Over the last 12 months, two of the worst-performing shares across the FTSE 350 are Hilton Foods Group (LSE:HFG) and PayPoint (LSE:PAY), both falling 42% and 36% respectively.

So what’s behind the decline? And has a lucrative buying opportunity potentially emerged here?

Investigating the problems

These businesses are quite different. Hilton Foods is a British food producer and packager working with some of the largest retailers across the UK and Europe. Meanwhile, PayPoint offers a point-of-sale and cloud-based retail management solution for convenience stores.

As such, the companies have encountered starkly different challenges of late.

Hilton’s seafood segment’s hitting multiple headwinds from regulatory shutdowns and inflation-driven demand destruction following quota restrictions on fishing in the North Sea. And even though its primary meat business is chugging along nicely, an overall downturn in consumer spending has resulted in multiple profit warnings.

PayPoint’s situation’s a bit different, driven primarily by managerial missteps and operational disruption.

The group’s investment in open banking venture Obconnect has so far failed to keep up with performance expectations, dragging down profits instead of boosting them.

At the same time, InPost’s acquisition of Yodel resulted in many of PayPoint’s Collect+ partnered stores being temporarily removed from the delivery network due to integration challenges. And consequently, these headwinds have ultimately led to management warning that its target of reaching £100m EBITDA will take longer than initially expected.

With that in mind, it isn’t surprising that both these shares took a tumble.

A hidden buying opportunity?

Hilton Foods Group’s CEO stepped down in November, and while the search for a successor is underway, Mark Allen has temporarily taken over as executive chair. And with his extensive experience within the food and consumer goods industries, investor sentiment has started to improve.

As for PayPoint, the parcel network disruption was ultimately a temporary setback rather than a drop in demand. And the firm’s already started seeing parcel volumes recover.

Meanwhile, its core merchant solutions business has recently launched new e-commerce tools and remains on track to expand its merchant network to over 10,000 by the end of 2026.

There are, of course, still plenty of challenges for both businesses to overcome.

With multiple external headwinds surrounding Hilton, a turnaround even under an experienced leader like Allen could prove challenging. And with PayPoint’s parcel volumes recovering, the new three-year contract signed with InPost is far less favourable than before, with the company receiving a lower fee per parcel delivered through Collect+.

So where does that leave investors?

The bottom line

With strong execution, PayPoint could steer itself back on track and enjoy solid revenue and profit growth. But given its recent track record, that’s not a risk I’m willing to take.

By comparison, Hilton Food Group seems to be in much more capable hands. The company’s appointed two new operating officers covering different regions as part of a wider turnaround. And with a weakened stock price, it could be worth a closer look for investors seeking turnaround shares to buy in 2026.

The post After crashing up to 42%, are these some of the best UK shares to buy today? appeared first on The Motley Fool UK.

Buying a dip

The first comes from Paypoint‘s (LSE:PAY) CEO Nick Wiles. Last Friday (21 November), it was confirmed he bought 25,000 shares in the FTSE 250 stock for a total value of £134.5k.

What makes this purchase interesting is that it was made at 538p. This comes just a few days after the company experienced a sharp share price slump. For reference, the stock’s down 34% over the last month, pushing the share price down 42% over a broader one-year time horizon.

The main reason for this was disappointing half-year results, where it posted an underwhelming underlying EBITDA figure of £37.3m. As a result, it pushed back the target of getting this profitability metric to £100m. For reference, it had previously hoped to get there this year.

Delaying promised profits is never a good sign, which is why the share price tumbled. But the stock buy from the CEO just after this actually gives me some confidence. I think it shows Wiles feels the stock is cheap.

Further, his purchase as the CEO could help to steady the stock. The CEO sees it as a good time to buy, so maybe investors will be tempted to do the same. After all, with the recent move, the price-to-earnings ratio sits at just 6.79, well below the benchmark figure of 10 that I use to assign a fair value. This could mean the stock’s now undervalued and worth considering.

