I reckon there’s good value among stocks in the FTSE 250 index right now. And I’ve bought some of them. 

On track

For example, I’m keen on soft drinks maker Britvic (LSE: BVIC). In July, the company said it’s “on track to deliver a full-year performance in line with expectations.” And City analysts have pencilled in an uplift in earnings of just over 37% for the current trading year to 30 September.

We’ll get the actual figures in the full-year report due on 23 November. Meanwhile, there’s a nice dividend for shareholders to collect. With the share price near 738p, the forecast yield for next year is just under 4.3%.

Britvic could run into operational setbacks ahead. But at the moment it’s trading well with a programme of share buybacks in full swing. And apart from 2020 when Covid hit the markets, dividend progression has been steady.

Solid revenue performance

I also like trading platform provider IG Group (LSE: IGG). In September, the firm posted an 11% increase in revenue. And the directors said the “solid” first-quarter revenue performance will help support the company’s medium-term growth targets.

IG has a multi-year record of growing its revenue, earnings and shareholder dividends. And the company is running a programme of share buybacks. But the dividend is attractive too. With the share price near 753p, the forward-looking yield is just above 6% for the trading year to May 2024.

It’s possible for the business to miss its estimates. But trading is strong right now. And IG was one of those firms that managed to keep up its dividend payments through the lockdowns.

Well positioned

Another that’s captured my attention is Investec (LSE: INVP), the banking, investment and wealth management services provider. The company has grown organically and via acquisitions from being a small finance company in South Africa in the 1970s.

Today, Investec’s core operations focus on the UK and South Africa. And it operates internationally as well. The business now sports a market capitalisation of around £3.6bn and has earned its place in the FTSE 250 index.

September’s pre-close trading update indicated a robust set of figures for the first-half period to 30 September. The company expects a chunky double-digit-percentage uplift in earnings. And we’ll get the actual outcome with the half-year report due on 17 November.

Meanwhile, the directors said Investec is “well positioned to continue to support its clients and pursue growth opportunities in line with its strategic objectives.”

City Analysts expect the dividend to increase by just under 14% in the trading year to March 2024. And with the share price near 401p, the forward-looking yield is above 7%. However, it’s possible the firm could miss its estimates. And that’s particularly true if a global economic downturn gathers pace.

Nevertheless, despite the risks, I’m hanging on to my shares in these three FTSE 250 companies. And I hope to own them for decades.

Here I’m looking at three that I’m considering buying in September, depending on how their latest news turns out.

Bricks

One is Redrow (LSE: RDW), with full-year results due on 14 September. Housebuilder shares have slumped this year. I didn’t think they would, as demand has remained strong. But a fall has to be a buying opportunity for those of us who see long-term gains, surely.

Redrow’s forecast dividend yield stands at 6.5%. That’s fairly modest compared to some in the sector. But last year’s was covered three times by earnings, which I think takes some of the pressure off.

The company launched a share buyback programme in July, too. It intends to return up to £100m to shareholders that way. When there’s capital to spare like that, I feel even better about a company’s long-term dividend prospects.

A prolonged period of high inflation and interest rates could harm housebuilder share prices, though. And that has to be the biggest danger.

Food

Maybe it’s the contrarian in me. But I like the look of a number of real estate investment trusts (REITs) these days. And for me, Supermarket Income REIT (LSE: SUPR) ticks the boxes.

The share price has been erratic over the short term, but it’s showing longer-term strength.

The trust holds a portfolio of UK supermarket real estate assets. And that’s got to be one retail business that will still need the big bricks and mortar facilities no matter how our shopping habits might change.

Dividends have been yielding around 5% in recent years, and forecasts suggest similar to come. I like the supermarket sector, and I rate Tesco as a long-term buy.

But I can’t help seeing this REIT as a diversified play on the whole sector.

What are the downsides? I wonder if the share price might be a bit overheated, and if fears of property price falls might turn it downwards. Full-year results are due on 21 September.

Money

I have my eye on Investec (LSE: INVP), with a trading update due on 23 September. Investec is a FTSE 250 bank, focused on private and corporate banking and wealth management. As such, I hope it will be more resilient in the face of higher interest rates.

