The coronavirus pandemic. The economy in recession. The stock market crashed. It’s not easy figuring out the best shares to buy to grow your wealth and help you retire early. However, there are some brilliant FTSE 250 stocks I’d invest in right now.
The three I’m looking at today are Real Estate Investment Trusts (REITs). In my view, these three companies operate in particularly attractive sub-sectors of the market. And are also very well-managed businesses. With property-backed balance sheets, and recently-raised war chests to fund future growth, I think now could be a great time to invest.
The three FTSE 250 stocks I’d buy
My first pick, Assura (LSE: AGR), owns healthcare properties. Namely, 576 GP surgery, primary care, diagnostic and treatment centre buildings around the country. At a share price of 73p, its market capitalisation is £1.94bn. Its current annual rent roll is £109m, and its running dividend yield is 3.8%.
Pick two is Big Yellow Group (LSE: BYG), the UK brand leader in self storage. With its 100 facilities, and distinctive yellow livery, you’ll no doubt be familiar with it. At a share price of 920p, its market cap is £1.62bn. Its annual revenue is running at £129m, and its dividend yield at 3.7%
My third pick is LondonMetric Property (LSE: LMP). This company owns 16m square feet of UK distribution and long-income real estate. At a share price of 186p, its market cap is £1.69bn. Its contracted annual income is currently £123m, and its running dividend yield is 4.5%.
In a trading update last month, Assura said its March quarter rents were “being received in line with normal patterns.” This is in marked contrast to what we’ve heard from many REITs, with exposure to office, retail, leisure and so on.
Assura’s specialisation in healthcare properties is paying dividends, both metaphorically (in the security of its rental income), and literally (in continuing distributions to shareholders).
It recently raised £185m in a placing at 77p a share. This is to fund its development and acquisition pipeline, as it’s “experienced substantial growth momentum in the volume of its near-term development and investment opportunities.” This bodes well for the future growth of Assura’s assets and rent roll.
The other two FTSE 250 stocks
Assura’s defensive qualities mean it commands a higher valuation than my other two FTSE 250 stocks. The healthcare specialist’s market cap of £1.94bn is 17.8 times its current £109m rent roll. For Big Yellow, the numbers are £1.62bn/£129m and 12.6x. And for LondonMetric, £1.69bn/£123m and 13.7x.
Big Yellow and LondonMetric are not immune to the challenging environment caused by Covid-19. However, the self-storage group said last month it believes its business model will provide it with “a good deal of resilience.”
Similarly, LondonMetric said earlier this month its portfolio, which is “aligned to structurally supported sectors” (such as urban logistics), “continues to demonstrate good resilience.”
Like Assura, both Big Yellow and LondonMetric have recently raised funds for their development and acquisition pipelines. The former raised £82m at 983p a share, and the latter £120m at 180p a share. Again, this bodes well for the future growth of the businesses, and shareholder returns.
In summary, I think these three FTSE 250 stocks are well positioned to increase your wealth, and help you retire early.
But you need to get in before the crowd catches onto this ‘sleeping giant’.
G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended LondonMetric Property PLC. 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.