I’d buy this exciting FTSE 250 dividend stock that’s up 120% in a year
The FTSE 250 is the home of mid-cap companies trading on the London Stock Exchange. And its companies are among the UK’s largest publicly-traded enterprises behind FTSE 100 firms.
The index’s average dividend yield sits at a generous 4%, but many stocks yield more than that. Plus, some even have the added appeal of offering exciting growth potential.
Exposure to a fast-growing economy
In my view, one such stock meeting both criteria is Bank of Georgia (LSE:BGEO). To illustrate, its shares have rocketed more than 120% since April 2022.
The group is a UK-incorporated holding company comprised of a retail banking and payments business, as well as a corporate banking and investment banking operation.
Both of these segments operate in Georgia, a rapidly-growing economy located in the South Caucasus.
As such, investing in Bank of Georgia presents me with an exciting opportunity to reduce exposure to the UK and increase exposure to a fast-growing economy outside of Western Europe.
According to the country’s National Statistical Service, Georgia’s real GDP increased by 10.1% in 2022 over the previous year.
A track record of strong performance
As for the bank itself, the group recently posted a bumper set of results for 2022.
Adjusted for one-off items, full-year operating income was up 46.6%, with profit up 55.7% to GEL1.13bn (the lari is Georgia’s national currency). Return on average equity stood at 32.4%.
In addition, the group maintained a strong balance sheet amid increased investment in building the business.
It’s perhaps no surprise then that the bank’s shares have surged around 126% since April last year.
A generous dividend yield
Alongside impressive share price growth, the bank also boasts an attractive dividend yield that currently sits at around 4.4%.
I could earn a decent amount of passive income thanks to that.
More importantly, I’m a big fan of the board’s overall capital distribution policy, which is to target a payout ratio in the range of 30%-50% of annual profits.
Risks and uncertainties
However, I’m aware that challenges lie ahead.
Not least among these is the ongoing impact of the economic uncertainty facing the Georgian economy as a result of the Russia-Ukraine war and broader macroeconomic challenges.
If conditions deteriorate, the group may be unable to effectively execute its business strategy.
This would result in a deterioration of its financial position due to regional tensions and ensuing economic instability.
Nevertheless, despite these challenges, the group’s resilient performance is reassuring me that the business can continue to deliver solid results in the midst of uncertainty.
A stock with exciting growth potential
What’s more, on top of a generous dividend yield, I think Bank of Georgia shares offer huge growth potential.
Given the importance of the South Caucasian corridor for Central Asian economies, the group expects Georgia’s role in the region to strengthen moving forwards. I’m inclined to agree.
As a result, the bank remains well-positioned to capture the benefits of increased economic activity in the country, and to sustainably deliver strong growth and high profitability.
If I had cash to spare, I’d jump at the opportunity to buy Bank of Georgia shares for my portfolio. In my eyes, the group’s combination of generous dividends and exciting growth potential is unmatched across the FTSE 250 index.
The post I’d buy this exciting FTSE 250 dividend stock that’s up 120% in a year appeared first on The Motley Fool UK.
Matthew Dumigan 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.
Motley Fool UK 2023