I think its share price shows that, remaining reasonably buoyant in 2022.

Investec operates primarily in the UK and South Africa. And I do think that brings risk into the equation, as South Africa’s political situation could be getting a little tense. And investors potentially withdrawing funds would not be good.

Earnings and dividends slumped during the pandemic. But the year ended March 2022 saw things back to pre-Covid levels, with a well-covered 5% dividend yield.

I’m not sure I’d buy Investec shares over a UK bank stock if I only held one. But I think it might make a nice addition to my existing Lloyds investment.

Hunting for income

The first company I like is Legal & General (LSE:LGEN). My aim with this stock is to try and benefit from the dividend payments. At the moment, the dividend yield is 6.91%. But hang on, isn’t inflation at 10.1%? It’s true, but I’d rather have an income stream I can depend on to offset some of the impact. There are some companies with higher yields, but some of these have been pushed higher due to falling share prices. This is a potential red flag for me.

As for Legal & General, the share price is modestly up 1% over the past year, unlike some stocks with attractive yields based mainly on the fact that their share prices have fallen. This encourages me that the business is going to be able to continue to pay out dividends to help my inflation headache in the period to come.

This is further backed up by recent H1 results. Operating profit was up 8% versus the same period last year. That allowed the interim dividend to be raised by 5%. I accept that the investment management business is never going to set the world on fire with huge growth. But for a steady dividend payer, I think it ticks the box completely.

One concern I do note is the reliance that the company has on broader financial markets. If investors pull money out due to worries about the economy, the business will make less money due to lower assets under management.

A UK stock with further growth potential

Aside from a dividend stalwart, I want to also add a growth option. To this end, I like Investec (LSE:INVP). The FTSE 250-listed bank has enjoyed a share price rally of 56% over the past year. I don’t think that this move higher has finished. If I’m correct, then the share price gains could help me to reduce the impact of inflation as my capital is appreciating.

The company is similar to most major banks, but is more focused on private and corporate banking instead of retail accounts. It reported net inflow of £1.9bn in the latest annual earnings report. Given the increase in interest rates, it’ll be earning significant sums on this money, even after taking into account the rate it pays to customers.

Given high inflation, I think the Bank of England is going to be forced to raise interest rates for some time. This is going to help the bank even more, hence why I think this growth stock could outperform.

My biggest worry that I’ve had for some time is the exposure it has to South Africa. I still think the geopolitical situation over there has the potential to boil over at any moment, which would be damaging.

Resilient demand

For example, I’m keen on soft drinks provider Britvic (LSE: BVIC). In July, the company posted its third-quarter trading statement covering the period to 30 June. And the headline read: “On track to deliver a full-year performance in line with expectations”.

City analysts expect earnings to rebound by around 36% in the current trading year to September. And they predict an uplift the following year of almost 7%. However, Britvic suffered declining earnings from 2019 to 2021. The pandemic wasn’t kind to the business. And there’s some risk earnings could be lumpy in the future.

However, chief executive Simon Litherland said the year-on-year performance in the quarter “reflects continued resilient demand”. He acknowledged the uncertain economic environment could “weigh on consumer confidence”. But he asserted that soft drinks is a “resilient” category. And he was “confident” Britvic will perform in line with market expectations.

With the share price near 849p, the forward-looking dividend yield is around 3.7% for the trading year to September 2023. It’s possible for any business to miss its estimates if trading deteriorates. However, I find the yield attractive and would aim to hold the stock for the long haul. 

Record order book and profits

I’m also drawn to groundworks and geotechnical specialist contractor Keller (LSE: KLR). At the beginning of August, the company released a robust set of half-year numbers and a positive outlook statement.

Chief executive Michael Speakman said he has “confidence” the business will deliver on expectations for the full year and in the long term. And his optimism is underpinned by “record” profits and a 22% uplift in the order book on a constant currency basis.