Investing for the future

Another interesting stock buy is from fellow FTSE 250 company B&M European Value Retail (LSE:BME). Like Paypoint, the company’s been struggling recently, with the stock down 50% over the last year.

Despite this, new CEO Tjeerd Jegen bought 31,850 shares for £49,447 last Thursday (20 November). He took the role in June as part of a leadership reshuffle designed to spark a growth turnaround. Last month, the business posted a new strategy called ‘Back to B&M Basics’.

It identified inventory and supply chain inefficiencies, problems with in-store operations and poor cost control. In terms of remedies, it’s aiming to simplify product ranges and continue selective store expansions in a more targeted way. The change in leadership, with Jegen at the top, should also bring fresh thinking.

I think the purchase of stock is a good way to align the CEO with shareholder interests. He is increasingly his stake in the company, meaning he’s financially tied to the success going forward. I think this is a good sign and could help push initiatives that will directly boost the share price in the future.

However, given the size of the problems the company is contending with, I’m going to wait until there are some signs of the October strategy having an impact before thinking about buying.

The post 2 FTSE directors snapping up their company shares appeared first on The Motley Fool UK.

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.

Setting expectations

Targeting an average income payment of £100 a week works out at £5,200 a year. Straight away, I can see that to generate this kind of income, an investor would need to have a portfolio worth tens of thousands of pounds. Of course, a large lump sum could be invested straight away to generate this.

Yet for many of us, having that sort of money lying around isn’t realistic. Therefore, an investor could look to regularly put a smaller amount to work and build the pot over time.

The other factor is how quickly the money can compound. Based on the available dividend yields of large-cap stocks, I think it isn’t unreasonable to target a 6% yield over time. When the dividend gets paid, this money can be used to buy more of the same stock.

If we assumed an investment of £400 a month with an average yield of 6%, it could take just over a dozen years to have a portfolio worth £86.7k. From there, it could generate an average of £100 a week in income.

Targeting specific ideas

The portfolio would need to be filled with reputable dividend stocks with yields around the 6% mark. One idea for consideration could be PayPoint (LSE:PAY). It currently has a dividend yield of 5.85%, with the share price down 3% in the last year.

The UK-based company provides multichannel payments and retail services infrastructure. It mainly makes money from transaction fees charged when people use its payment channels, along with commissions charged for retailers using the service. As a result, it’s a fairly steady revenue stream. As long as people keep paying for goods and services, PayPoint can make money.

I think the dividend’s sustainable. From a business perspective, the shift toward digital payments and e-commerce is only going to continue. This offers PayPoint more growth and higher margins, helping offset declining revenues from older cash channels.

Further, the company isn’t stretched when it comes to paying out income at the moment. The dividend cover ratio’s 1.5. Any number above one indicates the current earnings per share can completely cover the dividend being paid. As a result, this isn’t putting a strain on cash flow, which is a good sign.

One risk is that the business is tied to the broader economy. If we see a slowdown in spending due to consumer financial concerns, it could see revenue and profit fall for PayPoint.

Overall, I think PayPoint’s an option for investors to consider who are looking to implement the dividend strategy.

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While large FTSE giants may offer relative safety, smaller stocks often deliver bigger swings, which may frighten some but could offer an opportunity for others. Earnings volatility, funding issues and underwhelming results are common risks these companies face. 

But every so often, I spot a few whose fundamentals are still good despite short-term struggles.

Here are two that have suffered losses this month but could come back stronger when markets recover.

Oxford Nanopore Technologies

Oxford Nanopore (LSE: ONT) develops a new generation of DNA/RNA sequencing technology. In its latest half-year results, the company announced its first-half gross profit rose 24% to £61.4m on the back of revenue that grew 28% to £105.6m at constant currency. Its pre-tax loss narrowed slightly to £69m from £71.4m.

Despite these seemingly strong numbers, its shares have been on a bit of a wobble, down around 25% in the past month. The reason for this dip seems to be the company’s lack of an upgrade to its full-year guidance, which still anticipates revenue growth of only 20%-23%.

