Utility provider

Telecom Plus, better known under its trading name of Utility Warehouse, is a telecommunications and utilities business that provides a number of services. These include mobile, internet, fixed-line, as well as gas and electricity services. Most of its revenue is generated from electricity services.

So what’s happening with Telecom shares currently? Well, as I write, they’re trading for 2,270p. At this time last year, the stock was trading for 1,206p. This is a 88% return over a 12-month period.

To buy or not to buy?

Let’s take a look at some of the pros and cons of me buying Telecom shares.

FOR: I believe Telecom has excellent defensive traits. The services it provides are mainly essential, especially electric and gas services for consumers to heat and power their homes. In addition to this, internet and telephone connectivity is also pretty much essential in this day and age too. This should help boost performance, as well as keeping returns consistent. Furthermore, Telecom has benefitted from many other firms going out of business due to current issues in the energy sector. It has boosted performance, and customer numbers as a result.

AGAINST: Market volatility is always something I am wary of. The geopolitical events in Russia have led to gas supplies being tightened, and increased demand from many countries to seek resources from different resources. This has led to a spike in prices. I can’t help but wonder if the market eventually normalises, could Telecom find performance and payouts slowing down?

FOR: At present, Telecom’s dividend yield stands at 2.5%. Furthermore, it has a great record of payouts, with the dividend not having been cut since 2006! A dividend stock with such a great record is not easy to find currently, especially after the recent economic volatility, and the pandemic, when many firms cut dividends to conserve cash.

AGAINST: Another concern of mine is the fact that long-time CEO Charles Wigoder stepped down from the business in July. Under his 23-year stewardship, the company experienced growth, consistent returns, and great success. Could his steady leadership be missed moving forward? Only time will tell.

A dividend stock I will continue to monitor

Taking everything into account, I’ve decided to keep Telecom Plus on my watch list for now and continue to monitor developments. I want to see how the new leadership fares in the coming months, as well as monitor the energy market as a whole. Answering my titular question, Telecom is a decent dividend stock, in my opinion. For me, a mixture of uncertainty in the market, the change in leadership, and an average yield put me off. Finally, I believe I can purchase better yielding stocks elsewhere to boost my holdings.

Legendary investor Warren Buffett once said, “Only when the tide goes out do you discover who’s been swimming naked”. That’s what happened last year with UK energy suppliers. It wasn’t pretty. But for me, it was a useful reminder of just how good the Telecom Plus business really is.

Customers up 20%

Telecom Plus is probably better known under its trading name of Utility Warehouse. This business buys utility services such as electricity and gas wholesale. It then resells them to domestic customers through a workforce of self-employed agents.

One of the secrets to the group’s strong financial performance is its long-term energy supply deal with German utility giant Eon. This deal is allowing Telecom Plus to sell energy profitably below the UK government price cap.

It’s a tremendous competitive advantage in the current environment, as it makes UW pricing very attractive for people who need a new energy deal.

Telecom Plus says that during the six months to 31 March, customer numbers rose by 20%, on an annualised basis. Growth is expected to continue at this rate in 2022/23. I think that’s pretty impressive for a business with over 700,000 customers.

What could go wrong?

Market conditions at the moment are pretty unusual and will (hopefully) return to normal at some point. When this happens, Utility Warehouse could face tougher competition on pricing.

Another potential concern for me is that long-time executive chairman and major shareholder, Charles Wigoder, is planning to step down to a non-executive role in July. Wigoder has been gradually reducing his stake in the company and now only owns 9%.

Personally, I’m pretty relaxed about Wigoder’s decision to step back. Co-CEO Andrew Lindsay has worked with Wigoder since 2007. He looks like a safe pair of hands to me.

Would I buy Telecom Plus shares now?

I’ve followed Telecom Plus for several years and have really come to like this business.

Wigoder has kept the group’s focus on its core business and resisted the temptation to diversify. He’s also taken care to keep the dividend safe – the payout has not been cut since 2006.