City analysts predict single-digit percentage increases in the shareholder dividend for 2022 and 2023. And with the share price near 761p, the forward-looking yield is just above 5%. I reckon that’s a decent yield from a business with a multi-year record of consistent dividend payments. And that record, plus a number of new contract wins, is prompting me to set aside my concerns about any cyclicality in the business.

Strong liquidity and capital

I like the look of Investec (LSE: INVP), which provides international banking, investment and wealth management services in South Africa and the UK.

In May, the company delivered a strong set of full-year results. Chief executive Fani Titi said adjusted earnings came in at “the top end” of previous guidance at just above 55p per share. And that was ahead of pre-Covid levels.

Titi reckons Investec has “strong” liquidity and capital to support growth. And the business is “well positioned” to handle the uncertain outlook caused by inflation. 

City analysts expect a single-digit rise in the dividend for the current trading year to March 2023. And they predict a 14% rise the following year. So with the share price near 450p, the forward-looking dividend yield is running above 6%.

Financial companies like this can suffer from cyclicality of earnings. But there are no sign of weakness ahead and I’m attracted to that chunky yield.

Banking on more rate hikes

The first company in my focus is Investec (LSE:INVP). The bank is split between operating in South Africa and the UK. It has performed well over the past year, with the share price up almost 55%.

A good amount of the gain can be attributed to a stellar performance over the last financial year (that runs March-March). Basic earnings per share jumped 106.3%. The increase in earnings was driven by growth in operating income.

Funds under management grew by 9.2%, with net core loans up 13.2%. These were two key drivers that helped to boost profits. This is also why I think the business is a smart buy for me right now.

The higher the interest rate is, the more money the bank make on the funds and deposits. It also allows the bank to make a larger spread on the rate charged on loans. Given the fact that the Bank of England is likely to continue to raise rates this summer, I think Investec is going to continue to benefit from this.

I do think that the South African operations are a risk though. Even as they diversify the company, I’m aware of the instability that exists in that region and this could have a negative future impact.

An undervalued UK share

The second stock I think I’ll buy in July is Currys (LSE:CURY). In contrast to the share price performance of Investec, the Currys share price has fallen by 40% over the past year.

A key driver behind this move has been the lowering of profit guidance as the company has experienced problems. This has included supply chain issues, causing product availability problems. I think investors are also concerned about how consumer demand will hold up going forward, given the cost of living crisis.

Despite this, I think that the share price has been aggressively sold to the point of being undervalued. The business is still profitable, even if 2021 profit was much lower than pre-pandemic levels. As such, the price-to-earnings ratio sits at just 6.76. In my eyes, this is quite low and so does grab my interest.

I also disagree with the thinking that consumer demand will meaningfully fall due to a downturn in the economy. Products such as kitchen appliances and other household goods are staples. If my fridge breaks down, I’m going to find a way to buy another one! Further, the business has a good credit offering as well, providing an additional revenue line.

As for the first one, I think even Warren Buffett might approve. The billionaire investor has, after all, just bought more Occidental Petroleum stock for his Berkshire Hathaway investing company.

Money in oil

Yes, I’m talking about oil. And, specifically, BP (LSE: BP). The BP share price has climbed 22.5% so far in 2022, and it’s up 24% over the past 12 months. The FTSE 100, incidentally, has gained 1.7% over 12 months.

The outlook for BP is a far cry from its sorry state in the depths of 2020. The pandemic sent it into a slump. And then, after BP announced its Net Zero thing, investors gave it a further kicking. But since their low that year, BP shares have more than doubled.

It’s easy to say the BP share price is up only because of oil prices. That oil prices are high due to the war in Ukraine. And that once that’s over, BP will go back to being the fossil fuel pariah it deserves to be. And that may well happen.

Against that, though, is Warren Buffett. If he’s still investing in oil, he must see a profitable long-term future for the industry.

Pharma growth

GSK (LSE: GSK), previously GlaxoSmithKline, seems to have perpetually been one of those growth shares set to deliver… tomorrow. It’s drugs pipeline ran a bit thin, while some blockbuster drug patents were expiring.

And the drug development cycle is very long and costly. It takes years to turn R&D into a marketable product.

