The FTSE 250 can be a great place to find top dividend stocks. In this index, there are plenty of under-the-radar companies that have the potential to deliver steady dividends and capital gains.
Here, I’m going to highlight two FTSE 250 dividend stocks I like the look of right now. I’d be happy to buy these stocks for my own portfolio today.
FTSE 250 dividend shares
The first stock I want to discuss is Workspace Group (LSE: WKP). It’s a real estate investment trust (REIT) that offers flexible office space solutions in London. Currently, it has over 60 workspaces and serves over 3,000 small businesses. The yield on the stock is around 2.5%.
There are two reasons I’m bullish on Workspace. The first is that the company is well positioned for the new ‘hybrid’ work environment. I’m convinced that the pandemic has changed the way we work forever. In my view, we’re likely to see a lot less mandatory nine-to-five working going forward, and a lot more flexibility in terms of hours. The upshot? Companies are likely to seek out flexible office space.
The second reason I’m bullish is that the London start-up scene is booming right now. According to Tech Nation, there were over 100,000 new businesses launched in the Capital last year. As start-ups get bigger, they require office space. I think Workspace is well placed to benefit from the London start-up boom.
There are risks to my investment thesis, of course. If Covid-19 comes back with a vengeance, and we’re all forced to work from home again, Workspace is likely to struggle. Meanwhile, if we see a big recession, Workspace may not be able to collect rent from its tenants. It’s worth noting that the stock has a higher valuation (a forward-looking P/E ratio of 33), so there’s not a lot of room for error.
Overall however, I think the long-term risk/reward proposition here is attractive.
Growth and dividends
Another FTSE 250 dividend stock I’d buy today is Computacenter (LSE: CCC). It’s a leading provider of IT solutions (cloud computing, cybersecurity, remote work software and more) to businesses and government organisations. The prospective dividend yield on offer here is about 2.1%.
Computercenter is well positioned to generate solid growth in the years ahead, in my opinion. That’s because all over the world, companies are undergoing digital transformation and enhancing business processes with technology. Computacenter is essentially a ‘picks-and-shovels’ business for this trend. It provides companies with the tools they need to become fully digital.
But a risk to monitor here is the current semiconductor shortage that’s impacting the supply of electronic products. In the near term, the chip shortage could cause supply chain issues for CCC and hit profits.
I think this risk is factored in to the share price, however. Currently, the stock sports a forward-looking P/E ratio of just 18, which isn’t high at all, to my mind. It’s worth noting that last month, analysts at UBS upgraded the stock to ‘buy’ and raised their price target from 2,520p to 3,290p. That’s nearly 20% higher than the current share price.
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Edward Sheldon 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.
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