Here, I want to look at how realistic it would be for someone to aim (over time) for the equivalent of £100 a day in passive income from dividend stocks.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Caveats

The first thing to mention is that companies don’t pay dividends weekly, let alone daily. Most do so either quarterly or bi-annually. So when I say £100 a day in passive income, I’m talking about the equivalent of that spread across a year.

Furthermore, individual dividends are never guaranteed. Even the most seemingly reliable payers — such as Tesco and FTSE 100 banks — have cancelled their distributions at one time or another.

Therefore, it’s essential to build a diversified income portfolio. This way, it would still pay out income even if one or two of the shares in the portfolio disappoint.

It certainly helps one to sleep better at night knowing a portfolio is well diversified (especially one large enough to generate £36,500 a year).

Avoiding traps

With these caveats out of the way, how long would it take to build this level of income? Well, that would depend on the dividend yield.

For example, an ISA with a 3.5% yield would need to be worth a stonking £1.04m. Whereas one yielding 6% would ‘only’ need to be valued at roughly £608,000.

Now, this immediately creates a danger because novice investors might be tempted to invest in ultra-high-yield stocks, for example, those yielding 10%+. But these are often what’s called a ‘yield trap’.

In other words, there’s usually a good reason why the yield is so high. Usually, the stock has fallen a lot because the market is pricing in some forthcoming financial problems, and therefore a potential dividend cut.

All that glitters is not gold!

It’s possible

While income is tax-free inside an ISA, the annual contribution limit is £20,000. Therefore, it will naturally take time to build up to a substantial portfolio value.

However, it’s possible given enough time. For instance, investing £720 a month would grow to around £608k in 23 years, assuming an average annual return of 8.5% with dividends reinvested.

This is the stock market’s ballpark return long term, so isn’t some daft unrealistic target.

5%-yielding stock

One stock that I think is worth assessing is Hollywood Bowl (LSE:BOWL). Listed in the FTSE 250, this is the UK and Canada’s largest ten-pin bowling operator.

There are a number of reasons I like this stock:

• A leading market-position
• International expansion opportunity beyond Canada
• Consistent profitability (proven business model)
• Well-run management team
• Strong balance sheet
• Range of offerings, including food and drink, amusement arcades, and mini-golf

Moreover, the valuation looks cheap to me today, with the stock trading at just 11 times next year’s forecast earnings. There’s also a forward dividend yield of 5.1% — well above the FTSE 250 average.

The main near-term risk I see relates to rising inflation, which could heap more pressure on consumers.

But over the long run, I expect the factors listed above to come to the fore, leaving Hollywood Bowl in a strong position to deliver attractive long-term returns.

The post How much do you need in an ISA for £100 a day in passive income? appeared first on The Motley Fool UK.

Here are three UK growth shares to check out in April.

Moonpig

Moonpig (LSE:MOON) is the UK and Netherlands’ leading online greeting card firm, with over 12m active customers.

I’m one of these customers, and I use it all the time to send personalised cards. And I’m not alone because Moonpig enjoys tremndous loyalty, with roughly 91% of revenue coming from existing customers.

Looking ahead, this should create a solid base for continued expansion. For fiscal year 2026, ending 30 April, the firm expects adjusted earnings per share growth to be as much as 12%.

The stock’s trading at 11.5 times forward earnings, which is attractive considering the board just announced a new £65m share buyback programme for FY27. There’s also a near-2% forward dividend yield, which could grow nicely over time (no guarantees, of course).

One potential risk I see is further pressure on consumer budgets (sadly, a common theme today). However, UK online card penetration is still only 6% by value, suggesting there’s a strong secular growth story unfolding here.

Hollywood Bowl

Next, we have Hollywood Bowl (LSE:BOWL), the UK’s largest ten-pin bowling operator. The stock’s also trading at around 11.5 times forward earnings, but offering a much larger 5.1% forecast yield.

Beyond the income potential, I like the company’s growth prospects. By 2035, it expects to have 130 centres, up from 93 today. And a growing number are expected to be in Canada, where it’s successfully applying its UK expansion playbook.

Again, consumer spending pressure is the biggest risk, exacerbated by rising inflation. But in the six months to 31 March, revenue rose 9.5% to £141.5m, with 2.6% like-for-like sales growth in the UK.

Therefore, the company’s showing resilience in a tough market. It makes me wonder how well this business could do in future if and when the cost-of-living crisis eases.

