Do you really want all of your wealth tied up in Britain’s boom-and-bust housing market? I know I don’t.
It’s not just the risk of a house price crash. Costly landlord regulations, troublesome tenants and the expected changes to landlord rights to evict all represent stress that I could do without.
I prefer to invest my spare cash in the stock market. Share-dealing costs are minimal compared to the costs of buying and owning property.
The value of my shares may fall from time to time, as we’ve seen over the last few days. But for long-term investors in good businesses, short-term share price movements are irrelevant. As long as the business is healthy and dividends keep coming, you don’t need to worry.
Her are two unloved FTSE 250 dividend stocks I’d back to deliver market-beating growth and income over the coming years.
A real high roller
Gaming and sports betting group GVC Holdings (LSE: GVC) built its reputation as a software provider to online services. But it’s expanded through a number of acquisitions and now owns high street bookies Coral and Ladbrokes, plus online operations including Sportingbet, bwin and Foxy Bingo.
In the US, a recent deal has seen GVC pair up with MGM Resorts to take advantage of the continuing legalisation of sports betting there.
The right time to buy?
Whether you’re comfortable investing in gambling businesses is a personal decision. But I can say that I think GVC has the potential to be a profitable long-term buy.
The company reported online net gaming revenue growth of 17% during the first half of the year, helping to offset a 10% fall in its UK high street shops, 900 of which will be closing. As a result, full-year results are now expected to be slightly ahead of previous forecasts.
GVC is still digesting the acquisition of Ladbrokes Coral last year. But the company’s performance seems to be stabilising and the shares look affordable, on nine times forecast earnings and with a dividend yield of nearly 6.5%. I think this could be a good stock to buy and tuck away.
We need this business
If you live in a city, you’ll probably already know that electric cars aren’t the whole solution to our transport problems. They do nothing to reduce congestion.
In my opinion, the only possible answer to congestion is more public transport. One company that could be well positioned to innovate in this sector is bus and train operator Stagecoach (LSE: SGC).
As the UK’s biggest bus and coach operator, I reckon it should have a huge treasure trove of data on passenger movements and patterns of demand.
The company is already spending money on areas such as contactless payment, cutting emissions and trialling self-driving buses. I’d hope that this innovation will soon extend to finding ways of providing more flexible services to cut journey times and improve urban coverage, tempting more people out of cars.
For now, Stagecoach stock looks attractively priced to me, with a 6% dividend yield and a forecast price/earnings ratio of nine. Profits are expected to fall next year as the firm exits UK rail operations. But UK bus ops look healthy enough and are expected to support an unchanged dividend. I think Stagecoach shares could be a contrarian buy at current levels.
