I think the best way to grow a financial nest egg over the long term is to buy high-quality stocks and hold them. With that in mind, here’s a selection of FTSE 250 stocks I’d purchase right now for a buy-and-forget investment portfolio.
FTSE 250 stocks to buy
I think investors who are looking to grow their wealth are better off buying FTSE 250 stocks rather than their blue-chip peers.
The primary difference between FTSE 250 and FTSE 100 stocks is size. The largest company in the former index has a market capitalisation of £6bn. Meanwhile, the largest group in the FTSE 100 has a market capitalisation of £118bn.
However, just because the blue-chip companies are bigger doesn’t mean they’re necessarily the better investments. Indeed, many FTSE 250 companies have registered stronger growth rates in recent years, as their smaller size has helped them take market share from large competitors.
A great example of this is the media company Future. Over the past six years, this organisation has managed to increase sales by more than 300%. During this time, it’s moved from a net loss to a projected profit of £62m for 2020.
As income has expanded, the company’s shareholders have been well rewarded. The stock is up 10-fold in five years. Based on this track record of growth, I think the FTSE 250 magazine publisher could be a great addition to any diversified portfolio.
Growing businesses
Liontrust Asset Management is also on my radar. This FTSE 250 company has been able to expand over the past few years by taking market share from larger wealth managers by offering a better level of service. This strategy has enabled the investment management firm to grow net income from £6.2m in 2015 to a projected £36m for 2021.
During the same time frame, it’s increased its dividend to investors at an average rate of 33% a year. The stock currently offers a dividend yield of 2.7%.
As Liontrust continues to build on its existing footprint in the asset management sector, I think the company can continue to achieve impressive profit and dividend growth in the years ahead.
Playtech is a global leader in gambling software. By focusing on what it does best, the company has been able to dominate the gambling software market. Since 2014, sales have increased by 150%. It’s now targeting America’s burgeoning sports gambling market, which could produce even bigger returns in the years ahead.
The final FTSE 250 stock I’d consider buying as part of a diversified portfolio is broker TP ICAP. Many people won’t have heard of TP ICAP, but it provides an essential service in the financial world. Its brokers and dealers act as intermediaries between parties buying and selling all sorts of financial products.
These include equities, oil and gas, precious metals and soft commodities such as corn or orange juice.
As such, as a long-term bet on the health of the global economy, I think it could be worth considering this FTSE 250 financial services group as part of a diversified portfolio.