Genus

The third stock is animal genetics specialist Genus (LSE:GNS). The stock’s up 62% in one year but down 50% over five.

Now, this one isn’t conventionally cheap because it’s trading at 25 forward earnings. However, the long-term growth could be substantial due to the company’s PRRS-resistant pig programme (PRP).

What on earth is that? Well, PRRS (porcine reproductive and respiratory syndrome) is a devastating viral disease that causes reproductive failure in sows and respiratory illness in piglets. It has long been the bane of the global swine industry (losing around $1.2bn per year in the US alone). 

Genus has used gene-editing (CRISPR) technology to produce PRRS-resistant pigs. Canada has approved use of the PRP gene edit, while Genus is making progress with other key international regulators, including China, Mexico, and Japan.

Of course, the big risk here is Chinese or US regulators rejecting these gene-edited pigs. But brokers are getting excited about the potential for high-margin royalties from this programme.

For example, house broker Panmure Liberum recently told clients: “We remain of the view that Genus is a multi-year growth story and that it stands a reasonable chance of being a FTSE 100 stock by 2030.”

That’s an exciting prospect, considering Genus’ current £1.7bn market cap.

The post 3 top FTSE 250 growth stocks to consider for an ISA today appeared first on The Motley Fool UK.

Even so, this still leaves Hollywood Bowl some way lower than a high of 350p reached back in May 2024. Is the stock worth considering right now?

Decent H1

The reason for the share’s jump today was a solid trading update from the UK’s and Canada’s largest ten-pin bowling centre operator.

In the six months to 31 March, revenue grew 9.5% to £141.5m, with 1.9% like-for-like (LFL) growth. Encouragingly, the UK saw 2.6% LFL growth, showing how Hollywood Bowl is doing well despite the tough consumer backdrop.

During the period, it opened a new prime location in Edmonton, Canada, where it says trading has started well. This brought the estate to 93, with 77 locations in the UK and 16 in Canada. And a further three, including two in the UK, are due to open in the second half.

CEO Stephen Burns said: “Demand for high-quality, family leisure activities that offer great value for money also remains resilient in both territories, and our cash generative business model allows us to invest where we see opportunities and deliver profitable growth.”

Resilience

Of course, the biggest risk here is the potential for even more pressure on consumer spending due to the Middle East conflict. High government debt and a reliance on energy imports has left the UK economy more vulnerable than most, according to the IMF.

However, one thing I like about Hollywood Bowl is the balance sheet. It ended March with a net cash position of £26m, and no bank debt. This puts it in a strong position, even if the UK economy enters a downturn as energy costs soar.

Additionally, 76% of the company’s total electricity needs are hedged until September 2029, including 12% provided from on-site solar energy. And the firm says its high gross margin makes it “well-insulated against inflationary pressures“.

Bowling should remain popular

We’ll learn about profits and the dividend when the interim results are published on 27 May. But forecasts put the forward dividend yield at around 5%, a fair way above the FTSE 250 average.

The stock is pretty cheap as well, trading at 11.5 times forward earnings. I don’t consider that expensive for a market-leading company with a strong balance sheet that’s still growing in a difficult consumer environment.

On top of its core bowling and amusement arcade offerings, the company has been testing mini-golf, e-darts and go-karting in some locations. And average spend per visit has been trending up, with people buying more food and drink as they enjoy a bowl.

Finally, after seeing success in Canada, the firm is actively evaluating other international opportunities. I see no reason why the format couldn’t work in multiple countries, given that fun family activities like this are pretty universal. Hollywood Bowl is already targeting 130 centres by 2035.

Weighing things up, I reckon there’s a lot to like about this well-run company. The sensible valuation, 5% dividend yield, and long-term overseas growth potential make it a UK stock worth considering.

The post Up 12% in a month, Hollywood Bowl is a UK dividend stock on a roll appeared first on The Motley Fool UK.

For most, however, it might appear little more than a daydream. After all, it equates to £52k a year. Most people don’t have that much to invest, let alone possess a portfolio big enough to generate it in passive income.

So, how realistic is it?

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The long game

How big an ISA would have to be to throw off £52k a year would come down to the size of the dividend yield.

For example, a portfolio with a 6% yield would need to be worth approximately £867,000. Not only is that a hefty sum, it also far exceeds the annual £20,000 Stocks and Shares ISA contribution limit.

Therefore, even if one had £867k to invest upfront, only a fraction of that could be invested tax-free straight away. By necessity then, most investors are compelled to play the long game.

