- Top-yielding stocks in the FTSE 350 dominated by banks
- Bank of Georgia has been the best-performing bank share
- Redde Northgate offers a 7.1% yield covered 2.4 times
The prevailing market consensus is that central banks are close to the end of their rate hiking cycle and as long as inflation behaves, rate cuts are back on the agenda for 2024.
If that view prevails competition from bonds and cash deposits will become less intense, which may mean stocks with high dividend yields receive more attention.
With that in mind here are the biggest dividend-yielding FTSE 350 stocks whose payouts are covered at least two times by profits on a one-year forward basis.
Applying a dividend cover of two is not a guarantee that the dividend will not be cut in future, but it does provide some room for companies to maintain a pay-out should profits fall short of expectations.
BANKS TOP THE TABLE
Most UK bank shares have drifted lower over the last year which has boosted their dividend yields and probably reflects some concern that if the UK tips into recession it will cause an increase in bad and doubtful loans and hurt profits.
Lloyds Bank (LLOY) has performed better than other UK banks with the shares down around 1% over the same period. Analysts are penciling in a fall of around 6% in earnings this year but the dividend is expected to increase.
Bank of Georgia (BGEO) has bucked the general trend with the shares increasing close to 50% over the last year.
The Georgian bank has continued to see upward earnings revisions throughout last year with the current consensus estimate around 60% higher than where it started the year, according to Refinitiv data, which has supported the shares.
The dividend has increased at a compound annual rate of 23% a year over the last five years and is forecast to grow 4% in 2023 and 21% in 2024.
Looking beyond financials, commercial vehicle hire company Redde Northgate (REDD) offers a yield of 7.1% which is 2.4 times covered by earnings.
Consensus earnings are expected to fall by around 7% in the year to April 2025, but the dividend is forecast to increase by 3% which maintains the dividend cover above two times.
At the half-year results in December the company gave a confident second half outlook and said it expected full-year earnings to be ahead of market expectations.
