Buy this ASX 300 stock for a 14% gain and 5.5% dividend yield

Bell Potter thinks investors should be snapping up this stock before it's too late.

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If you're on the lookout for some big gains and a quarterly pay check, then Rural Funds Group (ASX: RFF) shares could be worth a closer look.

That's the view of analysts at Bell Potter, which think the ASX 300 stock is undervalued at current levels.

What is the broker saying about this ASX 300 stock?

Firstly, if you're not familiar with Rural Funds, it owns a diversified portfolio of Australian agricultural assets in five core sectors which are predominantly leased to corporate agricultural operators.

It seeks to generate earnings and income growth through productivity improvements and conversion of assets to higher and better use. The company has a distribution growth target of 4% per annum.

Bell Potter thinks that the ASX 300 stock is trading at a very attractive price for investors. It said:

The ~30% discount to market NAV appears excessive when we consider the material improvement in counterparty profitability indicators in recent months (with cattle, almond and macadamia nut prices all rallying off the lows) and that we are likely to see asset sales at or around the market value of the assets.

In light of this, at the end of last month it reaffirmed its buy rating with a $2.40 price target. This implies potential upside of almost 14% for investors over the next 12 months.

To put that into context, a $10,000 investment could turn into approximately $11,400 if Bell Potter is on the money with its recommendations.

But the returns shouldn't stop there. Rural Funds historically rewards its shareholders with quarterly dividends.

Bell Potter expects this trend to continue and is forecasting total dividends per share of 11.7 cents in FY 2024, 11.7 cents again in FY 2025, and then 12.2 cents in FY 2026. Based on its current share price of $2.11, this equates to dividend yields of 5.5%, 5.5%, and 5.8%, respectively.

If this proves accurate, it would mean dividends of approximately $550 from a $10,000 investment in this ASX 300 stock.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Rural Funds Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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