Most stock investors pick a share based on either potential income from dividends or capital growth from share price gains. Within the FTSE 250, there are some opportunities that can tick both the income and growth boxes. This can make it easier for an investor to build a portfolio that’s built for all scenarios.
Raining cats and dogs
Caring for our pets remains an area that many are happy to spend on, even with the cost-of-living crisis. Add into the mix the fact that many more people now have pets following the pandemic lockdowns, and the business case for Pets at Home is strong.
Further evidence of this can be seen from the recent financial results. In figures released in November, H1 consumer revenue jumped 8.6% versus the same period last year. This clearly shows there’s resilient demand for the retailer.
Profit before tax was down 19.3%, but this was due to money being used for investment in the online platform and £2m for a brand relaunch. However, some of the lower profit was due to higher logistics costs. I think this is a risk going forward. Inflation might be coming down, but labour and other costs are still high.
Based on the continued growth trajectory, I think the share price could keep going, with profits being used to pay dividends.
A lesser known banking group
TBC Bank Group (LSE:TBCG) is a Georgian bank that’s listed over here in the UK. It currently offers a generous 5.8% dividend yield, with the share price up 27% over the past year.
The bank mainly provides services in Georgia, but also has an online presence in Uzbekistan. Part of the success of the group has come from its digital capabilities. This might sound like nothing new to us in the UK, but in Eastern Europe the scale of digital banking isn’t as advanced.
TBC has also enjoyed the benefits from rising global interest rates. This isn’t anything specific just for this firm, but naturally it’s a perk that has helped to boost profits. This has helped not only to provide funds to pay out to shareholders, but has acted to lift the share price as well.
Looking forward, a risk is that the bump from interest rates is now over. I don’t think many developed nations will hike them some more, in fact we could see rate cuts next year.
Yet even with this, I think that the growth in clients and net assets over the past year will provide a strong enough foundation to support the business well into 2024. As a result, I think investors should consider adding the stock to their portfolios.