2 FTSE 350 dividend stocks I'd buy with £2,000 today

The Motley Fool

While the FTSE 350 may have posted sharp gains in recent years, there are still bargain dividend shares on offer. Certainly, some stocks now trade at record levels which suggest that there is little margin of safety on offer. And in some cases, dividend yields have been compressed to disappointing levels after strong share price growth.

However, here are two banking stocks that seem to offer strong dividend growth potential over the long run. Coupled with the potential for capital growth, this could mean that their total returns are high in the long run.

Improving performance

Releasing full year results on Thursday was Georgia's largest banking group, TBC Bank(LSE: TBCG). Its performance during the 2017 financial year was relatively positive, with underlying net profit increasing by 35.1%. This delivered an underlying return on equity of 21.4%, which is up on the previous year's figure of 20.6%.

The bank also became more efficient in the year, with its cost:income ratio declining to 40.5% from 42.9% in the previous year. Meanwhile, the integration of Bank Republic has progressed as per previous expectations.

Looking ahead, TBC is expected to report further growth in earnings in the current year. Its bottom line is expected to increase by 11% this year, followed by growth of 21% in 2019. The Georgian economy continues to perform relatively well, and this could provide the business with a tailwind over the medium term. Despite this, it trades on a price-to-earnings growth (PEG) ratio of just 0.3, which suggests that it offers upside potential.

In addition, the company's dividend yield is currently 3.7%. However, with dividends per share due to rise by 26% next year and still set to be covered 3.3 times by profit, the income investing outlook for the stock may prove to be the most enticing part of its overall investment appeal.

Improving performance

Also offering fast-paced dividend growth within the banking sector is Standard Chartered(LSE: STAN). The stock is in the midst of a successful comeback after a difficult period saw its profitability come under severe pressure. In fact, it reported a pre-tax loss in 2015, with regulatory issues causing investor sentiment towards the stock to decline severely.

Now, though, a brighter future seems to be ahead. The company is expected to post a rise in earnings of 38% this year, followed by additional growth of 22% next year. This high rate of growth means that it has a PEG ratio of just 0.6 at the present time. Given the growth potential across the emerging world and within many of the markets in which it operates, this appears to be a low price to pay for Standard Chartered.

In terms of income prospects, the bank is forecast to increase dividends per share from 8.5p in 2016 to 28.5p in 2019. This is a stunning rate of growth, and means that it has a forward dividend yield of 3.4%. And with dividends set to be covered 2.3 times by profit next year, further growth in shareholder payouts could be ahead.

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Peter Stephens owns shares in Standard Chartered. The Motley Fool UK has recommended Standard Chartered. 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.