In my view, this is a well-run business, with strong finances and an impressive track record of growth.

After last year’s gains, Telecom Plus shares now trade on 22 times 2022/23 forecast earnings. That’s not especially cheap, but the group’s strong cash generation means that the shares still offer a useful 3.9% dividend yield.

Perhaps more importantly, I think this quality business is likely to continue growing, even if market conditions normalise. I’d be happy to buy Telecom Plus shares at current levels. I think there’s a good chance they’ll keep rising.

Supermarket income

The first company I would buy is the Supermarket Income Reit (LSE: SUPR). With a dividend yield of 5% at the time of writing, the real estate investment trust (REIT) provides an attractive level of income.

The trust does this by investing in a portfolio of commercial property assets, which it then lets out to retailers such as supermarkets. It owns over 50 supermarkets as a mixture of joint ventures and direct investments. 

Supermarket retailers tend to be large companies with substantial profits. They also tend to commit to properties for years. This is why I like Supermarket Income. Its dividends are backed by income from these property assets, occupied by large, wealthy businesses. 

Unfortunately, that does not make the enterprise entirely risk-free. Higher interest rates or a sudden drop in commercial property values could impact the group’s income stream and net asset value. 

Despite these risks, I would buy the company for my portfolio of dividend stocks. 

Asset management

I would also buy the asset manager Premier Miton (LSE: PMI). 

This company has gone from strength to strength over the past five years. It made a modest profit of just under £1m in 2016, but this is expected to hit £19m by 2021. 

The asset manager has been focusing on providing a niche offering to customers, which they clearly appreciate. And as profits have expanded, the group has increased shareholder returns. According to City analysts, Premier Miton will support a dividend yield of 5.3% this year. This is just a forecast at this stage. 

As long as the company sticks to doing what it does best, I think its growth will continue, although I will be keeping a close eye on group assets under management to see if they start declining. This could be a sign that the business has begun to lose its way. 

Other challenges the enterprise may face as we advance include competition and market volatility. Both of these challenges could lead investors to pull their assets from its funds. 

A champion of dividend stocks

The final company I would buy for my income portfolio is the utility provider Telecom Plus (LSE: TEP). 

With a dividend yield of 5.5% at the time of writing, the stock looks incredibly attractive from an income perspective. Utility companies also tend to be predictable income payers because services such as energy and gas are relatively defensive.

As well as these utilities, Telecom Plus also offers its customers mobile and broadband packages and cashback on certain purchases.

This gives the group a unique offering, which has helped entice customers driving operating profit growth of 5% per annum over the past six years. 

As the utility sector is highly competitive, I will not be taking this growth for granted. The firm’s expansion could also struggle if energy prices rise significantly and customers start moving elsewhere to find better deals. 

Despite these challenges, as dividend stocks go, I think Telecom Plus ticks all the boxes.

Stocks and Shares ISA investments

One of the great things about Stocks and Shares ISAs is that any income or capital gains earned on assets held inside one of these wrappers are entirely tax-free. I think this makes them the perfect vehicle in which to own income stocks, although this strategy may not be suitable for all investors.

LondonMetric Property (LSE: LMP) is a real estate investment trust that offers a prospective dividend yield of 3.8%. This yield is covered by income provided by the group’s rental properties.

FTSE 250 property company

What I like about the company’s portfolio is the fact that it is diversified. It owns many warehouses, which have helped it deliver a solid property return over the past 12 months. Its portfolio delivered a total return of 13.4% over the trading year to the end of March.

Its lack of exposure to retail properties also meant occupancy and rent collection was high. Occupancy was 98.7% at the end of the year and rent collection throughout the year was 98.1%.

I think these figures showcase the company’s strengths. That’s why I would buy this real estate investment trust for my Stocks and Shares ISA today.

That’s not to say the business is without its risks. Like many property developers, LondonMetric uses debt to fund its growth. This could become an issue if interest rates were to rise substantially. Higher interest rates may translate into higher interest costs, which would impact profit margins and may force management to reduce the company’s dividend yield.

