The Motley Fool

With £2,000 to invest in FTSE 250 dividend shares, here’s what I’d buy

Image source: Getty Images.

If I were forced to pick a handful of FTSE 250 stocks to hold for income over the next few years, beverage maker Britvic (LSE: BVIC) would likely make the cut. That’s not to say the Hemel Hempstead-based£2bn cap is immune to setbacks or devoid of risk. Today’s trading update is evidence of that. 

FTSE 250 dividend stock

As one might expect, coronavirus-related restrictions in the run-up to Christmas, coupled with the third UK lockdown soon after, heaped more pressure on the hospitality sector. Understandably, this has impacted Britvic — the owner of soft drink brands such as Robinsons, J20 and R Whites.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Total revenue for Q1 of its financial year was a touch over £328m. On a reported basis, that’s a fall of 9.8%. In its GB market, total revenue fell 4.1% thanks to a huge 32% tumble in ‘out-of-home’ sales. Overseas revenue fell more than 19%, although sales in Brazil were a bright spot, rising almost 26%. 

Naturally, the outlook for this FTSE 250 member’s profits is as cloudy as it is for most businesses. Today, Britvic said that it expects restrictions to stay during Q2 and that performance would continue to be “significantly affected“.

Not that CEO Simon Litherland seems too concerned. Commenting today, he said that Britvic is confident that it will “continue to successfully navigate the pandemic, emerge stronger, and be at the forefront of the recovery when it comes”. 

Time will tell. In the meantime, analysts have Britvic returning 26.3p per share to shareholders in FY21. Taking today’s 4% tumble in the share price into account, that equates to a forecast yield of 3.6%. For an established company in the resilient beverage sector, that really helps to mitigate the risk, in my opinion.

What’s more, Britvic’s shares still look reasonably priced at 15 times earnings before markets opened. Although capital gains are not the point for me when I’m looking to generate income, I think we could see the stock fizz when pubs, bars and cafes are allowed to reopen. 

Chunky cash returns

Another FTSE 250 stock offering a great source of dividends, in my opinion, is online trading platform IG Group (LSE: IGG).

A little over one week ago, it released a set of record-breaking H1 numbers to the market. Thanks to existing and new clients being so active, net trading revenue increased 67% to almost £417m. Pre-tax profit jumped 129% to £231.3m. 

In addition to these figures, IG also announced its proposed acquisition of US site tastytrade. This will give the £3bn cap a route into the fast-growing market of exchange-traded options and futures. It will also further diversify the company’s earnings by geography.   

Naturally, all investment involves risk and IG is no exception. While the shares have been riding a wave of positive momentum following the Covid-19 pandemic, there will come a time when clients become less active. The possibility of even more regulation of its industry can’t be dismissed either.

Even so, the dividends alone give me a reason to stay invested.  Assuming there’s no change to its 43.2p per share payout in this financial year, IG yields 5.8% at its current share price. That’s a lot more than I’d get from even the best Cash ISA.

Like Britvic, IG’s valuation is also inviting. A P/E of 12 looks cheap to me for a market leader generating high margins and returns on the money it invests.

One stock for a post-Covid world...

Covid-19 is ripping the investment world in two…

Some companies have seen exploding cash-flows, soaring valuations and record results…

…Others are scrimping and suffering.

Entire industries look to be going extinct.

Such world-changing events may only happen once in a lifetime.

And it seems there’s no middle ground.

Financially, you’ll want to learn how to get positioned on the winning side.

That’s why our expert analysts have put together this special report.

If the pandemic has completely changed our lives forever, then they believe that this stock, hidden inside the tech-heavy NASDAQ, could be set for monstrous gains...

Click here to claim your copy now — and we’ll tell you the name of this US stock… free of charge!

Paul Summers owns shares of IG Group Holdings. The Motley Fool UK has recommended Britvic. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.