This seemed to disappoint some investors who had hoped for a more significant improvement. However, I think the company’s continued reiteration of its guidance is still a good sign of its confidence. The financials look healthy, with very little debt and liabilities that are well-covered by assets.

Risk-wise, it’s still a high-growth company that’s not yet profitable, so its spending is significant, and it’s burning through cash. It also faces competition from larger, more established players in the gene sequencing space. The journey to profitability might be longer than some hope, and any delays could cause further share price volatility. 

However, for a long-term investor, I think the current low price is an opportunity to consider as it continues to grow its market share in an exciting, high-tech industry.

PayPoint

PayPoint (LSE: PAY) operates a vast network of payment services, including eMoney, pre-paid cards and electronic point of sale systems. Its shares are also down, having fallen around 10% in the past month, which seems to reflect a period of weak sentiment.

Margins fell to near-1% in the second half of 2024 but it’s still profitable with a return on equity (ROE) of 17.9%. And while debt has risen above £100m, its free cash flow remains strong at £48.42m.

The dividends tell a promising story too, with a 5.8% yield and payments that are covered 2.4 times by cash. Reassuringly, the board recently proposed a final dividend of 19.6p a share, an increase from 19.2p last year.

As with any stock, an investor should be cautious. The falling margins are a risk that must be monitored. Although it’s a good sign that the company remains profitable, it must keep a tight grip on costs. While somewhat niche, it faces competition from newer payment technology providers.

However, its forward price-to-earnings (P/E) ratio is a low 8.75, which suggests earnings are expected to improve notably. Combined with the dividend, I think it’s worth looking at for both value and income investors.

The post 2 beaten-down FTSE 250 stocks to consider before markets rebound appeared first on The Motley Fool UK.

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.

Unlocking a £50k tax-free salary

On average, UK shares offer a dividend yield of around 4%. However, by being a bit selective, it’s possible to boost that yield a little higher towards 5% without needing to take on excessive levels of risk. And at this rate, a £50,000 second income from dividends would need a £1,000,000 portfolio.

Sadly, most investors don’t have a seven-figure nest egg just sitting in the bank. Fortunately, when working on a long-term time horizon, reaching this impressive milestone is far more achievable than many would believe.

Putting aside £500 each month and reinvesting any dividends received creates a steady stream of capital to leverage the snowball effect of compounding. Let’s assume that on top of the 5% dividend yield, a portfolio also generates an extra 4% annual capital gain, in line with the market average.

This brings the total gain to 9% a year. And under these conditions, the journey to millionaire status could be completed in just over 30 years when starting from scratch. Is that a guaranteed timeline? Of course not. The stock market does have a tendency to go through crashes and corrections every once in a while. And a poorly-timed downturn could leave investors waiting longer than expected.

But even if everything does go smoothly, it’s worth remembering that inflation will chip away at the spending power of £50,000. Nevertheless, an early retirement could still be possible for those who begin their wealth-building journey sooner rather than later.

Finding 5%-yielding stocks

With UK shares performing strongly in 2025, the list of high-yielding opportunities across the FTSE 350 has shrunk compared to a few years ago. Yet there are still plenty of opportunities available to capitalise on. And one that I’ve got my eye on right now is PayPoint (LSE:PAY).

The yield’s slightly shy of the target 5%. But thanks to the highly cash-generative nature of this enterprise, shareholder payouts have been getting consistently hiked for the last four years. In other words, a 5% yield could be just around the corner.

The business provides payment processing solutions to over 67,000 small and independent retailers across the UK, as well as operating the Collect+ parcel network that many e-commerce stores leverage to keep last-mile delivery costs low. And with tools, features, and online shopping steadily driving demand, the company has seen its growth quietly expand over the last five years. And if analyst projections prove accurate, that trend’s expected to continue.

Of course, there are risks to consider. Aggressive internal investments and share buyback schemes have pushed the group’s net debt up significantly. At the same time, with its terminals already deployed across the country, there’s the risk of market saturation to consider that could undercut growth potential.

Management’s been steadily diversifying its business to unlock fresh opportunities, funded by its existing cash-generative operations. But of course, execution risk remains.

