The FTSE 250 offers a world of opportunity for investors seeking to diversify their portfolios. Building a well-balanced mix of shares, funds and investment trusts is critical at any stage of the economic cycle. But with trading conditions threatening to become much tougher for many companies, diversification is taking on greater importance as a risk-management tool.
Owning different categories of equities can also help generate a stable return over time. Growth and value stocks can provide significant long-term capital gains, while dividend shares can provide defensive protection during economic downturns.
With this in mind, here are three shares from each category I think would be worth considering as part of a balanced UK stocks portfolio.
Growth
Increasing digitalisation, accelerating online threats and growing regulation means cybersecurity companies like NCC Group (LSE:NCC) have significant room for long-term growth. According to Fortune Business Insights, the global market will grow at an annualised rate of 12.9% between now and 2032, at which point it will be valued at a stunning $562.7bn.
NCC offers a wide range of services in this field, including consulting, attack detection and assurance. This gives it multiple ways to capitalise on this booming market.
Be mindful however, that sales cycles have been lengthening in recent months, and this could continue if the global economy cools. At the moment City analysts are tipping earnings growth of 53% and 30% for the next two financial years (to May 2025 and 2026 respectively).
Dividends
Real estate investment trusts (REITs) such as Tritax Big Box (LSE:BBOX) are popular picks for investors seeking passive income. This is because they tend to have their tenants locked down on long-term contracts, the rental income from which can be doled straight out to shareholders.
As well, REITs must pay at least 90% of the profits they make from their rental operations out in dividends.
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Tritax is an exceptionally robust REIT, in my opinion. The weighted average unexpired lease term (WAULT) was 10.6 years at the end of 2024. It also has a wide array of blue-chip companies on its books like Amazon and Tesco.
The firm has a solid balance sheet too, with a loan-to-value (LTV) of 28.8% at the end of 2024. The trust’s forward dividend yield is a huge 6.2%.
I think it’s worth a close look, even though the potential for interest rate rises are a constant risk.
Value
FTSE 250 retailer B&M European Value Retail (LSE:BME) isn’t without its share of risks. Even sellers of cheaper goods like these aren’t immune to ongoing pressure on consumer spending, as recent disappointing trading updates here have shown. Group revenues rose just 2.8% between April and December.
While things could remain tough, I think B&M’s rock-bottom valuation more than reflects this possibility. The former FTSE 100 share now trades on a forward price-to-earnings (P/E) ratio of 8.3 times.
With a 7.2% forward dividend yield too, it offers solid all-round value, in my opinion. A robust longer-term outlook for value retail — combined with B&M’ ambitious store estate expansion plans — makes this fallen angel worth a close look, in my opinion.