Utility income

The other company I would buy is the utility provider Telecom Plus (LSE: TEP), because it has a defensive business model that stands out to me.

For example, according to its latest trading update, last year, when many businesses struggled to stay afloat, customer numbers increased 0.8%. Although this figure was small and was also down from 2.7% in the prior-year period, it’s impressive considering the environment.

Thanks to this growth, the company was able to sustain its dividend. It currently offers a dividend yield of 4.6%.

I’m optimistic that the firm can maintain this distribution, but I’m also aware that the business faces challenges.

Competition in the utility sector is growing, and this may mean Telecom Plus has to spend more money on marketing as we advance. This may impact profit growth.

Higher commodity costs may also reduce profit margins if the organisation cannot pass them on to customers.

Still, despite these risks and challenges, I would buy the company for my Stocks and Shares ISA today, considering its income potential and defensive nature.

Kevin Godbold: National Grid

The FTSE 100’s National Grid (LSE: NG) has a long record of delivering strong operating cashflow leading to incremental rises in the shareholder dividend. And the company’s regulated monopoly position at the heart of the UK’s energy systems keeps the cash flowing. There’s also a regulated energy business in the US.

Perhaps the biggest risk is regulatory requirements could change in the future. And that could make it difficult for the firm to raise or maintain dividend payments. However, that scenario hasn’t happened and may never occur. Meanwhile, with the share price near 867p, the yield is around 5.7%.

Kevin Godbold does not own shares in National Grid.

Rupert Hargreaves: TP ICAP

TP ICAP (LSE: TCAP) is a financial broker, which facilitates trading in products such as oil, copper, and oats. Market uncertainty is excellent for this business. TP takes a small commission on each trade, so profits can surge when traders are jittery. Of course, this also works the other way. Profits can fall in periods of calm.

TP has a track record of paying large dividends to investors. At the time of writing, the stock is set to yield 7%. After a year of market volatility, I think this payout is sustainable in the near term, although in the long term, nothing is guaranteed.

Rupert Hargreaves does not own shares in TP ICAP.

Kirsteen Mackay: GlaxoSmithKline 

GlaxoSmithKline (LSE:GSK) is slower in the vaccine race than competitors but that might not be a bad thing. GSK is a vaccine manufacturer in normal times, not just Covid-19 times, so its expertise could prove golden going forward. It has joined forces with CureVac to focus on developing vaccines that tackle emerging coronavirus variants that existing vaccines may not work against. It’s also continuing to trial its vaccine in the over-65s.

It has a price-to-earnings ratio of 13 and earnings per share are 93p. GlaxoSmithKline will be cutting its 6% dividend yield next year, when it spins out its consumer division. But in the long run, I think this top income stock looks a good investment.

Kirsteen Mackay does own shares in GlaxoSmithKline.

Christopher Ruane: Imperial Brands

Tobacco stocks tend to be highly cash generative. When such free cash flow is paid out as dividends, it can be substantial.

One concern is falling rates of smoking in many developed markets. That may be why the City marked Lambert and Butler owner Imperial Brands (LSE:IMB) down after a strategy update last month. The company plans to invest in its cigarette business in five key markets. That may sound like doubling down on a declining business.

But I think the clearer focus could help sustain earnings – and dividends. Imperial’s yield is close to 10%. I find that very attractive.

Christopher Ruane owns shares in Imperial Tobacco.

Royston Wild: dotdigital Group 

Now dotdigital Group (LSE: DOTD) doesn’t offer the biggest dividend yields out there. For this financial year (to June 2021) the yield sits at a modest 0.5%. But I’d buy this UK share on the likelihood that shareholder payouts will continue to boom. Annual dividends have risen 93% in the past five fiscal years as cash generation has rocketed. 