Nevertheless, PayPoint looks like a potentially interesting opportunity. And for investors seeking to earn a chunky second income, it might be a stock worthy of a closer look.

The post How to take an empty ISA and transform it into a potential £50,000 second income appeared first on The Motley Fool UK.

I reckon the recent market shake up has added the opportunities that are on offer. As a long-term investor who’s still adding to their portfolio, I’m excited – not worried – when I see good companies with falling share prices.

In this piece I’m going to look at two FTSE 250 stocks I’ve been buying recently for my own portfolio.

#1: this fintech stock looks too cheap to me

Payment processing specialist PayPoint (LSE: PAY) is a fixture in convenience stores and other small businesses across the UK. I see this business as a fintech, connecting many different payment and voucher systems.

Services provided by the company’s yellow terminals include card processing, top-ups and gift vouchers, government benefit payments, utility bill payments and banking transfers. The company also owns the Collect+ parcel collection and drop-off service.

One downside is that this is quite a complicated business, with lots of moving parts. It’s sometimes hard to follow exactly where the profits are coming from.

However, I’ve been following this business for years and I’m confident that its strong profitability and good cash generation are real. Growth prospects also seem positive, with broker forecasts suggesting earnings could rise by 10% for the year ending March 2026.

PayPoint shares currently trade on just nine times earnings, with a well-supported 6% dividend yield. That looks too cheap to me for a company with profit margins close to 20%.

I’ve been buying recently and would be happy to add more to my portfolio if funds allowed (sadly, they don’t).

#2: an automotive stock that’s safe from US tariffs?

President Trump’s tariffs are causing many car manufacturers sleepless nights at the moment. But my pick from this sector, Inchcape (LSE: INCH), is a little different.

This business operates as a distributor for car manufacturers in countries where they don’t have a large, direct presence. Effectively, Inchcape allows car makers to outsource all of their operations in some areas of the world.

The end result is that Inchcape operates extensively in Asia, Latin America and Europe. But as far as I can see, it doesn’t operate in the USA.

Although some of its clients are US or European car makers, many of them are Chinese firms that are expanding into new markets. They often have no sales in the US and don’t generally depend very heavily on US suppliers for the components they use either.

Of course, tariffs could still end up pushing up car prices globally and contributing to a broader slowdown in sales. Inchcape would likely be affected by this.

However, the company’s financial results from last year suggest to me that it’s in a strong financial position, with reduced debt and good cash generation.

What’s more, Inchcape shares currently trade on less than nine times 2025 forecast earnings, with a useful 4.8% dividend yield.

City analysts expect the company’s earnings growth to accelerate in 2026 – if they’re right, I think Inchcape could be too cheap not to consider at current levels.

The post 2 FTSE 250 dividend growth stocks I’ve been buying after recent falls appeared first on The Motley Fool UK.

But it’s also important to think long term. If an undervalued stock doesn’t have recovery potential, it could be all for nothing.

With that in mind, here are two UK dividend stocks that look cheap right now. I’m keen to find out where they might be in a year.

Imperial Brands

Imperial Brands (LSE: IMB) is a UK multinational tobacco company known for Winston cigarettes and Backwoods cigars. It’s been pivoting towards less harmful next-gen products (NGPs) like vapes and e-cigarettes. The dividend yield is a decent 5.3% with a payout ratio of 51% — more than enough coverage.

But declining smoking rates and evolving regulatory landscapes are challenges the company has faced. Although the transition to NGPs is promising, they’re currently loss-making and their long-term profitability is uncertain. Subsequently, the company has run up £9bn in debt which puts profits (and dividend payments) at risk.

Still, earnings beat expectations last year and its net margin has increased from 9% to 14% since 2022.

With a below-average price-to-earnings (P/E) ratio of only 9, it looks like it has space for more growth. Plus, it’s trading at 44% below value using a discounted cash flow model. That’s impressive, considering the stock is up 69% in the past year – somehow, it still looks cheap!