But is GSK finally hitting a new earnings growth phase to go with its new name? Well, the share price is up 10.5% so far in 2022, and up 25% over the past 12 months.

And after a few years of earnings picking up and falling back again, analysts appear optimistic. They have three years of growth penciled in, starting this year. We’ve seen a few false starts from GSK, though, and investors might fear this could be another one.

Contrarian bank

A bank? In a year when UK favourites Lloyds and Barclays are sliding? Yes, but I’m talking about Investec (LSE: INVP), which is a bit different.

Investec is a constituent of the FTSE 250, where growth shares are more typically found. It provides financial and investment services to high-value customers in South Africa and the UK. That does seem to be paying off, with earnings nearly doubling in the year to March. The company paid a 5% dividend, more than twice covered by earnings.

The Investec share price has risen 50% over the past 12 months in response. I think that’s a remarkable performance for a company in the financial sector this year, no matter what its specific business.

My trouble is I have no clear view of the outlook. Earnings have been erratic before, and the shares have been very volatile in the past few years. More research is needed.

A FTSE 250 stock I believe should perform well in these challenging conditions is Investec (LSE: INVP). The received wisdom in investing circles is that banking shares tend to outperform as interest rates rise because they can charge more for their loans. Currently offering a 5.5% dividend yield, here’s why I consider Investec stock to be a good buy today.

An Anglo-African bank

The Investec share price has performed comparatively well this year. It’s up 7.5%, while the FTSE 250 index has plunged over 21.5%. I believe the primary reason for this is the bank’s status as a specialist lender and asset manager, servicing the needs of high-value clients in South Africa and the UK.

Many mid-cap stocks are vulnerable to changes in consumer spending as household budgets are squeezed. However, Investec’s client base will be actively seeking ways to preserve wealth, lifting demand for the bank’s services.

Evidence for this can be found in the company’s latest results. In the last financial year, Investec delivered a 90.7% increase in adjusted earnings per share. It also recorded an 82.1% uplift in adjusted operating profit and funds under management hit £63.8bn. This exceeds the pre-pandemic level of £55.8bn in 2019.

These are impressive numbers. What’s more, the business is geographically diversified. Southern Africa accounts for 45% of its operating income and 55% comes from the UK and other jurisdictions. Accordingly, I regard Investec shares as a good way to gain exposure to emerging markets in my portfolio.

Crucially, the group’s target dividend pay-out ratio is 30% to 50% of the consolidated adjusted earnings per share. It has a reliable history of delivering dividends during difficult times, such as the Covid-19 recession and the 2008 financial crisis.

Risks for Investec shares

As with all investments, the shares come with risks. While on balance I like the exposure to the South African economy Investec offers, this does raise some concerns for me.

South Africa is a young democracy and no stranger to violent protests. It ranks 118th out of 163 countries in the Global Peace Index and has experienced difficulties with corruption and bribery in its business culture.

There are also wider risks posed by a slowdown in the global economy. Investec shares have enjoyed strong momentum since their 2020 lows. However, capitulation in the stock market could prove to be a setback to further growth.

Why I’d buy this FTSE 250 dividend stock

Bearing the risks in mind, Investec still looks like a promising investment to me. The bank has a healthy financial position and a solid track record of rewarding shareholders with distributions through thick and thin. I believe it’s better placed than most FTSE 250 stocks to withstand turbulent times ahead as interest rates soar.

Overall, I think this dividend stock would make a good addition to my diversified passive income portfolio.

With £3,000 to invest, I’d spread the money between three of my top UK shares. And I’d diversify by size with one large-cap, one mid-cap and one small-cap. On top of that, I’d diversify by sector.

My large-cap pick

My pick from the big league is the smoking products maker British American Tobacco (LSE: BATS). The company has a market capitalisation of around £79bn and resides in the FTSE 100 index. 

The business deals in traditional smoking products and new-generation offerings aimed at reducing harmful health effects. And on 9 June, it delivered an upbeat trading statement. And that’s despite being in the process of withdrawing part of its operations from Russia because of the Ukraine war.

