The FTSE 250 is a popular hunting ground for investors seeking growth shares. Its composition of mid-cap shares provides (in theory) more scope for significant earnings growth than the FTSE 100‘s blue chips, and therefore the potential for superior capital gains.
What unfairly gets less attention is the index’s ability to provide a decent passive income. To illustrate the point, the FTSE 250’s forward dividend yield of 3.5% matches that on offer from the Footsie.
Today I’m looking for the best ‘all rounders’ for UK share investors to consider buying today. Here are two from the FTSE 250 I think are attractive growth and dividend stocks, and especially so at current prices.
Should you invest £1,000 in Bakkavor right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Bakkavor made the list?
Warehouse REIT
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Real estate investment trusts (REITs) like Warehouse REIT (LSE:WHR) typically don’t have the potential to deliver stratospheric dividend growth. But they compensate for this by providing a reliable stream of passive income regardless of economic conditions.
This is thanks in large part to REIT dividend rules. Each year, at least 90% of annual rental profits must be distributed by way of dividends.
However, this alone isn’t enough to guarantee steady dividends, given their relationship to profits delivery. Yet earnings at companies such as this are usually immune to volatility thanks to the long contracts that tenants are tied down with.
In the case of Warehouse REIT, the weighted average unexpired lease term (WAULT) as of September was 4.7 years.
City analysts expect annual dividends to be locked for this financial year (to March 2025) and next year. However, investors can still enjoy a tasty 6.2% dividend yield.
I expect rising demand for logistics properties to underpin strong long-term dividends here. I think it’s worth considering despite interest rate risks to its profits (e.g., the potential for higher borrowing costs and reduced asset values).
Indeed, City analysts expect earnings to rise 23% in financial 2025 and 7% in financial 2026. With a forward price-to-earnings-to-growth (PEG) ratio of 0.8 for this year, that represents decent value for money.
Any reading below one suggests that a share is undervalued.
Bakkavor
Bakkavor (LSE:BAKK) is another FTSE 250 share offering an attractive blend of growth, dividends, and value.
Forecasters think earnings here will leap 26% year on year in 2025. This leaves it dealing on a forward PEG multiple of 0.6. Meanwhile, expectations of another dividend increase leaves the dividend yield at a meaty 4.9%.
Bakkavor makes freshly prepared food like bread, salads, pizzas, and desserts. This has two distinct advantages for investors.
Firstly, food industry earnings tend to remain stable regardless of economic conditions. We all need to eat, don’t we?
Secondly, the company is tapping into a fast-growing segment: people are becoming more inclined to healthier, fresher meals, but an increasingly large number of us don’t have the time to prepare them. Bakkavor solves this problem.
With operations across the UK, US, and China, Bakkavor provides exposure to rock-solid markets alongside fast-growing ones. Bear in mind, though, that its geographic footprint leaves it vulnerable to foreign currency risk.
Bakkavor has also been experiencing earnings issues in Asia recently, though the success of recent restructuring initiatives is an encouraging omen.
