Stocks to buy for high second income often share a few traits, with the key one being robust earnings forecasts. That is why global terrestrial and digital media giant ITV (LSE: ITV) stands out to me right now.
It has strong earnings growth projected, which should drive its already solid cash generation and sound balance‑sheet.
And around 81p the shares are trading considerably lower than their ‘fair value’ implies they should. Indeed, just £500 would buy investors 617 of them now.
So, how much second income could we be looking at?
Are dividends set to go higher?
ITV has paid the same annual dividend of 5p for the last four years, beginning in 2022. But because dividend yields change as a firm’s stock price and annual payout alter, the dividend yield has differed.
In 2022 it was 6.7%, in 2023 it came in at 7.9%, in 2024 it edged down to 6.8%, and in 2025 it was 6.1%. However, all of these remain way above the current FTSE 100 average of 3.1% and the FTSE 250’s 3.4%.
As of now, the stock delivers a dividend return of 6.2%, but analysts forecast this will go higher. The projections are that the dividend will increase to 5.2p by 2028, giving a yield of 6.4%.
What sort of a second income?
So, a £20,000 holding in the shares would make £17,119 in dividends after 10 years and £107,861 after 30 years.
The numbers are based on the forecast 6.4% as an average and on dividend compounding being utilised. The process involves reinvesting the dividends to harness the full power of compounding over time.
At the end of the 30 years, the value of the holding (including the original £20,000 investment) would be £127,861.
And that would produce a yearly income of £8,183!
Are the shares going cheap?
Discounted cash flow (DCF) analysis identifies where any stock ‘should’ trade. It takes future cash flows for the underlying business and then discounts them to the present.
When those projections become less certain, the discount applied increases and differing assumptions here sometimes is why analysts’ DCF outcome sometimes vary. However, my own modelling — incorporating an 8.2% discount rate — shows ITV is 31% undervalued at its current 81p level.
That implies a fair value of the stock of £1.17.
Importantly here, history has shown that share prices move to their fair value over time. So in this case, that gap highlights a potentially superb buying opportunity if those DCF forecasts hold good.
My investment view
Supportive of long-term rises in ITV’s share price and dividends are analysts’ forecasts of 6.1% annual average earnings growth over the medium term at least.
A risk to this is the continued fragility of the UK advertising market, which remains sensitive to economic slowdowns. Another is the rising cost and competitive intensity of premium content production.
Nevertheless, its full-year 2025 results showed statutory operating profit soaring 14% year on year to £363m.
I have several high-yielding, undervalued stocks already, and am not looking for another. But for investors looking to construct a high-powered portfolio delivering strong second income, I think ITV is well worth considering.
Should you invest £5,000 in ITV right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if ITV made the list?
Simon Watkins does not hold any positions in the companies mentioned.
