Benefitting from volatility

First up is IG Group (LSE:IGG). This stock’s already up 11% this year, with much of that driven by investor sentiment about bumper future earnings amid recent market volatility. After all, IG’s main source of revenue is fees and commissions from users trading on the platform. So during the recent weeks of stocks swinging higher and lower, not to mention commodities and other assets, I expect client activity has picked up significantly.

Even though volatility’s only been evident for a month or so, I think some investors are buying the stock almost as a form of protection against the risks of a longer-term conflict in the Middle East. If the situation doesn’t improve in the coming months, it could weigh on the stock market, but companies like IG Group could become defensive stocks that outperform in this environment.

Over the past year, the stock’s risen by 52%. Yet when I look forward, the sharp rally still only means the price-to-earnings ratio is 7.39. This is less than half the FTSE 100 average ratio, suggesting the stock could be undervalued. At the very least, it appears better value than Rolls-Royce.

In terms of risks, regulatory concern is up there. IG operates in leveraged products and services retail clients, which regulators are very strict on. Yet even with this, I think the outlook could support further gains.

Turning to emerging markets

Another option is Ninety One (LSE:N91). Up 10% in 2026 and 61% over the past year, the emerging markets asset manager is enjoying a strong inflow of client funds. In a January trading update, it noted assets under management (AUM) hit £159.8bn as of the end of 2025, up from £130.2bn the year before.

Demand for emerging market investments has risen over the past year, with lower interest rates in developed markets pushing investors to other areas in the hunt for yield. Further, the spike in energy prices in 2026 has helped many of these nations, given their net export nature of products like oil and gas.

Ninety One isn’t just being passive in its strategy either. Its new Sanlam partnership is a big deal as it gives access to a large South African client base with a steady pipeline of assets. This should help to boost the outlook going forward.

It’s true that one good year doesn’t mark a structural trend higher for the company. Emerging markets are notoriously volatile, meaning that investors could swiftly pull their money back out if things turn sour. But overall, I think it’s another growth share that looks more attractive than Rolls-Royce.

The post 2 growth shares beating Rolls-Royce stock so far this year appeared first on The Motley Fool UK.

What is this ‘secret’ FTSE 250 stock?

The stock is question is Ninety One Group (LSE: N91). Formerly a part of Investec, the investment manager has a focus on emerging markets, such as Asia, Africa and Latin America. Its share price has been charging ahead in 2025. A gain of 60% vastly outperforms that of the mid-cap index (+7%).

So what’s been going so right?

Well, assets under management have been growing at a fair clip. Indeed, this hit £140bn by the end of June as investors grew keen to revisit previously out of favour markets, including the UK. That means higher fees and, ultimately, revenue.

Ninety One has also been expanding via the acquisition of Sanlam’s UK active asset management arm. Sensing this will unlock growth in time, brokers have been raising their price targets on the shares.

Above-average dividends

But Ninety One’s shareholders haven’t just seen the value of their stakes shoot upwards this year. They also received a dividend of 6.8p per share in August.

As things stand, the stock has a dividend yield of 5.7% for FY26 (which ends in March 2026). In addition to being way above the yield of the FTSE 250 as a whole (3.5%), this looks set to be covered by expected profit.

All this makes a valuation of 13 times forecast earnings look decent, both relative to the Financials sector and the market as a whole.

What if the market turns?

Like all asset managers, Ninety One’s ability to keep its share price heading up is heavily dependent on money continuing to come in. This will depend on a few things.

First, its funds will need to perform well and better than those of rivals. Currently, this is not the case with at least some of them. If this continues, retaining clients could become harder.

More generally, business could suffer if markets begin to struggle. A crash — and the widespread panic it generates — could do real damage to revenue.

Going back to the dividend stream, I can also see that Ninety One’s distributions have been a bit volatile since it started paying them in 2020.

To be fair, it only became an independent entity in that pandemic-ravaged year so we don’t really have sufficient data to make a judgement on whether this form is likely to continue. But ideally, I want to see an unbroken streak of hikes.

Worth considering

Taking into account the concerns mentioned above, placing too much weight on Ninety One to keep that cash flowing in is risky. Then again, I’d say the same thing about any listed company.

However, I also reckon the £2.1bn cap is a decent example of a lesser-known mid-cap to consider buying as part of a full-diversified portfolio, especially by those looking to replace or add to their primary income while also getting a bit of growth in the mix.

Half-year results — due on 17 November — will be worth reading.

The post Up 60% in 2025, this FTSE 250 stock still yields 5.7%! appeared first on The Motley Fool UK.

But every now and then, an income stock also shows signs of growth potential, either because it’s undervalued or backed by strong earnings momentum.

