Growth, value AND income! A FTSE 250 share I’d hold in my ISA for the next 10 years

Royston Wild looks into a top FTSE 250 dividend stock that he thinks investors should pay close attention to today.

| 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.

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.

Heaps of regulatory uncertainty is part and parcel of investing in the gambling sector. And lawmakers in the UK have been getting particularly tough with gaming companies in recent times.

In April, lawmakers slashed maximum stake sizes on fixed-odds betting terminals (FOBTs) to just £2 in a move that has caused hundreds of betting shops to close. And regulators have been at it again this week by banning punters making bets on their credit cards from next April.

The Gambling Commission believes the move will help curb addiction and stop many gamblers racking up huge debts. It’s estimated that up to 800,000 people gamble using a credit card.

Quite resilient!

This is another obstacle for the likes of GVC Holdings (LSE: GVC), to name just one, to conquer. But I believe the business — whose brands include Ladbrokes, Foxy Bingo and bwin — has the mettle to overcome these problems. And latest financials released today showed why.

It’s not that the FTSE 250 firm isn’t suffering some fallout of greater regulation. Indeed, like-for-like net gaming revenues (NGRs) across its betting shops dropped 11% in the fourth quarter. However, GVC is performing better than many as punters substitute their FOBT fix for betting face to face. In quarter four, for instance, a 17% boom in ‘over the counter’ like-for-like NGRs helped offset the 31% drop in corresponding machine NGRs.

An internet sensation

The biggest takeaway from GVC’s financials, however, was that online sales keep growing at a blistering rate. Indeed, so strong was its performance online that even in spite of those betting restrictions on its machines, at group level NGRs at constant currencies edged 1% higher between October and December.

Thanks to what it described as “strong across all major territories”, GVC saw online NGRs at stable currencies soar 11% in the final quarter of 2019. Gaming revenues generated via the internet rose 9%, while corresponding turnover from sporting events leapt 15% year-on-year.

Business has remained so strong that earnings for 2019 would hit the top end of guidance, GVC said. Its current £670m-£680m estimate is the result of an upgrade made just a few months ago. I, for one, am buzzing over what the business will be guiding for 2020 when preliminaries hit on March 5.

More to come

City analysts currently expect earnings at the gambling giant to soar 20% in 2020. And it’s more than likely (at least in this Fool’s opinion) that the bottom line should keep soaring into the next decade. Its US expansion is paying off handsomely, while the acquisition of Ladbrokes Coral in 2018 offers plenty more upside too.

At current prices GVC boasts a low forward P/E ratio of 12 times and a large 4.2% dividend too. Offering plenty for value, dividend and growth hunters to get stuck into, this FTSE 250 share is one I’d happily buy today and hold for years to come.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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

I’d buy 1,784 shares of this FTSE 100 stock to target £350 of monthly passive income

Muhammad Cheema takes a look at how British American Tobacco shares, with a dividend yield of 10.1%, can generate a…

Read more »

White female supervisor working at an oil rig
Investing Articles

1 ex-FTSE 100 stock that I think will get promoted soon

Jon Smith flags up an energy stock that used to be in the FTSE 100 and currently has strong momentum…

Read more »

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

With an 8% dividend yield, I think this undervalued FTSE stock is a no-brainer buy

With an impressive yield and good track record of payments, Mark David Hartley is considering adding this promising FTSE share…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£9,500 in savings? Here’s how I’d try to turn that into £1,809 a month of passive income

Investing a relatively small amount into high-yielding stocks and reinvesting the dividends paid can generate significant passive income over time.

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

Dividend star Legal & General’s share price is still marked down, so should I buy more?

Legal & General’s share price looks very undervalued against its peers. But it pays an 8%+ dividend yield, and has…

Read more »

Investing Articles

Dividend shares: 1 FTSE 100 stock to consider buying for chunky shareholder income

This company’s ‘clean’ dividend record looks attractive to me and I’d consider buying some of the shares to hold long…

Read more »

Investing Articles

3 of my top FTSE 250 stocks to consider buying before April

Buying undervalued UK shares can be a great way to generate long-term wealth. Here, Royston Wild reveals a handful on…

Read more »

Ice cube tray filled with ice cubes and three loose ice cubes against dark wood.
Investing Articles

Just released: our 3 top income-focused stocks to buy before April [PREMIUM PICKS]

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

Read more »