My approach to dividend investing

This approach to investing isn’t straightforward. Previously I tried to buy the highest-yielding shares and hoped this would generate consistent income over the years. Unfortunately, if the company’s share price begins to suffer, this could mean all passive income is offset by capital losses. Consequently this wouldn’t achieve a great deal in the long run.

For this reason, I’ve shifted my focus to real estate investment trusts (REITs). These instruments are more akin to a property investment than a traditional share and often provide a stable dividend yield. A REIT is a company that owns or finances physical property. By using pooled funds from a range of investors, they can allow a steady dividend income to be achieved by owning shares in the company.

New opportunity

In pursuit of this dividend goal, I found myself drawn to Big Yellow Group (LSE: BYG). It’s a REIT that acquires, owns, and manages self-storage facilities within the UK. After a strong rebound from the pandemic, growing 55.6% in 2021, the shares have struggled this year, down over 33%. 

The company currently offers a dividend yield of 3.7%, which is forecast to reach 3.8% next year. This is certainly not the highest yield available for a REIT, however the growth and consistency of this dividend is a core factor. It’s been paid consistently for 13 years and has grown for 12 years, which is an encouraging sign. This growth has averaged 8.2% over the last three years, and is expected to be 4% next year. Despite 2023 being below the three-year average, this is a fair level given the share price contraction.

Underlying fundamentals

The finances of Big Yellow Group are also attractive, with low debt levels and strong cash generation. The company has also achieved impressive earnings generation on invested capital, a core indicator of a share’s quality. Furthermore, turnover is forecast to grow by 8.7% next year and has grown by an average of 11% over the last three.

However, it’s important to note that the price-to-earnings (P/E) ratio is currently just under 22, which is relatively high, despite the considerable share price falls fall this year. Additionally, dividend cover, which looks at how easily dividends can be paid out of earnings per share, is just 1.3, which could lead to future dividend reductions.

Nonetheless, I believe this REIT presents an opportunity to access a fair dividend yield, that’s stable and growing. However, I’m not jumping in just yet and am keen to monitor this dividend stock over the next few months, with the aim of adding it to my portfolio in 2023.

Self-storage REIT

As a quick reminder, a REIT is an investment trust designed to make money from income-yielding property. As a rule, these types of investment trusts must return 90% of profits to shareholders. This is an attractive prospect for me as a passive income seeker.

As a quick introduction, Big Yellow Group is a REIT that specialises in self-storage solutions. In fact, it is now recognised as one of the largest firms of its type in the UK and has 103 locations throughout the UK.

So what’s happening with Big Yellow shares currently? Well, as I write, they’re trading for 1,413p. At this time last year, the stock was trading 5% higher, for 1,476p.

Risks to be wary of

Despite a great growth story, Big Yellow Group REIT now operates in a very intense and saturated market place. The rise of e-commerce as well demand for storage solutions in general has seen many businesses vying for the same customers and contracts from businesses. If any of its competitors could gain the edge on Big Yellow Group, its performance and returns could be negatively affected.

Next, I do note that after the stock market dip of March, Big Yellow shares are creeping closer towards all time highs once again. This is something I am always wary about due to the fact that negative news or trading could send the shares tumbling. This in turn could affect my investment if I added the shares to my portfolio.

The bull case and verdict

So let’s take a look at some positives then. I wanted to learn more about the self-storage market and demand for such services too. There are a number of self storage firms that operate as a REIT. I found The Self Storage Association UK Annual Industry Report for 2022 which made for positive reading. Some of the key headlines I gleaned were the fact that occupancy was up compared to 2021. Next, rental rates had increased too and operators had decreased discounts due to continued robust demand. Finally, industry annual turnover had increased by close to 5% which equated to nearly £1bn. Big Yellow is in a prime position to benefit from continued demand and this should boost performance and returns.

Let’s take a look at some fundamentals then. I noticed that Big Yellow shares look good value for money currently on a price-to-earnings ratio of just 4. In addition to this, the shares would boost my passive income stream offering a dividend yield of 3%. I am aware that dividends are never guaranteed, however.

Overall I like the look of Big Yellow Group REIT shares and would add them to my holdings. The current fundamentals are attractive. Furthermore, it seems the self storage market is a burgeoning one that could support future growth and returns too.

Big Yellow

The self-storage operator Big Yellow (LSE: BYG) is among the cheap shares I would consider buying for my portfolio at the moment.