I’ve been looking at two examples on the London market that stand out as potential candidates for those wanting both income and the possibility of capital appreciation.

The up-and-coming asset manager

Ninety One (LSE: N91) might not be the most talked about stock, but it’s been making quiet progress. The firm started life as Investec’s asset management arm before demerging in 2020. Today, it oversees £126bn in assets under management (AUM) and has carved out a niche by integrating environmental considerations into its investment approach.

Notably, it provides a framework for assessing biodiversity and natural capital risks at a national level.

This year has been particularly strong. The share price is up around 45%, supported by solid fundamentals. Return on equity (ROE) stands at 40.5%, which is very impressive, and its forward price-to-earnings (P/E) ratio of 11.87 suggests there’s still room for growth without veering into expensive territory.

Dividends are also reasonably covered, at 71% of earnings, while its debt-to-equity ratio is just 0.23 – leaving the balance sheet in good shape.

That said, no investment’s without risk. Asset managers are heavily exposed to market conditions, and a downturn in equities or bonds could cause AUM to shrink, cutting into revenues. But the asset management industry is crowded and margins can be squeezed if flows slow. Investors should think about these risks before adding Ninety One to a portfolio.

A small-cap with big dividends

Mears Group‘s (LSE: MER) a very different business. This £265.5m company focuses on providing housing repairs and maintenance services, an area of steady demand. While it may not sound particularly glamorous, its numbers speak for themselves.

The dividend yield is a substantial 8.57%, supported by a payout ratio of 48.7% – comfortably below the levels that would raise alarm bells. The company has raised its dividend for four consecutive years, with growth of 109% year on year most recently.

Earnings growth has been equally impressive at 36.3%, and return on equity (ROE) stands at 25.6%. Analysts estimate earnings per share (EPS) will reach 50p in FY 2025. With a forward P/E ratio of 6.42 and a price-to-sales (P/S) ratio of just 0.23, the stock looks undervalued compared to peers.

Still, risks shouldn’t be overlooked. Mears operates in a sector heavily influenced by government contracts and housing policy. Any cutbacks in public spending could impact revenues, while cost inflation may erode margins despite recent improvements.

Final thoughts

Both these companies strike me as income shares worth considering for a diversified portfolio. Mears is growing quickly but is less resilient to shocks than its larger peers. Meanwhile, Ninety One looks very profitable but operates in a highly competitive sector.

Together, they combine generous dividends with growth potential, which isn’t easy to find. However, as always, investors must weigh the risks against the rewards.

The post 2 high-yielding UK income shares with added growth potential appeared first on The Motley Fool UK.

Tapping into emerging markets

Ninety One (LSE:N91) is an investment manager listed in the FTSE 250. It caters to a wide range of clients, but has an investment focus tilted towards the emerging markets. Over the past year, the share price has fallen by 28%. This is one factor that has pushed the dividend yield up to 7.61%.

The focus on emerging markets is something that can give investors the kind of exposure they’d struggle to replicate directly. This isn’t just due to the physical areas that are targeted. Ninety One does invest in stocks, but also fixed-income, specialist credit and other alternative financial assets.

The fall in the share price over the past year closely correlates to the choppy financial markets due to the high-inflation, higher-interest-rate environment. As a result, the business saw £3.2bn in client fund outflows in the half year through to November.

This remains a risk going forward, but I feel markets have now digested and are caught up with the lay of the land. That’s why I feel buying at current levels for the high yield could be a good option.

Renewable energy in the spotlight

The second stock for an ISA watchlist is Riverstone Credit Opportunities Income Trust (LSE:RCOI). It might be a bit of a mouthful to say, but the trust has a lot worth talking about. The current dividend yield is 8.99%, with the share price up 13% over the past year.

In a nutshell, the company provides funding and other credit options to help raise capital for projects in the energy sector. This includes conventional energy and also a push towards renewable energy. I think this focus could make it a strong candidate for long-term profitability. Instead of some other sectors that are stagnant, I feel the renewable energy space is primed to grow for the foreseeable future.

Risks and rewards

Naturally, there are risks in this space. Infrastructure projects are expensive to fund, meaning that a lot of money can be tied up in one area. It’s also illiquid, meaning that the managers can’t simply sell an asset as quickly as selling a normal stock or bond.

Yet the high income potential on offer is very appealing. When this is combined within the ISA, an investor doesn’t have to pay dividend tax. This allows more of the dividend to be kept, which can then be reinvested to help compound future returns.

Both options are on my ISA watchlist for the coming months and I feel they could be of value to many income orientated investors out there.

