FTSE 250 shares have some of the best dividend prospects on the London Stock Exchange

FTSE250 stocks are currently paying hefty dividends. Looking at current dividend forecasts, some of the yields on offer are amazing.

Take a specialist mortgage lender OSB Group (LSE:OSB), for example. City analysts currently expect the company to pay a dividend of 31.8p per share for 2024. With the OSB share price currently trading at 392p, the yield on offer is an impressive 8.3%.

Interestingly, dividend coverage (the ratio of earnings per share to dividend per share) is high and amounts to 2.6. A ratio greater than two is generally a sign that dividend payments are safe in the near future.

Share prices are also rising?

But it’s getting better. These stocks are super cheap right now. Currently, the forward-looking price-to-earnings (P/E) ratio is just 4.8. Therefore, here too there may be potential for share price increases.

What’s the catch? Well, there are several risks associated with this business.

It is important to understand that OSB is very focused on buy-to-let (BTL) mortgages. Currently, there is a lot of uncertainty on the BTL market.

In recent years, taxes, government regulations and high interest rates have made BTL real estate a much less attractive investment than in the past. As a result, many investors are abandoning their properties and investing in pensions (which are much more tax efficient) instead.

Therefore, there is no guarantee that the company’s shares will be a good investment in the long term. Still, with an offered yield of 8.3%, income investors may consider purchasing this company.

Yield of 10.8% in 2025?

Another FTSE 250 company with a phenomenal dividend outlook is Lancashire Holdings (LSE: LRE). It is a provider of global specialist insurance and reinsurance products with operations in the United Kingdom, Australia and Bermuda.

Analysts are currently expecting a payout of 86.6 cents for 2024, followed by a payout of 96.8 cents for 2025. At today’s share price of 684c, these forecasts correspond to yields of 9.7% and 10.8%. .

Dividend coverage is not as high here as in the case of OSB. However, it seems reasonable that in 2024 it will be 1.6 times and in 2025 1.5 times.

I suspect that these forecasts may include “special” dividends, as the company has paid several of them in recent years. In other words, profitability may decline in the coming years.

And this is not the only risk in this case. As an insurance company, profits may be volatile in the coming years, depending on the volume of claims. In the past, the company has suffered losses from claims related to catastrophic events such as hurricanes and wildfires.

However, in the group’s latest first-half results, management sounded quite optimistic about the future. So I think it’s worth taking a closer look at the shares now.

The company’s P/E ratio is currently only 6.4. Like OSB, it is a very cheap material.