I like the profit potential of the self-storage business model. Indeed, I already own Big Yellow’s rival Safestore in my portfolio. Buying or renting a large building then subdividing it to lease is a proven business model. Many people or companies who put items into storage end up leaving them there for years, with the rent adding up. I also see reasons that demand could keep increasing, from the rising cost of homes to firms downsizing their offices.

Big Yellow has some advantages in this area. Its instantly recognisable brand helps the company attract new customers. The shares have a dividend yield of 3.2%, which is attractive to me. I particularly like the potential for capital growth. I think the industry is set to keep increasing its sales. As a leading player, Big Yellow should benefit from that. There are risks, though. Low barriers to entry in the industry could mean future profit margins are smaller than now.

Cheap shares in the self-storage sector

The price-to-earnings (P/E) ratio of less than four looks very cheap. P/E ratios are not the way all investors value property companies. Indeed, the company’s operating profit last year was more than quadruple its revenue. That reflects the way that the property sector accounts for earnings and changes in valuations.

But I do think the shares look cheap. Revenues, profits, and dividends have all risen over the past several years. I expect demand to stay strong and would consider adding the shares to my portfolio.

Barclays

The bank Barclays (LSE: BARC) needs little introduction. Its retail banking operations make it a household name. It also has a sizeable investment banking arm. In good times, that can be a massive profit driver. But I think it adds risks for the company. Investment banking can be heavily loss-making when the economy suddenly stops growing. I think that is a risk some investors are currently factoring into the Barclays share price.

However, the P/E ratio of less than five still looks cheap to me. Barclays made a post-tax profit of £7.2bn last year. This year has started strongly, with a pre-tax profit for the first quarter of £2.2bn. The bank thinks bad loans are set to stay relatively low for the coming quarters, partly because it has taken measures like reducing unsecured lending. Nonetheless, I think a worsening economic outlook adds risks for Barclays. For example, a weakening deal environment could hurt profits in its investment banking division.

But as a long-term investment, I like Barclays as a possible purchase for my portfolio. The current share price looks cheap to me. The bank’s strong brand, international presence, and deep experience could all help drive future profitability.

Lucky Cement

Lucky Cement (LSE: LKCS) is a UK share I’d buy to increase my exposure to fast-growing emerging markets. You see, the business is one of the biggest producers of the essential building material in Pakistan. It therefore stands to benefit from the steady population shift from the country to towns and cities.

Indeed, Pakistan has the fastest urbanisation growth rate, and the United Nations thinks 60% of its people will live in metropolitan areas by 2050. That compares with just over a third in 2010.

Profits at Lucky Cement are in danger of slipping sharply during economic downturns. But as a long-term investor I still think this penny stock is an attractive buy right now. Profits here rocketed 43% in the final six months of 2021 as conditions in Pakistan’s construction market continued to improve following Covid-19.

Spire Healthcare Group

The worsening NHS waiting list crisis also encourages me to invest in Spire Healthcare Group (LSE: SPI) today.

The number of people seeking free healthcare treatment in the UK currently sits at record highs above 6m. And the British Medical Association suggests that “it will take years to clear the backlog”, adding that “the ongoing need for stringent infection prevention control measures and workforce shortages mean it will take even longer to work through as demand continues to rise”.

I am concerned that spiking Covid-19-related costs remain a threat for Spire as the pandemic rolls on. However, the prospect of soaring patient numbers in the years ahead means the business remains a top buy. Spire saw a whopping 870,000 patients in 2021.

Big Yellow Group

I also reckon Big Yellow Group (LSE: BYG) could prove a wise investment for me as demand for self-storage space intensifies. This is a market which has been expanding considerably in Britain in recent years. But there is still plenty of room left for growth compared to more mature markets like the US.

Property stocks like Big Yellow are highly cyclical and storage demand can sink if economic conditions worsen. Over the long term, however, I think the market in which the business operates remains highly appealing from an investing standpoint.

The housing market still looks pretty bulletproof, for example, a big driver of self-storage use. The growth of e-commerce is boosting the space needs of retailers as well. And a growing culture of hoarding means people are hanging onto their stuff instead of throwing things away. I’m pleased that Big Yellow is expanding rapidly to fully maximise this opportunity too (it currently has more than a dozen sites in its development pipeline).

Mining champion 

The first company on my list is mining group BHP (LSE: BHP). This firm recently announced a bumper set of results. Buoyed by rising commodity prices, the corporation announced a 61% increase in pre-tax profit for the six months to the end of December. 

Thanks to this growth, management has hiked the firm’s dividend to investors. After the recent increase, the shares support a dividend yield of 11.5%. 