But the good news is that there are some benefits to doing this. The main one is that it becomes impossible to mistime the market. For example, if someone is investing £700 per month come rain or shine, they will be buying when the market is up, down and flat.

Crucially, they will be investing when stocks are down and dividend yields are higher. History shows the very best time to invest is after a stock market crash.

In contrast, a person who invests a large sum may do so just before the stock market tanks. And if they’re new to investing, they may make beginner mistakes that a longer-term investor would learn to avoid.

How long?

Sticking with the example of investing £700 a month, it would take just over 25 years to reach £867,000. This assumes an average total return of 9.5%, with dividends reinvested.

This return isn’t guranteed, of course, and individual dividends are far from bullet-proof. But it is the annualised total return of the FTSE 100 index over the past decade, so it’s not an unrealistic ballpark figure to aim for.

Finally, it goes without saying that £52k will buy less in 25 years than it does today. Then again, rising inflation arguably makes a future income stream even more necessary.

FTSE 250 dividend stock

One example of a dividend stock to consider for an ISA is Hollywood Bowl (LSE:BOWL). As the largest ten-pin bowling operator in the UK and Canada, it has a strong brand and plenty of repeat business.

Last year, revenue increased 8.8% to £251m, while average spend per game rose to £12.04 from £11.05 the year before. The FTSE 250 firm opened 7 new locations, bringing the total to 92. It intends to have 130 centres by 2035, including strong expansion in Canada.

Naturally, inflation adds risk. If people’s energy, fuel and food bills go up, they may have less disposable income for a game of bowling.

That said, the experience is competitively priced. A family of four can sometimes bowl for under £26 during peak times, and Hollywood Bowl is expanding its electric go-karting and mini-golf offerings. 

After falling 26% in two years, the stock’s trading cheaply at 10.6 times forward earnings. And there’s a forward dividend yield of 5.5% on offer.

The post How much do you need in an ISA for £1,000 a week in passive income? appeared first on The Motley Fool UK.

One name that will be familiar to many readers is Hollywood Bowl (LSE:BOWL). As the UK’s number one tenpin bowling operator, it’s a popular choice for fun family days out.

Let’s take a look at why I think this FTSE 250 stock could be worth considering as part of a diversified income portfolio.

Still expanding

As well as operating 77 centres across the UK, Hollywood Bowl now has 15 locations in Canada under the Splitsville brand. They’re typically located in prime, out-of-town leisure and retail parks where there’s high footfall and free parking.

In FY25, which ended in September, revenue increased 8.8% to £250.7m, with statutory post-tax profit up 15.7% to £34.6m. The firm opened a record five new sites in the UK and two in Canada, with 12 refurbishments.

Spend per game rose 9.8%, including 14.8% in Canada. This shows that Hollywood Bowl is successfully replicating the UK business model in North America, including offering food and drinks, as well as other activities like e-darts, mini-golf, pool tables and go-karting in select locations. Amusements grew 15.1%, boosted by cashless options.

Management said it’s introducing the ability to wear your own footwear while playing in Canada. I seem to remember those rented bowling shoes were never the comfiest (and certainly not cool), so this might attract more people, including younger groups on dates.

The company continues to buy back shares, which should boost the earnings per share (EPS) metric over time, and finished September with a net cash balance of £15.2m.

We delivered a fourth consecutive year of record revenue and adjusted EBITDA, against a backdrop of industry-wide challenges...This performance demonstrates the resilience of our model and the enduring appeal of bowling for consumers.
CEO Stephen Burns.

Tough backdrop

Last year, Hollywood Bowl paid a dividend of 13.3p per share. City analysts expect the payout to edge up 6% next year to 14p, giving a 12-month forecast dividend yield of 5.2%.

This means anyone investing £5,000 in shares could expect approximately £260 in annual passive income. For context, the average FTSE 250 stock yields roughly 3.2%.

Of course, the dividend forecast might not be met, especially if trading conditions worsen between now and then. Like-for-likes sales growth has been quite modest (up just 1.1% last year).

And while Hollywood Bowl offers good value for money, enabling a family of four to go bowling for just £26 at peak times, falling inflation and interest rates could also make competition like theme parks and zoos more affordable.

The future looks bright

Looking ahead, I’m optimistic Hollywood Bowl can grow into a larger company. And I see no reason why it couldn’t expand to further overseas markets in future, including in Europe. After all, affordable family days out doing fun activities should be popular wherever.

