Looking to become an ISA millionaire? I’d buy these 2 FTSE 250 dividend growth stocks

I think these two FTSE 250 (INDEXFTSE:MCX) shares could improve your long-term ISA returns.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

With the FTSE 250 having risen by just 10% in the last four years, there are a number of mid-cap shares that seem to offer good value for money at the present time.

Furthermore, a range of stocks could produce rising dividends over the long run. As such, their total returns could be highly impressive, which may increase your chances of becoming an ISA millionaire.

With that in mind, here are two mid-cap shares that seem to offer high potential returns in the long run.

Big Yellow Group

Self-storage specialist Big Yellow Group (LSE: BYG) released an encouraging update on Friday. Trading in the first quarter of its financial year was positive, with like-for-like occupancy moving to 85.1% from 83.3% in June 2018. This means that the company is on track to meet its objective of 90% like-for-like occupancy over the medium term.

With a pipeline of 13 potential stores that comprise around 19% of the company’s current maximum lettable area, it could generate improving financial performance in the long run. Although demand may weaken to some degree during the Brexit process, the company’s price-to-book (P/B) ratio of 1.5 suggests that this has been accounted for by investors.

Since Big Yellow Group has been able to deliver a rise in dividends per share of 53% during the last five years, its 3.5% dividend yield may become increasingly attractive over the long run.

Although there may be higher-yielding dividend stocks available elsewhere, the company’s potential to generate capital growth and an increasing bottom line could mean that its total return is higher than for many of its index peers. As such, now could be the right time to buy it for the long term.

easyJet

easyJet’s (LSE: EZJ) trading update released this week showed that the budget airline is on track to meet expectations for the full year. The company is, of course, facing challenging operating conditions that have contributed to weak investor sentiment. This has led to a falling share price, which saw it demoted from the FTSE 100 to the FTSE 250 in June after six years in the large-cap index.

In the short term, the stock could face further pressure on its valuation. Challenges such as weak consumer confidence are set to continue, and could lead to an increasingly cautious stance from investors.

However, with the company having a solid track record of growth, it could be well-placed to increase its position in what is set to be a growing budget airline sector over the long run.

Since easyJet has a dividend yield of 6.5% that is covered twice by profit, its income prospects seem to be bright. Meanwhile a price-to-earnings (P/E) ratio of 7.7 could mean that it offers a margin of safety which provides scope for an upward re-rating over the long run.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of easyJet. 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.

More on Investing Articles

Investing Articles

17,648 shares in this under-the-radar Dividend Aristocrat could earn investors £1,500 a year in passive income

With 47 years of consecutive dividend increases, James Halstead might be one of the best passive income shares for UK…

Read more »

Investing Articles

Could this beaten-down FTSE 100 stock outperform the index in 2025?

Investing in precious metals miners has been deeply frustrating over the past few years, but Andrew Mackie believes this is…

Read more »

Investing Articles

No savings at 40? Here’s how late investors could target an £18,100 passive income with UK stocks

Creating a diversified portfolio of UK stocks could be a great way for investors to build long-term wealth, explains Royston…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

The Ashtead share price could soar with proposed US listing! A slam-dunk opportunity to buy?

The Ashstead share price has underperformed its US peers over the past 12 months, but moving its primary listing there…

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

2 FTSE stinkers I’m avoiding in 2025

Investors might be ending 2024 in a fairly bullish mood. But our writer doesn't like the outlook for at least…

Read more »

Businesswoman calculating finances in an office
Investing Articles

This FTSE 100 stock looks good to me, so should investors consider buying it now?

The battered retail sector's thrown up some keen company valuations, such as this FTSE 100 player that's been expanding abroad.

Read more »

Young woman holding up three fingers
Investing Articles

Recently released: our 3 top income-focused stocks to consider buying in December [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

1 overlooked reason Warren Buffett’s made so much money by investing in Apple

Being greedy when others are fearful is a big part of what makes Warren Buffett a great investor. But Stephen…

Read more »