I’d certainly buy dotdigital before the release of half-year financials scheduled for Thursday, February 25. Soaring e-commerce activity is supercharging demand for the online marketing specialist’s services. Latest financials in January showed organic revenues in the six months to December soar 22%. I fully expect that upcoming release to indicate that revenues have kept ripping higher. 

Royston Wild does not own shares in dotdigital Group.

Jonathan Smith: National Grid

National Grid (LSE:NG) is a gas and electric utility company, operating mostly in the UK. As an established company within the market, high growth prospects in the short term are slim. However, the dividend pay-outs make this top income stock look attractive to me. It currently has a dividend yield of 5.62%, several percent higher than the FTSE 100 average. 

The dividend yield has held around the 5% mark for several years and has kept being paid throughout the Covid-19 pandemic. This is in part thanks to a having a dividend cover above 1 for at least the past five years.

Jonathan Smith has no position in National Grid.

G A Chester: Polymetal International 

Blue-chip gold and silver miner Polymetal International (LSE: POLY) will release its annual results on 3 March. Based on City analysts’ forecasts, it has an attractive P/E of 10 and a generous 5.5% dividend yield. 

As a high-grade and low-cost producer, Polymetal’s positioned to remain profitable and pay dividends through varying gold and silver price environments. Meanwhile, its nine producing assets mitigate the risk of an operational setback at any one mine. 

With a strong pipeline of future growth projects, I think the company’s low earnings rating and high dividend yield augur well for shareholder returns this year and beyond. 

G A Chester has no position in Polymetal International.

Paul Summers: BHP Group

While commodity prices can be volatile, I suspect FTSE 100 mining giant BHP Group (LSE: BHP) could prove to be an excellent source of income over the next few years. The green energy revolution, gradual electrification of vehicles and subsequent need for copper are likely to play right into its hands. Moreover, BHP’s sheer size should allow it to keep production costs low relative to smaller peers. 

Analysts have BHP returning 134p per share in cash in FY21, giving a yield of 6.6%. That’s far better than the paltry 0.55% being offered by the best Cash ISA.

Paul Summers has no position in BHP Group.

Edward Sheldon: Unilever

My top income stock is Unilever (LSE: ULVR). It’s a leading consumer goods company that owns a wide range of well-known brands such as Dove, Persil, and Ben & Jerry’s. The stock currently offers a prospective dividend yield of about 3.7%.

Unilever’s share price has pulled back recently. One reason for this is that full-year results for 2020 were a little underwhelming. However, the results weren’t terrible. Underlying sales growth came in at 1.9% and the company raised its dividend by 4%.

All things considered, I see the recent pullback as a good buying opportunity. With the shares now back near the 4,000p level (the same level at which Warren Buffett tried to buy the company a few years ago), I think it’s a good time to be building a position. 

Edward Sheldon owns shares in Unilever.

Roland Head: Telecom Plus

FTSE 250 utility firm Telecom Plus (LSE: TEP) sells energy and telecoms services to consumers through its Utility Warehouse brand. Founder Charles Wigoder still owns 12% of the stock and the group’s dividend has not been cut for 14 years.

This business is unusual in that it doesn’t advertise and sells through a network of self-employed agents. Lockdown caused some disruption last year, but the firm was quick to adapt by moving sales online.

Broker forecasts suggest stable profits in 2021, with a dividend yield of 4.3%. I admire the firm’s steady progress and would buy TEP shares for income.

Roland Head does not own any share mentioned.

Manika Premsingh: Royal Dutch Shell

The FTSE 100 oil biggie Royal Dutch Shell (LSE: RDSB) just increased its dividends and now has a yield of 4%. This is despite its weak financial performance in 2020.

To me this shows that RDSB is confident about its future. I can see why. Brent crude price just crossed $60 a barrel, the highest in over a year. Easing lockdowns and growth pick-up likely in 2021, it’s a no-brainer that oil demand will rise too.

I reckon RDSB’s share price will benefit from this.

Moreover, it takes an extreme situation, like Covid-19, for it to cancel dividends.