Unfortunately, commodity prices are highly volatile, so BHP’s bumper profitability may not last forever. This is a significant risk I will be keeping in mind as we advance. If profits slump, the firm may have to slash its payout. 

Still, it looks to me as if high commodity prices are here to stay, at least for the next year or so. As such, I would buy BHP for my Stocks and Shares ISA today for its income credentials. 

Stocks and Shares ISA property buy

As well as BHP, I would also buy Big Yellow (LSE: BYG). The self-storage group might not offer a double-digit yield, but it does have a lot of growth potential, in my view.

Over the past 10 years, the firm has built a portfolio of self-storage facilities throughout the UK. And it is still creating new facilities. Demand for new storage facilities is running high, and Big Yellow is looking to capitalise on this potential. 

The one risk of this approach is that the company could end up overexpanding. If it invests too much and grows too far, too fast, shareholders could have to end up footing the bill. The firm might have to ask shareholders for cash to strengthen its balance sheet. 

Despite this risk, I believe the stock has a lot of income potential. At the time of writing, the shares offer a dividend yield of 2.9%.

However, this payout could grow if the firm’s earnings expand as it builds out the portfolio. There is also the potential for capital growth if the business’s growth plans yield favourable results. 

Leading income stock 

Financial services group Abrdn (LSE: ABDN) would also earn a place in my Stocks and Shares ISA portfolio. With a yield of 6.3% at the time of writing, the stock offers one of the highest yields in the FTSE 350. I am also attracted to the business as it has lots of growth potential over the next few years. 

The company is currently building out its investor offering by acquiring smaller wealth managers, and by buying online stockbroker Interactive Investor, Abrdn is trying to reach a new audience. 

This strategy could backfire. If it does, the firm could end up paying a lot of money for nothing. It may have to cut its dividend if the company ends up overexpanding. I will be keeping an eye on this risk factor going forward. 

Still, considering the group’s position in the market, reputation, and scope for growth during the next few years, I believe it deserves a place in my Stocks and Shares ISA. 

Although it is not an easy task, I tend to look at the sector a business operates in, competition, and recent financials when I am trying to pick cheap UK shares to invest in. And right now, Vertu Motors (LSE:VTU) and Big Yellow Group (LSE:BYG) look like bargains for my portfolio. Both companies operate in untapped niches within booming sectors, and I think they have massive potential.

Automobile stock that grew 126% last year

The pandemic forced many households to cut down on extra expenses, and global used car sales saw a huge boost in 2020. I think this represents a broader need in the market. A brand new car is an expensive purchase for most, given rising prices, taxes, and running costs. I think the used car market will grow in tandem with the automobile industry over the next decade.

And the Vertu Motors stock is on a great run. Its share price is up 81% in the last six months and a whopping 126% in the last 12 months. And despite this incredible run, it is trading at a forward price-to-earnings (P/E) ratio of 5.5 times, which tells me that there is still a lot of room for growth.

But analysts expect Vertu Motor’s revenue to drop after consumer habits normalise in 2022. And the car dealership operates on a razor-thin margin of about 1.5%. Coupled with expansion efforts, this could wreak havoc on its share price if sales drop in the coming months. But I still remain optimistic about the potential of the industry, which is why I am watching this UK share closely to capitalise on any price drop.

Passive income real estate stock

Big Yellow Group offers self-storage solutions in the UK, a business that has seen a growth in popularity thanks to the e-commerce boom. BYG offers online vendors a cheap space to store and ship products from, as well as a personal space to store goods for people moving house. Storage spaces are very popular in the US and are seeing wider adoption in the UK as well.

At its current share price of 1,556p, the Big Yellow Group share price is up a healthy 39.8% in the last 12 months. It is trading at a forward P/E ratio of six times, making it very undervalued right now. Its 2.3% dividend yield is backed up by a year-on-year increase in revenue for the last four years. 

But there have been reports of prominent board members selling holdings in the last 12 months. Chairman Nicholas Vetch’s wife recently sold £2.9m worth of BYG stock at a price of 1,670p per share and CEO James Gibson sold £5.2m of his holdings at a price of 1,487p per share. The share price has fallen nearly 10% since the start of 2022.

But, this could just be investors taking profits after a solid run last year. And I am optimistic that the company can deliver strong financials this year. Given its passive income potential, Big Yellow Group is on top of my list of UK shares to buy right now.

As we begin 2022, I am looking for new stocks to add to this portfolio. And there are a couple of corporations that have recently caught my attention. I would buy all of the company’s outlined below for my portfolio.

