year at around 13.5%.

Meanwhile, the balance sheet looks strong with a sizeable net cash position, rather than net debt. And, overall, the business’s financial statistics seem to be in good shape.

But despite the tasty numbers, IG’s stock price has been low. At 695p, it is around 15% lower than at the start of March. However, I think many of the weaknesses are because the company belongs to the broader financial sector. And it may be dragged unwittingly along with the banks.

The directors seem unconcerned about the business. He said on March 15 that he expects profit and pre-tax profit to be in line with current market expectations. And that’s for the current trading year until May 31. On top of that, they reiterated their previous revenue and profit margin guidance for the medium term.

Meanwhile, City analysts have penciled in a single-digit percentage increase in earnings for this year and next. And he expects the dividend to rise by the same amount over that period.

But the stock is down about 15% over the past year despite the positive outlook.

However, the director said in March that the number of active clients for the third quarter declined by 5% annually. And that reflected the quiet market conditions in the period.

But I don’t think about it, at least for the time being. Although I will take notice if the slide in the number of clients continues in the next update of the company.

IG wants his client to win

IG provides an online trading platform for institutional and retail investors/traders. And it’s been in business – and a lot of it – for about 49 years.

The company makes a profit from the client’s transaction fees. So, it is the client’s trading volume that generates the profit. And IG doesn’t make money when customers lose trades.

IG believes that the more clients succeed with trading, the more successful the business is. And because when customers trade well, they are more likely to continue.

Meanwhile, IG aims to help users succeed by providing access to the educational ecosystem.

However, there is a clear risk to shareholders here if the number of clients continues to decline. And because revenue and profit will continue, along with dividends.

However, the company looks like it’s cash-strapped right now. And even participated in a multi-million pound share buyback program.

Given the attractive price numbers, buybacks seem well timed. And it may help support share prices.

Overall, I think IG is a serious contender for being labeled the best stock in the FTSE 250!