It has a pipeline of four new centres this year, with ambitious plans for 130 locations by 2035. Of these, 35 will be in Canada, which already accounts for 15% of group revenues.

The stock is down 25% since May 2024, leaving it on a cheap-looking forward earnings multiple of 11.3.

The post £5,000 in this FTSE 250 leisure stock could generate £260 in passive income appeared first on The Motley Fool UK.

However, there are still some potentially lucrative long-term opportunities, especially in growth stocks. Here are a pair of FTSE 250 shares that I think are worth researching further today.

A market leader

First up is Moonpig (LSE:MOON), the leading online greeting card company in the UK and the Netherlands. It offers an extensive range of cards, curated gifts, and personalisation features.

Moonpig’s due to release a trading statement on 18 March. But in the six months to 31 October, the firm reported a 6.7% uptick in revenue to £168.6m, with adjusted earnings per share rising 13.1%.

Second-half trading up to early December had been “encouraging“. And in a show of confidence in its prospects, Moonpig hiked the interim dividend 25%.

Mind you, the forecast yield is still modest at 1.85%. And if the UK economy were to hit the rocks, the company’s growth could slow as consumers cut back on curated cards and gifts.

However, the FTSE 250 stock trades at 12 times forward earnings, which isn’t expensive for a digital-first firm that boasts a strong return on capital. It’s also buying back up to £60m worth of shares in FY26.

Moonpig now has over 12m customers, with a database of 107m customer occasions. This data allows the company to predict what cards or gifts customers might like based on previous purchases and upcoming calendar events.

I use the firm’s app to create personalised birthday cards for my daughter, and I like the AI-generated stickers you can create. I’m not alone. Over 50% of customers are now using its innovative creative features to make their cards more personal.

Looking ahead, I’m bullish on the company’s growth prospects. There’s a long-term structural shift from offline to online card buying, and Moonpig is a market leader with a strong brand.

Another leader

Next, I want to highlight Hollywood Bowl (LSE:BOWL), which is the UK and Canada’s largest 10-pin bowling operator.

What I like here is that the business is showing resilience during a tough period of weak consumer spending. In the 12 months to the end of September, like-for-like revenue in the UK and Canada grew 1.1% and 3.2% respectively.

However, spend per game was up 9.2% in the UK and 14.8% in Canada. So the firm’s managing to sell more food and drink to customers when they’re inside. It has also invested £11m in new amusement machines and is increasing its mini-golf offer.

Total revenue rose 8.8% last year to £250.7m, with a record five new sites opened in the UK and two in Canada. The growth opportunity in Canada looks attractive because the 10-pin bowling market there is very fragmented.

Similar to Moonpig, any deterioration in the economy would present a risk. However, it’s worth noting that a family of four can bowl in the UK for £26. So Hollywood Bowl offers value for money at a time when families are sadly struggling financially.

The company’s on track to reach 130 centres by 2035, up from 92 at the end of September. And the stock’s reasonably priced at 11 times forward earnings while sporting a 5% yield.

The post 2 top stocks to consider from the FTSE 250 in March appeared first on The Motley Fool UK.

By contrast, the FTSE 100 is dominated by large companies like Shell, BP, HSBC, GSK, and British American Tobacco. As these are very mature, they return a lot of cash to shareholders in the form of dividends.

In the last few years however, UK mid-caps have been less popular with global investors due to the stagnant domestic economy. And when a share price falls but the dividend stays the same, the yield goes up.  

Meanwhile, the FTSE 100’s come back into fashion as investors have sought out established dividend payers with global operations. The index is now up around 65% in five years, with dividends on top.

The FTSE 250? Less than 35% with dividends!

Index tracker

As a result of these trends, the FTSE 250’s yield of around 3.3% today is higher than the FTSE 100’s 2.9%. 

What this means is that someone could invest £10,000 in a tracker fund like iShares FTSE 250 UCITS ETF to aim for roughly £330 in yearly dividends.

This ETF simply tracks the mid-cap index, and the top five holdings are IG Group, Tritax Big Box REIT, housebuilder Taylor Wimpey, Johnson Matthey, and asset manager Aberdeen.

Picking individual shares

Alternatively, an investor could aim for higher passive income by picking individual mid-cap shares. While riskier, this has the potential to drive better returns.

The five highest yielders today all offer double-digit yields. These are SDCL Efficiency Income Trust (13.3%), Bluefield Solar Income Fund (12%), Foresight Environmental Infrastructure (11.7%), Renewables Infrastructure Group (11.6%), and Greencoat UK Wind (11%).