Chief executive Jack Bowles pointed to “strong” revenue and volume growth in all three of the firm’s new categories. But traditional smoking products continue to generate much of the firm’s incoming cash flow.

The company has an impressive multi-year record of growing its shareholder dividend. And it’s also buying back some of its own shares. However, it’s possible regulatory changes in the sector could lead to lower dividends in the future.

But with the share price near 3,564p the forward-looking dividend yield is forecast to be around 6.8% for 2023. I see that as attractive, although it’s always possible for any company to miss its estimates.

My mid-cap

My mid-range pick is international banking, investment and wealth management services provider Investec(LSE: INVP). The company has a market capitalisation of around £4.45bn and I can find it in the FTSE 250 index.

The business operates mainly in South Africa and the UK serving private clients with a range of products and services. 

In May, the company delivered a robust set of full-year results. And chief executive Fani Titi said the company is well-positioned to serve its “carefully chosen” client base. And that’s despite the uncertain outlook due to ongoing inflationary pressures and the war in Ukraine.

I reckon uncertainty is what I get with all businesses. And shares have the potential to disappoint as well as to delight me. However, I’m keen on Investec’s chunky dividend and analysts’ estimates of decent growth in earnings ahead. Although estimates are never guaranteed figures.

With the share price near 462p, the forward-looking dividend yield is around 5.7% for the trading year to March 2023. And that tempts me.

And a promising small-cap

For my small-cap company, I’ve chosen Wynnstay (LSE: WYN), the UK-based manufacturer and supplier of agricultural products. It has a market capitalisation of around £128m and is in the FTSE AIM All-Share index.

In May, the company issued a strong trading update. And the directors said they expect full-year pre-tax profits to exceed previous expectations. That’s because the business benefits from higher fertiliser commodities prices. And, again, the effects of the war in Ukraine plus the disruption of supplies from Russia are combining to keep prices elevated. But that could reverse in the future.

Meanwhile, with the share price near 642p, the forward-looking dividend yield is near 2.6% for the trading year to October 2023. That’s not the highest yield of these companies. But I like Wynnstay’s long record of steady annual and rising dividend payments. The compound annual growth rate of the dividend is running at about 5.25%.

Dunelm

Dunelm (LSE: DNLM) is a British home furnishings retailer that operates throughout the UK. It is one of the largest homewares retailers in the country with an ever growing market share. New director Karen Witts was appointed CFO this week and a number of Dunelm shares were awarded to her.

• Name: Karen Witts
• Position of director: Chief Financial Officer
• Nature of transaction: Free shares
• Date of transaction: 9 June 2022
• Amount purchased: 73,979 @ nil
• Total value: £N/A

Investec

Investec (LSE: INVP) is an international banking and wealth management group. It provides a range of financial products and services to a clients in Europe, Southern Africa and Asia Pacific. This week, a number of director dealings were carried out in both directions.

• Name: Ciaran Whelan
• Position of director: Director
• Nature of transaction: Sale to cover tax liabilities
• Date of transaction: 8 June 2022
• Amount sold: 24,037 @ £4.77
• Total value: £114,674.28

• Name: Ciaran Whelan
• Position of director: Director
• Nature of transaction: Partnership shares
• Date of transaction: 8 June 2022
• Amount purchased: 21,531 @ £4.77
• Total value: £102,702.87

• Name: Stephen Koseff
• Position of director: Director
• Nature of transaction: Sale to cover tax liabilities
• Date of transaction: 6 June 2022
• Amount sold: 31,514 @ £4.82
• Total value: £151,938.67

• Name: Ruth Leas
• Position of director: PDMR
• Nature of transaction: Sale to cover tax liabilities
• Date of transaction: 8 June 2022
• Amount sold: 10,179 @ £4.75
• Total value: £48,374.68

• Name: Ruth Leas
• Position of director: PDMR
• Nature of transaction: Partnership shares
• Date of transaction: 8 June 2022
• Amount purchased: 10,330 @ £4.75
• Total value: £49,092.29

