A 4% yield and high ROE! Is this the top growth and income stock on the FTSE 250?

Lion Finance Group (LSE: BGEO) appears to have all the trappings of a killer growth stock — steady earnings growth, high profitability and a respectable balance sheet. It has soared 53.4% this year alone and an astonishing 675% over the past five years.

What makes it even more unusual is that the shares come with a 4% yield and trade at low valuation multiples. Growth stocks usually demand a premium, yet this one seems cheap. That combination felt almost too good to be true, so I decided to dig deeper.

A growth and income powerhouse?

The numbers look impressive. Lion Finance Group posts a return on equity of 30.3% and a net margin of 46%. Revenue rose 36.1% in the past 12 months and Q2 2025 earnings came in at £140.3m. Earnings per share beat expectations by 8% in its latest annual results.

Over the past decade, the median earnings yield has been 72.4% — an astonishing figure for any bank. Net loans jumped 30% to £9.95bn last year, while the London Stock Exchange lists its long-term debt-to-capital ratio at a comfortable 20.2%.

The dividend also looks healthy. With a payout ratio as low as 20%, the 4% yield appears well covered. On valuation, the stock trades at just 0.3 times book value and 5.56 times earnings, both of which are very low compared to peers.

That said, not everything is clear. I noticed no reported allowances for bad loans, which feels unusual for a lender with such rapid loan book growth. Reliable data on free cash flow is also hard to come by. These gaps raise questions that investors might want to keep in mind.

So what’s the catch?

Lion Finance Group isn’t exactly a household name. It was previously called Bank of Georgia Holdings, with the Georgian bank still operating as a subsidiary. The group also controls Ameriabank in Armenia, the investment bank Galt & Taggart and Belarusky Narodny in Belarus, among other smaller firms.

That geographic mix is where things get complicated. These are emerging economies that have delivered fast growth, but they are also regions where political and economic risk runs high. Georgia, Armenia and Belarus each face varying levels of instability, often caught between European Union interests and Russian influence.

It’s worth asking whether the recent rebrand was a strategic attempt to distance the company from its roots in the region. Either way, the fact remains that investing here means gaining exposure to economies that could be pulled into the broader Russia-Ukraine conflict. This adds a degree of risk that investors need to weigh carefully.

Final thoughts

Lion Finance Group certainly looks like a top candidate for growth stock status on the FTSE 250. It’s hard to say it’s the very best as that can be subjective. Yet it combines rapid expansion, fat margins, strong profitability and a reliable dividend with valuations that look remarkably cheap. 

On paper, it’s the kind of share many investors would love to own.

But the regional exposure can’t be ignored. For those comfortable with higher risk, it could be a stock to consider for a well-diversified portfolio. For more cautious investors, the political backdrop might outweigh the appeal.

The post A 4% yield and high ROE! Is this the top growth and income stock on the FTSE 250? appeared first on The Motley Fool UK.

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Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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