The FTSE 250 index is a great place to screen for new stocks that offer both income and growth characteristics. With this in mind, I’ve been looking at the shares in the index, and here’s what I’ve found in my search.
The mid-cap index
The FTSE 250 is the UK’s mid-cap stock index. It tracks the share price performance of 250 companies that range in market value from about £500m to £5bn. This gives me a wide investment choice to look at when I’m researching new stocks for my portfolio.
The index has performed well over one year. At time of writing, it’s up almost 12%. This is despite rising inflation and the new strain of Covid that has heightened risks for stock investors like myself recently. Nevertheless, I still think there are some excellent stocks there to consider for next year.
Growth stocks
The first company I’ve been researching in the FTSE 250 is Greggs. It’s a retail baker specialising in food-to-go. The share price is up a huge 71% over one year, but I think this could increase further in 2022. Greggs is expanding online, has improved its app-based ordering, and now offers home delivery. Revenue is forecast to increase by 10% next year too. Greggs did suffer during the initial lockdowns though, so it’s something to keep in mind before I buy the shares.
I’ve also been looking at real estate investment trust Tritax Big Box. It owns a portfolio of large-scale logistics real estate that are used for bulk deliveries. I think this sector has excellent growth potential going forward as prime warehousing space is critical for online shopping. The share price is up almost 50% over one year, so has far outperformed the index. I think this should continue into next year due to the booming e-commerce sector. Real estate valuations have increased recently though. This may limit the company’s growth if it can’t acquire additional prime location warehouses at reasonable valuations.
Income stocks
Alongside my growth stocks, I also look for companies that offer respectable dividend yields. Dividends can be a great source of passive income, but can also be reinvested back into my portfolio to buy more shares.
The first income stock in the FTSE 250 I’m looking at for 2022 is Brewin Dolphin. It’s a wealth management company operating primarily in the UK. It should benefit from the increased savings ratio of UK households as more people look to wealth management services. Indeed, the company achieved record discretionary inflows in its fiscal year 2022. The dividend yield is forecast to rise to 4.8%, which I consider highly attractive for my portfolio. However, there’s always a risk of a stock market crash that would lower the fees that Brewin Dolphin can charge on its assets under management.
The final company I’ve been researching is The Renewables Infrastructure Group. It’s a close-ended investment company that specialises in renewable energy assets such as wind farms and solar cells. There’s going to be high demand for this sector as governments across the world target a zero-carbon future. This should support the current dividend yield forecast of 5.2%. Dividends are never guaranteed though, so the company has to keep acquiring high quality assets to grow its earnings.