However, a massive yield’s usually a sign that the market thinks it’s unsustainable moving forward. Therefore, it can be risky to pile in expecting juicy dividends. A 10%+ yield is often a red flag, and certainly needs extra careful consideration.

Arguably, the sweet spot is between the index yield (3.3%) and risky double-digit yielders. Something like Hollywood Bowl (LSE:BOWL), the UK and Canada’s largest tenpin bowling operator, which offers a forecast yield of 5.3%.

To my mind, there are a few attractive things about Hollywood Bowl. One is that, despite this period of squeezed disposable income, revenue still grew 8.8% last year to £250.7m. Statutory net profit rose 15.7% to £34.6m. 

Plus, Hollywood Bowl’s growing strongly in Canada, with two further sites opened last year. Like-for-like sales growth there was 3.2%, with spend per game jumping 14.8%. This shows that customers are willing to spend on food, drink, and amusements once they’re through the door.

Of course, high UK inflation is problematic and adds risk. But it’s worth noting that spend per game was up 9.2% here, despite the tricky backdrop. As a cheaper alternative to theme parks for inflation-weary families, I expect tenpin bowling to remain resilient.

Falling intertest rates should also help loosen consumers’ purse strings.

By 2035, Hollywood Bowl is aiming for 130 centres, up from 92 today. It’s also expanding its mini golf and electric go-karting offerings in some larger locations. 

With the stock trading for less than 11 times next year’s forecast earnings, I think Hollywood Bowl’s worth a look today.

The post How much passive income does the FTSE 250 offer? appeared first on The Motley Fool UK.

How might it work? Here is how someone could set up a second income plan, in five steps.

1. Start putting money aside

The first step would be to start putting money aside on a regular basis.

How much depends on what someone can spare. In this example I will use £500 a month. The same approach could work with less or more, but would be correspondingly slower or faster.

Buying shares will require an account, so it makes sense from day one to start putting the money into one, such as a share-dealing account, Stocks and Shares ISA, or trading app.

2. Get to grips with how the stock market works

If this approach was as simple as putting money into shares that pay dividends, that would make it easy. The reality is a bit more complex.

Dividends are never guaranteed. As well as that, share price moves can mean that even a share that pays dividends turns out to lose money over the course of ownership.

So, before investing, it is helpful to become familiar with at least the key elements of how the stock market works – things like how to value shares and how to manage risks.

3. Begin to build a portfolio

At some point, the investor is ready actually to invest!

In my example, I presume a compound annual gain of 8%. That does not necessarily mean an 8% dividend yield – share price gains can also contribute, though to my point above, share price declines could eat into the compound annual gain.

One share I think investors should consider at the moment is Hollywood Bowl (LSE: BOWL).

The leisure site operator offers a 5% dividend yield. Over time I expect the dividend to keep growing, as the proven and profitable business aims to keep growing its number of bowling alleys in coming years.

Hollywood Bowl’s share price has gained 30% over the past five years.

I also like the growth story of its plans in Canada, where it already has a footprint and sees lots of opportunity to expand by buying existing single-site operators.

The economics of a bowling lane can be attractive. They are pretty cheap to maintain. Once someone is through the door, as well as lane hire there are other revenue opportunities like snacks and drinks.

One risk I see is the company’s North American expansion plans distracting management from the core UK business.

But over the long run, I see this as a simple, but proven, cash generative business with sizeable growth potential.

4. Keep on going…

So, is there a second income yet?

Not for a while, if dividends are initially reinvested as I presumed when I included them in the 8% compound annual growth rate.

A long-term approach to investing is required. Putting in £500 a month and compounding it at 8% annually, after 13 years it ought to be worth around £133,700.

5. Turn on the income taps!

At that point, the dividends could be used as a second income.

An 8% dividend yield on that £133,700 would generate over £500 per month on average.

The post 5 steps to target a £5,000 second income appeared first on The Motley Fool UK.

Take Hollywood Bowl (LSE: BOWL) as an example. The FTSE 250 leisure operator grew revenue by 9% last year. Net profit moved up even quicker, by 16%,

But I think the company could just be getting started!

Bowling over the competition

It is looking to apply its core expertise beyond 10-pin bowling as well as increase the appeal of existing sites, by building a mini-golf course at some of them.