• Name: Fani Titi
• Position of director: Director
• Nature of transaction: Sale to cover tax liabilities
• Date of transaction: 6 June 2022
• Amount sold: 75,150 @ £4.84
• Total value: £363,996.54

• Name: Nishlan Samujh
• Position of director: Director
• Nature of transaction: Sale to cover tax liabilities
• Date of transaction: 6 June 2022
• Amount sold: 37,885 @ £4.84
• Total value: £183,499.79

Bodycote

Bodycote (LSE: BOY) is the world’s largest provider of heat treatment and thermal processing services. The service acts as a vital link in the manufacturing supply. A non-executive director purchased a decent number of Bodycote shares this week.

• Name: Nicola Susan Boyd
• Position of director: Director
• Nature of transaction: Purchase of shares
• Date of transaction: 8 June 2022
• Amount sold: 3,000 @ £6.54
• Total value: £19,620.00

Types of shares in a SIP

To provide context, there are a few types of shares within a company’s share incentive plan (SIP). A SIP is an employee plan for companies within the UK to flexibly award equity to employees. Publicly listed companies normally exercise this option because it’s tax-efficient for both the employer and its employees.

In this instance, the director dealings at Investec bought partnership shares. Employees can use a SIP to buy shares on a monthly basis or at the end of an ‘accumulation period’. If there is an accumulation period in effect, employees can buy shares at the market value at the beginning or end of the period.

Let’s explore where they could go next and whether I should buy.

Investec: a dividend stock with a solid yield

Specialist Anglo-African banking group Investec (LSE:INVP) has climbed higher than any other FTSE 250 stock over the past year. The blistering 137% growth in the Investec share price hasn’t dented the stock’s passive income appeal. It still yields a healthy 3.7%.

I also like the geographic diversification away from the UK economy that it offers via significant exposure to emerging markets from its Johannesburg operations. At £14.1bn, over 53% of its net core loans are in Southern Africa.

The FTSE 250 bank should also prove resilient in a rising interest rate environment. These factors make Investec stock a great pick to protect my portfolio from the twin threats of a domestic recession and inflation.

On the other hand, credit rating agencies have expressed concerns about rising government debt in South Africa. This could pose a headwind for Investec. Nevertheless, with adjusted operating profit of £377.6m for 2021 and positive forecasts for 2022, the potential risks wouldn’t dissuade me from buying the shares today.

Indivior: a pharma growth stock

Another star performer in the FTSE 250 index is healthcare company Indivior (LSE:INDV). The drug manufacturer’s share price is up by 132% on a 52-week basis and a stunning 585% over two years.

Indivior specialises in opioid addiction treatments. Demand for its products is rocketing due to the opioid problem currently haunting the US. According to the CDC, overdose deaths involving opioids increased by 138% from 2015 to 2021.

Unsurprisingly, Indivior’s financials have benefited. Net revenue increased from $647m to $791m last year, driven primarily by an 88% uptick in net revenue from its extended release injection, Sublocade.

Indivior stock is not without risks, however, demonstrated by its payment of a $600m settlement in 2020 to resolve liability arising from false marketing of its Suboxone Film treatment in Massachusetts, which at one stage threatened to bankrupt the company.

But with its legal troubles in the rear-view mirror and investment in R&D to expand its pipeline into Cannabis Use Disorder treatments, this pharmaceutical company has a bright future, in my opinion. I’d buy.

Drax Group: a FTSE 250 energy stock

Drax Group (LSE:DRX), the owner and operator of the UK’s largest biomass and coal-fuelled power station, has seen its share price almost double over the past 12 months.

Moreover, the company’s adjusted profits rose from £800m to £843m in 2021. Shareholders also benefit from a handy 18.8p dividend per share.

There are clear concerns about investing in a fossil fuel business. However, Drax Group has taken steps to mitigate this.

It is the world’s first energy company to announce an ambition to become carbon negative by 2030. Indeed, the company currently supplies 12% of the UK’s total renewable energy.

Furthermore, there is increasing pressure to diversify away from Russian oil and gas. In this context, I’d buy shares in this homegrown FTSE 250 energy company today.