UK shares for income

The first on my list is the infrastructure investment group 3i Infrastructure (LSE: 3IN). This company owns a portfolio of infrastructure assets around the world. This is a great asset to hold as an income investment because related contracts are usually multi-year and inflation-linked. This gives the enterprise a high level of visibility over future cash flows. 

These qualities, as well as the company’s progress in seeking out new investments, have helped it increase its dividend at a compound annual rate of 6% over the past six years. 

Of course, past performance is no guarantee of future potential. But considering the company’s attractive qualities, I think there is a high chance this growth could continue. At the time of writing, this stock offers a dividend yield of 2.9%.

Issues the group could encounter include higher interest rates. These could lead to higher costs, reducing the amount of cash available for distribution to investors. 

Passive income growth

Also on my list is 4imprint (LSE: FOUR), which designs and manufactures promotional marketing material. Unfortunately, this has been a complicated business over the past two years.

During the pandemic, companies have been forced to greatly reduce the number of face-to-face marketing activities. Consequently, the demand for promotional products has declined. Revenues dropped from $861m in fiscal 2020 to $560m in fiscal 2021. 

However, a rapid recovery is expected over the next two years. City analysts have pencilled in revenues of $904m for the 2023 financial year. Profits are also expected to rebound, and so is the firm’s dividend. 

Analysts believe the stock will yield 1.5% next year. That might not seem like much, but 4imprint’s balance sheet is stuffed full of cash, and there is plenty of headroom for further growth in the years ahead. This potential is the main reason I like the look of the company for my passive income portfolio. 

Challenges it could face going forward include competition and additional pandemic restrictions. These headwinds could curb growth. 

Income from property

One of the top UK shares for passive income, in my opinion, is Big Yellow (LSE: BYG). Thanks to its steady profit growth, this self-storage company has become an income champion over the past decade. As management has reinvested profits back into the business, it has grown rapidly, with book value up more than 100% since 2016. 

As Big Yellow’s property portfolio has expanded, the organisation’s income generation has increased. Management has been able to hike the firm’s dividend to investors by 100% since 2016. The stock currently yields 2.3%. And with further development opportunities planned over the next couple of years, it seems likely this payout will continue to grow as it grows. 

Some notable challenges the group may encounter as we advance include higher interest rates, as it relies on debt to fund expansion initiatives. Higher rates could lead to increased interest costs, reducing the amount of cash available for distribution. 

International expansion

Some of the best UK shares for income, in my opinion, are international growth stocks. HSBC (LSE: HSBA) is one of the best examples. 

The Asia-focused bank is one of the world’s largest banks, and as interest rates begin to increase, I think it has fantastic potential for the next few years. As the global economy also begins to recover from the pandemic, the group should have plenty of opportunities to expand its footprint and increase lending to customers. 

These twin tailwinds may help the business’s bottom line expand rapidly in the years ahead. And HSBC has always been one of the best UK shares for income, which suggests that, as the group’s bottom-line grows, it could increase the dividend to investors. 

At the time of writing, the stock offers a dividend yield of 3.6%. City analysts are expecting payout growth of 20% in 2022, implying the shares could yield 4.3% next year. As well as this income potential, HSBC has also been returning cash to investors by repurchasing shares. These are the reasons why I think the stock is one of the best passive income shares to buy. 

Unfortunately, the company’s growth is far from guaranteed in the years ahead. Risks it could face include further pandemic restrictions and a deterioration in relations between China and the United States, which may hit global trade flows. 

UK shares for income and growth

Moneysupermarket.com (LSE: MONY) is one of my top UK shares for passive income generation and earnings growth. It also looks incredibly cheap at current levels. 

The company, which operates online comparison sites, is currently selling at a forward price-to-earnings (P/E) multiple of just 15. This reflects uncertain market sentiment towards the business. Regulatory changes have hurt the outlook for the comparison market, and it is unclear how much of an impact these changes will have on the corporation’s bottom line. 

Still, I am happy to look past these headwinds and buy the stock. As well as the cheap valuation, the stock also supports a dividend yield of 5.1%. It has a cash-rich balance sheet and robust profit margins, suggesting it can sustain a higher than average dividend yield. 

As well as this income potential, there is also scope for a valuation re-rating. This could provide both income and capital growth in my portfolio of UK shares. 

