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The FTSE 250 is packed with terrific high dividends right now, with eight on forecast yields of more than 10%. Here they are…
| Stock | Forecast yield | Market cap | Recent share price | 12-month change |
| NextEnergy Solar Fund |
13.1% | £380m | 65.1p | -18% |
| SDCL Efficiency Income (LSE: SEIT) |
11.5% | £605m | 55.9p | -14% |
| Foresight Environmental Infrastructure |
10.6% | £469m | 74.3p | -22% |
| Energean (LSE: ENOG) |
10.4% | £1.56b | 848p | -10% |
| Renewables Infrastructure |
10.3% | £1.81b | 73.2p | -15% |
| Bluefield Solar Income Fund |
10.2% | £515m | 87.0p | -17% |
| Foresight Solar Fund |
10.2% | £440m | 79.5p | -16% |
| Ashmore Group |
10.1% | £1.10b | 168p | -12% |
One thing is clear. Those cracking dividend yields have been pushed up by falling share prices — just look at the 12-month change column in the table.
I think there’s a good chance the market has got it wrong here. And if these dividends keep going for another year or two, we might be looking at a list of top recovery candidates.
So what should we do about these depressed stocks today? Let’s look at two from the table.
Renewable energy
Renewable energy is somewhat out of favour as the world — especially the US — backtracks on previous targets. And my pick, SDCL Efficiency Income Trust, invests in energy-efficient projects globally — including North America.
At full-year results time in June, CEO Jonathan Maxwell spoke of “global economic and geopolitical uncertainty.” But he added that the company’s assets “delivered growing operational performance, in line with expectations, to fully cover dividends.”
Chair Tony Roper said the board is “frustrated that our share price has drifted down and our shares continue to trade at a material discount to NAV per share.” And the company is considering “strategic options to deliver value.”
The discount? At the time, the trust’s net asset value (NAV) per share stood at 90.6p. So for 55.9p per share we can buy 90.6p in renewable energy assets — that’s a whopping 38% discount.
Oil and gas
Seeing Energean in the list surprised me, as it’s a nicely profitable oil and gas producer. It operates in the Eastern Mediterranean region, including Egypt, Israel… and not far from Iran. Oh, maybe it’s not such a big surprise.
Still, Energean is functioning fine — fingers crossed. In the first half, reported 11 September, the company posted a 24% rise in profit after tax with earnings per share up 25%. CEO Mathios Rigas said that “we are therefore pleased to declare our regular quarterly dividend.”
He also told us the company had “secured over $4bn in new, long-term gas contracts that brings the total value of contracted gas to around $20bn for the next 20 years.“
Forecasts put Energean on a forward price-to-earnings (P/E) ratio of only 5.2.
Time to buy?
Here we have two companies that are doing fine operationally and look good value on that. But each faces significant geopolitical risk.
I reckon investors who can handle that and look for longer-term dividend opportunities might do well to consider both. Together they might even make a nice hedge in the renewables versus hydrocarbons divide.