That is not what I see as the key opportunity, though. Hollywood Bowl continues to expand its proven core bowling offering in the UK, having opened a record new five sites last year. Meanwhile, it opened a couple of new sites across the pond in Canada.

That puts it on course to have 35 sites in the North American country by 2035 and 95 in the UK. That would be growth of 24% in the number of UK sites – and 133% in Canada.

Now, a decade is a long time and things may not go according to plan. The pandemic saw leisure sites shuttered on months on end and that is a risk for any future public health emergency. But, as a long-term investor, the fact that this FTSE 250 is planning a decade ahead appeals to me.

Here’s what excites me

Why am I so excited about growth opportunities in what many see as an old-fashioned part of the leisure sector?

It is simple. Hollywood Bowl has proven that it can deliver economies of scale by rolling out a simple, but popular formula. That let it achieve a net profit margin of around 14% last year.

Canada has a lot of single-site operators. It can buy them up, squeeze out economies of scale, and grow profits.

The firm’s ownership of an equipment business in the country can further help its economics and speed of estate expansion, as well as giving it an advantage over rivals.

If things go well, it should be able to grow revenues strongly over time — and, thanks to those economies of scale, increase profits even quicker.

Generous dividend and reasonable valuation

So, while this may look like a dull business in a stagnant part of the economy, in fact I reckon there is a strong long-term growth story here. At 13 times earnings, I think the share is attractively priced.

Meanwhile, the company is highly cash generative: last year, adjusted operating cash flows were £64m

That supports a dividend yield that, at 5.1%, is well above the FTSE 250’s 5.1% average.

Plus, the dividend is growing strongly! Last year’s 10% growth in the dividend per share was an indication that management is confident about the direction of the business.

There are risks, of course. Successful international expansion can be harder than it looks. It adds exchange rate risks too.

Plus, bowling is not top of mind for most people when they have a spare evening and want to let down their hair. In a weak economy, its relative value may become less attractive compared to cheaper options.

Taking the long-term view, I see Hollywood Bowl as a FTSE 250 share for investors to consider thanks both to its dividend and business growth potential.

The post With a 5.1% yield and P/E ratio of 13, is this FTSE 250 share a bargain hiding in plain sight? appeared first on The Motley Fool UK.

One FTSE 250 share I think merits long-term investors’ consideration at the moment is Hollywood Bowl (LSE: BOWL).

Why I like the business model

Is 10-pin bowling cool, with the cachet of a buzzy leisure activity like padel or pickleball? No – and for as long as I can remember, it never has been.

But it has always hung around. By not being a buzzy trend, 10-pin bowling also feels less likely to fall out of fashion when trends change. After all, it is not exactly in fashion in the first place.

A certain number of people in each generation like to go bowling, even if only occasionally. That gives the leisure activity durability.

A bowling lanes operator can do well thanks to lane and equipment rental fees, as well as ancillary items like food and drinks. Some such facilities are operated as standalone businesses, but Hollywood Bowl’s growing collection of centres gives it economies of scale.

As well as continuing to grow in its home UK market, the company has also expanded to Canada, where I see substantial growth opportunity simply from buying existing single facility operators, let alone opening new ones.

Long-term potential

At the moment, this FTSE 250 share sells on a price-to-earnings ratio of 17. That does not strike me as a screaming bargain.

Bear in mind though, that I am taking the long view. From that perspective, I think the valuation is attractive for a company with Hollywood Bowl’s characteristics.

It has a strong position in an industry that ought to benefit from ongoing demand. It has space to grow in its home market as well as in Canada. Further down the line, I can imagine its operating model could be rolled out to other markets.

Hollywood Bowl has more than just bowling lanes in its portfolio, incidentally. It has also been expanding its mini gold offer.

I see that as potentially a good add-on, but the main appeal for me is the company’s core business and the long-term growth potential it offers.

Passive income potential

Meanwhile, the company’s dividend yield of 4.4% also looks attractive to me.

Any company can face challenges. Pandemic restrictions wreaked havoc on Hollywood Bowl’s ability to opens its centres for business. There is a risk of such disruption in future should there be similar restrictions in a public health incident.

The Canadian expansion also brings risks, as well as opportunities. Overseas expansion can be fraught with unseen difficulties for any company and Hollywood Bowl’s focus has historically been domestic.

Still, I continue to see a lot to like about the investment case. I regard this as one FTSE 250 share for investors to consider.

The post 1 FTSE 250 share to consider for the coming decade appeared first on The Motley Fool UK.