If that performance continues, it could be a lucrative passive income machine in the future. So I think it’s a strong dividend stock that’s worth looking into now.

Paypoint

Paypoint (LSE: PAY) is a £444m FTSE 250 company specialising in multichannel payment and retail services. Many Britons use its services on a daily basis without even realising it.

The business operates across four main divisions: shopping, e-commerce, payments and vouchers.​ It provides digital solutions and payment services to small and medium-sized enterprises (SMEs), along with Open Banking services for payments via direct debit, cards and cash.

Being in the finance sector, it faces specific challenges from economic downturns and regulatory changes, not to mention strong competition. It’s also at risk of technological advancements that could render its services obsolete.

Performance in 2024 was impressive though, with underlying EBITDA up 32.6% and profit before tax up 21.5%. The dividend yield sits at 6.3% and it has a trailing P/E ratio of 11.43. Its otherwise solid dividend track record was dented by reductions in 2019 and 2021. However, dividends have still grown at an annual rate of 4.84% over the past 15 years.

To further affirm its dedication to shareholders, it recently announced a three-year £20m share buyback programme.

Why these stocks?

The above stocks were chosen based on their dividend history, financial performance and low valuation. Plus, their future return on equity (ROE) is forecast to be above 30%.

These metrics are used to reveal companies that are trading below their intrinsic value and have good growth potential. I believe they are both well worth considering as part of a long-term passive income investment strategy.

^{1 The ex-dividend date is the date before which an investor buying shares will qualify for that period’s dividend.}

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The perfect dividend stock?

FTSE 250 member IG Group (LSE: IGG) is a very attractive option, in my opinion.

First off, there’s the size of the dividend yield. Based on current analyst estimates, this comes in at 5.1%. For comparison, companies within the mid-cap index yield 3.5% on average.

Now, a higher-than-average yield counts for little if a firm is in financial difficulty. It’s often the first thing to be cut. But since FY25 profit is expected to cover the cash distribution twice over, I think this is very unlikely with IG. It also has a huge amount of net cash on the balance sheet.

Another thing worth noting is that, after a few years of not moving at all, the total dividend is growing again. That usually a sign of confidence. And no wonder! The online trading platform provider reported a 12% jump in quarterly revenue last week. It is now expected to breach the £1bn mark for the full year.

Still cheap

Of course, no dividend stream is ever nailed on, hence why having a diversified ISA portfolio can make a lot of sense. Threats to IG include ongoing regulation and intense competition from rivals. Interestingly, business also tends to suffer when markets are calm and clients spot fewer opportunities to trade.

Still, I think these risks are in the price. The shares trade at just nine times forecast earnings. That’s despite rising nearly 30% in the last 12 months.

Stonking yield

A second FTSE stock worth considering is PayPoint (LSE: PAY). The mid-cap enables payments and commerce for the public and private sector.

Like IG Group, this seems to be a business in good health. Back in January, it reported “further progress in the third quarter […] despite a more challenging overall trading environment and a stalled recovery in consumer confidence“. As a consequence of this and further investment, management thinks £100m EBITDA (earnings before interest, tax, depreciation, and amortisation) will be achieved by the end of FY26.

As encouraging as this is, it’s PayPoint’s income credentials that are of interest here. On this front, it all looks pretty stellar to me.

Analysts reckon the total payout for FY25 will come to 38.8p per share. This gives a stonking yield of 6.2%. Another small increase is expected in FY26, easily covered by anticipated profit.

Great value

Again, nothing can be guaranteed and calculations may need to be adjusted as time goes on. PayPoint holders could see their dividend payments reduced if, for example, some of the retailers it works with go under or sever ties. Things might also get tricky if consumer confidence dips for longer than predicted.

But this £441m cap still smacks of value. Right now, shares change hands on a forward price-to-earnings (P/E) ratio of just eight. That looks a bargain for a company that achieves margins far above the market average.

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Different avenues to take

To make sizeable passive income from stocks, there are three main routes to go down. One is to buy growth stocks with the aim of getting large scale share price appreciation. Over time, the profits from the rising stock price can be trimmed, enabling an investor to bank a portion of the profits and using this as income.