REIT details

A REIT is an investment trust that specialises in property investment. It invests capital in a diverse array of property assets, and then pays a dividend to investors to reward them for the risk. The properties can be residential, commercial, or property developments. The REIT scheme launched in 2007 and there are currently over 50 REITs in the UK. 

Here are some of the rules a REIT must follow:

• Be listed on a recognised stock exchange with at least 35% of quoted shares held by the wider public, and not a closed group of five or fewer people
• Distribute 90% of its tax-exempt property income profit each year as a dividend — this is the part that makes investors a passive income
• Be diversified across at least three properties with each representing less than 40% of the total trusts’ assets
• Invest 75% of gross assets into property rental assets, which can include buy-to-rent property projects

In return for following the rules mentioned above, REITs are offered tax advantages compared to an ordinary investment firm. This relates to the way profits are taxed.

I believe there are some significant advantages to investing in a REIT. First, there is an element of double taxation when investing in ordinary firms and receiving a dividend. Firms’ profits are subject to corporation tax and then the dividend income I receive as an investor is also taxed. In addition to this, earning rent as an individual directly investing into property would also be liable for tax.

A REIT receives a corporate tax exemption for rental income. This allows net rental income to pass through to me as the investor without the double taxation mentioned earlier. Furthermore, I would not have to raise lots of capital to invest in a rental property myself. I could buy shares in a REIT and have access to a diverse portfolio of property investment without the hard work of managing anything myself. REITs also provide a higher shareholder return than any standard form of investment trust. REITs are popular investment vehicles, especially to make a passive income.

Risks of investing

The risks of investing in REITs that could threaten any passive income are similar for most right now. Of course, risks will differ slightly from firm to firm, such as size and diversity of portfolios. 

More common risks currently affecting REITs are macroeconomic pressures and Covid-19. Rising inflation and cost of rent could affect portfolios and any dividends that REITs can distribute. The pandemic was a tough time for REITs especially as growth slowed and rent was tougher to collect. The threat of new variants is not good news and could affect growth and profitability once more. This could affect the level of payout to me as a investor. 

Passive income opportunity #1

I would buy shares in Land Securities Group (LSE:LAND) for my portfolio. Often known as Landsec, it is one of the largest REITs in the UK and has a diverse portfolio of properties on its books. Diversity in a REITs portfolio is important for me as it means the risk is spread out. Landsec has property in the retail, leisure, workspace, and residential sectors. Currently its portfolio is worth £11bn.

As I write, shares in Landsec are trading for 733p. A year ago shares were trading for 712p, which is a 2% return. It is worth noting shares have not reached pre-crash levels of over 900p, making me think there is room for shares to continue upward.

I like Landsec for a few reasons. Firstly, its size, footprint, and diversity are positive. Next, recent half-year results showed me that recovery after the height of the pandemic is underway. Profit was up to £275m and further acquisitions for growth worth £616m had been purchased. Finally, it has a track record of success too, which I use as a gauge to review investment viability. I understand the past does not guarantee future success. From a passive income perspective, Landsec’s dividend yield is close to 4%, which is an attraction for my portfolio.

REIT #2

I would buy shares in British Land (LSE:BLND) for my portfolio. British Land has roots back to 1856, making it one of the oldest property firms in the UK. It owns close to £10bn of its own assets as well as managing a further £2bn worth of assets too with a 95% occupancy rate. British Land owns property throughout the UK but focuses on what it calls “London campuses” which is a mixture of work, living, and retail spaces in London.

As I write, shares in British Land are trading for 511p. A year ago, shares were trading for 496p, which is a 3% return.

I like British Land for a few key reasons. in my opinion, one of the best characteristics of a REIT is longevity. British Land ticks that box. Next, it is one of the largest landlords in the country. It has also been moving with the market recently in selling struggling retail assets and buying better yielding assets. Finally, it is currently undertaking a redevelopment scheme in Canada Water, London. This is one of the largest redevelopments in the country, which will boost performance and growth. From a passive income perspective, a dividend yield of over 3% is attractive too.

REIT #3

I would also buy shares in Big Yellow Group (LSE:BYG) for my portfolio. It is one of the largest self-storage firms in the UK. It has benefitted from the recent e-commerce boom that resulted from the changing face of retail and the pandemic.

As I write, shares in Big Yellow are trading for 1,644p. A year ago, shares were trading for 1,146p, which is a 47% return! At current levels shares look cheap with a price-to-earnings ratio of just eight. I like BYG as it is a bit different to other REITs. It specialises in self-storage solutions only, unlike than British Land or Landsec, which have a mixture of other properties. I like a bit of diversity in my portfolio.

