This top UK share is up 133% and offers a 4.4% dividend yield!

When British stocks returned 133% in just one year, it caught my attention.

This FTSE 250 shares comfortably top player in the British mid-cap index over 12 months. In fact, no FTSE 100 shows that it corresponds to its astronomical results.

But the good news does not end there. I can also earn a decent amount of passive income thanks to the 4.4% dividend yield.

The company I am interested in is Bank of Georgia Group (LSE:BGEO). Here’s my take on the factors behind the company’s success and whether its impressive rally can continue.

An exceptional return

Georgia’s economy has proven remarkably resilient in the face of the geopolitical challenges posed by the war in Ukraine. After all, the country is also no stranger to conflict with its neighbors, having been invaded by Russia in 2008. However, Georgia’s GDP is expected to grow by 10% by 2022, according to the IMF.

As a Tbilisi-based company with a UK stock market listing, Bank of Georgia shares have benefited from the country’s economic growth coupled with weakness in sterling. Last year, the net asset value per share of the investment bank grew by 4% in Georgian Lari from GEL63.03 to GEL65.56. If measured in GBP, that translates to 33%.

In addition, the improvement in the company’s profits has been impressive. Pre-tax profit for 2022 jumped 55% from GEL801.9m to GEL1.24bn. The bank cited higher migration in the country as one of the factors behind its success. At least 260,000 Russians of military age are estimated to have fled to Georgia since the war began.

Outlook for stocks

So where next for these UK stocks?

There is a risk that growth in the Bank of Georgia share price may slow in 2023. The IMF expects GDP expansion to slow to 4% this year due to inward migration and reduced FX inflows. However, this still seems surprising given that many developed countries are on the brink of recession.

Passive income is one of the important reasons to buy this stock. The company’s trailing dividend yield is 4.4%, but at current stock prices, the forward dividend yield for 2023 is more than 7%. The combination of potential share price appreciation and huge dividend payouts.

In addition, the company benefits from the concentrated nature of the banking system in Eurasian countries. The two banks own more than 70% of the sector’s assets between them. Bank of Georgia is one, and another TB Bank Groupwhich also refers to the UK with a London Stock Exchange register. Its share price has also grown rapidly over the past 12 months, up 110%.

Finally, the regulatory situation continues to improve. The World Bank praised Georgia’s banking sector for being in “front of good corporate governance”.

Should I buy it?

There are risks posed by ongoing geopolitical tensions and slow GDP growth, but overall UK stocks look very good to me.

I don’t expect returns to be quite as good as last year, but I believe there is plenty of potential for growth in the share price – not to mention a useful dividend yield. If I had the money, I would buy Bank of Georgia stock today.