A second option is to invest in dividend stocks. These typically pay out income via a dividend a couple of times a year. With a pot of several income shares, it’s possible to receive some cash each month. Of course, dividends aren’t guaranteed, so investors need to be careful in assuming that the current dividend payments will continue into perpetuity!

Finally, a strategy can be to merge the two together. In practical terms, this means having a mix of growth and income stocks in a portfolio. Then there’s flexibility to generate cash proceeds both from potential share price movements as well as dividend payments.

Income and growth

Some stocks could offer the best of both worlds for a potential investor to consider. For example, PayPoint (LSE:PAY). The UK-based company provides convenient payment and retail solutions, with most of us likely having used the service at a local shop or petrol station.

Over the past year, the stock’s rallied by 40%, with a dividend yield of 5.53%. In this sense, it could offer an investor both the growth element and also income. It’s not a new business, but has the scope for further expansion.

In the half-year results, it spoke about how the “strategic investments made in Yodel and obconnect strengthen two core areas of our business, enhancing future growth and opportunities in parcels and Open Banking”.

It’s true that there are many avenues the company could go down to grow further. With the business posting a half-year profit before tax of £23.1m, I don’t see the dividend under any immediate threat. However, one risk is that should the company want to fuel a future acquisition or expand in a new market, management might decide to retain the dividend for a period to help fund this.

Talking numbers

If an investor could put away £500 a month and obtain an average yield of 8% from the portfolio, the total size could increase over time. After 15 years, the pot could be worth £174.6k. This means that in the following year, even without adding any fresh money, it could generate an investor £1,164 each month, on average.

Of course, these numbers are by no means guaranteed. But it does highlight roughly the size of investment and the target return needed to try and make this strategy work.

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Allocation to defensive shares

Defensive stocks often come from sectors such as consumer staples and utilities. Companies that provide goods and services are seen as necessities. As a result, revenue and profitability shouldn’t be materially impacted during a recession. Therefore, these stocks often perform better than consumer discretionary and other similar sectors during a volatile period.

By considering allocating a portion of ISA funds to defensive shares, an investor can look to smooth out volatile performance in the portfolio. Of course, such stocks are unlikely to provide huge share price gains. But they can help to protect an ISA over time.

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.

Diversify in different ways

Holding a number of different shares in a portfolio is a great way to reduce risk. After all, with a dozen stocks when one has a problem, the impact is less than if I only held that share.

However, some investors forget about diversifying in other ways. For example, having exposure to companies around the world, instead of just UK ones, including stocks trading in the US, or with a big base in Asia. If the UK struggles, the portfolio shouldn’t necessarily underperform.

Make smart use of income stocks

Some investors think that when they get paid a dividend, the best thing to do is take the money and spend it. It’s true that this is an option, but when trying to build a strong ISA I believe there’s a better option.

Any income that’s received can be used to buy more of the same stock. This means that even during a period of high volatility when stock prices are falling, the dividend money can be used to buy at a lower price, without having to add more cash to the ISA! Over time, this can provide a better blended average purchase price, and acting to smooth our share price swings.

An idea to think about

An example of a stock worth considering for is PayPoint (LSE:PAY). The FTSE 250 stock has a current dividend yield of 4.75%, with the share price up a whopping 90% over the past year. Even with this, the price-to-earnings ratio is 12.75. Although it’s above my fair value benchmark of 10, I wouldn’t say it’s anywhere close to being overvalued.

It pays out quarterly dividends, which gives frequent opportunities to receive cash. Not only that, but I’d also classify it as a defensive stock. The business provides payment services, with a strong footing in the UK for retail transactions. Regardless of the state of the economy, payments will still be flowing during good times and bad.

One risk is that net debt is increasing, with the half year report showing it ticking higher to £86.8m. This was due to making more investments to fuel growth, which is understandable but it does need to be careful.

On balance, I think it’s a stock that investors could consider for inclusion to help build a robust ISA.

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