Big Yellow has a successful track record of growth and success, which is positive. From a passive income perspective it has a dividend yield of close to 3% which is also attractive for me.

Storage solutions

Big Yellow Group is one of the UK’s largest self-storage firms. It was founded in 1998 in the London area and has since grown organically. Businesses had to adapt to the changing habits of shopping quickly due to the pandemic. A stronger online presence requires distribution and storage solutions which is where Big Yellow Group comes in.

As I write, shares in BYG are trading for 1,567p. A year ago, shares were trading for 1,152p, which is a healthy return of 36%. Most of my best stocks to buy now have produced double-digit returns over the past 12 months.

Performance, growth, and valuation

At current levels, BYG shares sport a forward price-to-earnings ratio of 10 which is relatively cheap in my opinion. With growth plans and the recent e-commerce boom, the share price could rise and now could be a good time to buy shares cheap.

One of the key things I like about Big Yellow Group is its growth journey to date and plans moving forward. In 23 years, BYG has grown from a single unit in London to 102 sites across the UK. It also shows no sign of slowing down its growth and is on the lookout to open new sites in strategic locations. A recent announcement of a new 90,000 square foot site in Slough to open in 2023 is evidence of this.

Big Yellow Group has a positive track record of performance. I understand past performance is not a guarantee of the future but I use it as a gauge when reviewing investment viability. I can see that revenue and gross profit has increased year on year for the past four years. FY results for 2021 were impressive with an increase in revenue, profit, and free cash flow. This resulted in a dividend of 34p per share which was also up from 2020 levels. Regular dividend payments can make me a passive income, which is a bonus.

The best stocks to buy now have risks too

Despite my bullish stance towards Big Yellow Group, I must note credible risks. The e-commerce boom has seen an increased demand in services. BYG has competitors who are also looking to capitalise. There are other firms that have similar offerings and all are vying for business. Some others that spring to mind are Clipper Logistics and Warehouse REIT. These competitors could hamper BYG’s progress.

In addition to competitors, the BYG share price is trading at all-time highs. This means any negative news or lower-than-expected trading levels could see the share price drop significantly.

Overall I like Big Yellow Group for my portfolio and would add shares at current levels. I believe it is currently cheap and its share price will rise further. It has a good track record of recent and past performance and offers me a dividend to make a passive income. I believe it is one of the best stocks to buy now for my portfolio to capitalise on the e-commerce boom we are seeing.

Tritax Big Box makes big gains

The first is Tritax Big Box (LSE: BBOX), which is a real estate investment trust (REIT) focused on logistics. With this focus, it is hardly surprising that it performed quite well last year. Its results for this year so far as also quite healthy. In line with this, its share price has been on the upward journey as well. It has gained over 45% in the past year alone.

And when I look at its valuations, it appears that it can rise even more. If I consider it purely in terms of its price-to-earnings (P/E) ratio, the stock has a dirt cheap valuation of 5.5 times. To me, this makes it a no-brainer stock to buy for my portfolio. But there is a catch. Not everyone is convinced of the merits of the P/E ratio in assessing REITs, which is something I talked about at length in another article recently. 

What do the FTSE 250 stock’s valuations say

I still see it as a useful tool to understand where the stock stands agains its FTSE 250 peers. However, I did also consider the more popular way of assessing REITs, which is the price-to-net asset value (P/NAV). The latest NAV value I can work with is up to 30 June. If I compare this to the price on the date, the company appears fairly valued. Despite this, the stock price is up by almost 20% since.

This to me indicates that investors expect even better days ahead for it. Also, I think the general buoyancy in stock markets has helped. Even though there are some questions around the appropriate valuation for it, I would be happy to buy this stock. 

Big Yellow Group sees boom too

Another FTSE 250 stock I would ideally like to buy is the self-storage provider Big Yellow Group. Since it caters to both homes and businesses, it too has benefited in the past year from the online shopping boom. Its share price is up by 35% in the last year and in the last three years, it has risen by 65%. 

In terms of its its valuations, its P/E ratio is around 10 times. This is not as competitive as Tritax Big Box, but even this is pretty cheap in my opinion. In this case too, however, it is a good idea to consider NAV as well.

In this case, the P/NAV shows that the stock was slightly overvalued on 31 March, which is the date up to which we have data on NAV. By overvalued, I mean that the price is higher than the NAV per share. But here too, its share price has continued to rise since, indicating investor optimism. I am optimistic about this one, too. Big Yellow Group is on my list of stocks to buy.