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Two promising FTSE 250 dividend stocks, OSB Group (LSE: OSB) and Aberdeen Group (LSE: ABDN), have both made gains of 40%-50% in 2025. While they aren’t the top-performers on the index, they both have high yields and some of the longest dividend track records.
That makes them two of the most attractive mid-cap income stocks on the London Stock Exchange right now.
But past performance is never indicative of future returns and a shifting economic environment could spell trouble in the coming years. So how should existing shareholders prepare, and do they still present an opportunity for new investors?
A recovery gem
OSB Group kicked-off the year heavily undervalued, trading at just 0.7 times tangible book value and 5.3 times forward earnings. As the year progressed, the market repriced mortgage lending risk and reassessed rate-cut implications, leading to a significant boost for the niche mortgage and loan provider.
Now, it’s at a more moderate valuation, with a price-to-book (P/B) ratio of 1.1 and forward price-to-earnings (P/E) ratio of 7.8. This reflects its growth but also indicates potential room for further gains.
To solidify its income credentials, the group boosted dividend 5% year on year to 34p per share and maintains strong coverage, with a payout ratio of 48.4%. Backed by 11 years of uninterrupted payments, and it still looks like a compelling income option to consider in 2026.
However, it’s worth noting that OSB Group’s profits depend heavily on interest rate margins and the buy-to-let mortgage market. Both are under pressure as rates fall and regulations tighten, potentially squeezing earnings and the dividend faster than expected.
Coming back strongly
After a tumultuous few years mired by a rebranding catastrophe, Aberdeen Group has bounced back, once again with its original name. The recovery was largely driven by the explosive growth of its online trading platform, which now boasts almost 500,000 customers and is one of the UK’s leading direct-to-consumer wealth managers.
Its cost-cutting initiatives are ahead of schedule, and management has raised 2026 profit guidance to at least £300m, suggesting renewed confidence. With a P/B ratio of only 0.74, it’s even more undervalued than OSB Group — so 2026 could be its year.
And although it hasn’t raised dividends for several years, the ongoing growth could make that a possibility soon. It has thin but sufficient cash coverage and earnings about 20% higher than dividends per share. Earnings have increased 3.7% year-on-year despite a 7% drop in revenue, revealing strong operational efficiency.
Still, the thin coverage does risk a dividend cut if earnings miss. Plus, the Core Investments division continues to underperform, with only one-third of funds beating benchmarks.
But with an improving outlook paired with a 7.5% yield, it’s a dividend stock worth considering in my book.
Mid-cap promise
Naturally, there are stronger and more well-established dividend shares on the FTSE 100. But what I like about mid-cap’s is their untapped potential. When markets truly recover, the well-positioned tend to fly and the combined dividend and growth returns make them lucrative picks.
As always, any considerations should be made as part of a well-diversified portfolio, including some defensive and growth picks in the mix.
This story originally appeared on Motley Fool