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 post 2 high-yield stocks investors should have on their ISA watchlist now appeared first on The Motley Fool UK.

Income stocks from finance

The first company I like is Ninety One (LSE:N91). The asset manager has a range of funds, but the focus is mostly on stocks with global exposure. Given the fact that the company has multiple funds, the share price doesn’t track the price of just one fund. It trades based on the firm’s overall business performance.

Over the past year, the share price has fallen by 12%. This has helped to boost the dividend yield to 7.44%. Most of this fall has occurred over the past month, following the release of the full-year results in May.

The results actually highlighted a record year for the company, with earnings and assets under management being the highest ever. However, the slump in the stock was due to concerns around the outlook. It noted “worsening conditions”, which has clearly spooked some investors.

I accept that 2022 is going to be a lot harder for the company to deliver profitable fund returns. This is a risk if I want to buy the stock. Yet at the same time, the asset manager has provided strong returns previously with a good track record. Therefore, I’m happy to look beyond the short term and focus on the long-term income potential.

An old star making a comeback

The second stock I’d buy for income is Kingfisher (LSE:KGF). Over the past year, the share price is down by 31%. This has been a slow grind lower, as the popular pandemic pick has followed the same trajectory as other lockdown stars.

However, I like the company despite the pandemic boost wearing off. We’ve got a cost-of-living crisis right now that doesn’t look like it’ll dissipate anytime soon. Therefore, I expect a lot of people to revert back to DIY projects in order to save money.

Given the B&Q and Screwfix brands that Kingfisher own, I think it could be well positioned to take advantage of this move.

The dividend yield for this income stock is currently at 5.06%. It’s not as high as my other pick, but I think this could be a great pick for income going forward. If sales pick up in the second half of this year, higher profits should result in a large dividend per share next year.

In Q1 results, the company noted that it was managing “inflationary and supply chain pressures”. This is a concern for me, as I anticipate that this could cause management a headache in being able to get goods delivered on time and at an acceptable price.

The post 2 hot income stocks to buy for July appeared first on The Motley Fool UK.

British stocks

The first corporation is the defence group BAE Systems (LSE: BA). What I like about this business is that it’s a relatively defensive enterprise. It’s the biggest defence contractor for the UK government, which gives it a large, stable customer.

At the same time, BAE owns a broad portfolio of intellectual property, which gives it a competitive advantage against other defence contractors around the world. 

I think these defensive qualities suggest the business will be able to produce a high level of profit year after year. This should support its dividend.

At the time of writing, the stock supports a dividend yield of 4.6% and trades at a price-to-earnings (P/E) multiple of 11. Based on these metrics, I’d buy the equity for my portfolio today. 

As a defence contractor, there’s a multitude of risks facing BAE. These include the potential for actions against the company if it has supplied weapons to sanctioned organisations. It may also suffer in a trade war between the UK and other nations. 

High-yield investment 

Another company I’d buy for my portfolio of British income stocks is asset management group Ninety One (LSE: N91). At the time of writing, this stock supports a dividend yield of 5.7%. 

The company’s benefited from rising stock markets. According to its latest trading update, last year, the group registered an increase in assets under management of 27% to £131bn. Thanks to this growth, pre-tax profit increased 3% to £204.1m and adjusted operating profit increased 9% to £206.2m.

I think this profit growth should support the company’s dividend yield. Moreover, if the economic recovery continues to drive stock markets higher, Ninety One’s assets under management, and profits, may continue to grow. Based on this outlook, I’d buy the stock today. 

On the other side of the equation, if stock markets suddenly lurch lower, Ninety One’s assets under management could decline. This may lead to reduced profitability and, in the worst-case scenario, a dividend cut. 

Income champion

The final high-yield company I would buy for my portfolio of British stocks is the FTSE 100 income champion National Grid (LSE: NG).

National Grid owns and operates the electricity infrastructure across England which, in my opinion, is a massive defensive advantage. Replicating this network would be nearly impossible. Therefore, the company has a virtual monopoly. 

Unfortunately, it can’t charge whatever it wants for consumers and suppliers to use this network. It’s heavily regulated. This means National Grid’s profitability is limited. And if regulators decide to take a hard line with the business, the dividend could come under pressure. 

Still, compared to many other British stocks, the company has an incredibly stable income stream which shouldn’t disappear anytime soon.

At present, the stock offers a forecast dividend yield of 5.5%, which is significantly above the market average. It also trades at a forward P/E of 15.6, which is a bit on the pricey side. Nonetheless, it’s a price I’m willing to pay for a company with such an established monopoly.

The post 3 top high-yield British stocks appeared first on The Motley Fool UK.