I’ve just bought the share keeping in mind that it offers not just growth but also stable income.

Manika Premsingh owns shares of Royal Dutch Shell.

Harshil Patel: CMC Markets

CMC Markets (LSE:CMCX) is a UK-based online trading platform. Not only does it provide a 3.6% yield for income investors but it’s also a growing company. I like this combination of growth and income.

It intends to grow and diversify by continuing to invest in its technology. So far, it seems to be working, in my opinion. Further investment should lead to product expansion and the addition of new asset classes to its platform.

CMC Markets recently highlighted strong client trading activity. It also continues to attract premium clients and has managed to offer resilient platforms, even in volatile trading periods.

Harshil Patel has no position in CMC Markets.

A UK industrial heavyweight

IMI (LSE: IMI) may not be a company you’re familiar with. This £3bn FTSE 250 engineering firm specialises in “products that control the precise movement of fluids” and has clients in most major industrial sectors.

Trading has been good this year, with weakness in sectors such as oil and gas being offset by gains from the group’s medical division, whose products include ventilators. I’d guess this will be a one-off boost, but even so, I’m pleased to see that profits are expected to rise slightly this year and be stable in 2021.

I don’t know what the future holds for the world economy. But IMI has a track record of double-digit profit margins and strong cash generation. With the stock trading on 15 times earnings and offering a forecast dividend yield of 2.1%, I would feel confident buying this UK share today.

An overlooked FTSE 100 star?

FTSE 100 firm DCC (LSE: DCC) is an Irish energy group. It owns a range of businesses, including LPG and heating oil suppliers and fuel stations in a number of countries. DCC also has businesses distributing technology and healthcare products to trade customers.

DCC looks well run to me, with stable profit margins and comfortable levels of debt. One attraction for me is the dividend, which has doubled since 2013. Although the current dividend yield is only 2.7%, I’m happy to accept a lower upfront yield when buying shares with a strong track record of income growth.

The shares currently trade on about 16 times forecast earnings. I think this could be a useful addition to my portfolio. I’d be happy to buy the stock today.

A UK share I’d buy for income

My final pick is Telecom Plus (LSE: TEP). This is a utility share with a much stronger record of growth than most its rivals. The reason for this is that the group is a reseller that bulk-buys gas, electric, mobile, and broadband then resells these services through its Utility Warehouse business.

Telecom Plus is still chaired by Charles Wigoder, who joined the company in 1998 and has built it into a £1.1bn FTSE 250 business. Mr Wigoder owns about 12% of the group’s shares. This suggests to me that his interests should be well-aligned with those of shareholders.

I like to see owner-management at companies, because in my experience it often results in reliable long-term returns. That’s the case here, in my view. The Telecom Plus share price has risen by 270% over the last 10 years. The dividend has doubled since 2012.

Last week’s half-year results showed profits up slightly, despite the disruption caused by the spring lockdown. CEO Andrew Lindsay expects the number of customers and services sold to increase modestly over the full year.

This UK share is up by more than 50% from the lows seen during the March stock market crash. Despite this, Telecom Plus still looks reasonably valued to me, with a forecast dividend yield of 3.9%. Given the group’s track record of growth, I’d be happy to buy the shares at this level.

Specialist engineering

FTSE 250 engineer IMI (LSE: IMI) may not be a name you’re familiar with. IMI specialises in fluid engineering – controlling the movements of fluids within larger systems. Areas where the company is active include medicine, automotive engineering, and heating and cooling systems.

A surge in demand for ventilators helped the group deliver a strong performance during the first half of 2020. IMI’s pre-tax profit rose by 1% to £94m during the six months to 30 June, despite a 5% reduction in sales.

Debt levels look very comfortable to me and IMI has a decent dividend history. However, the company has opted to reduce its payout in order to support future growth. I think this makes sense. IMI’s results suggest to me that the company is able to invest its own cash in areas that will generate attractive returns.

The shares look fairly priced to me, on 17 times forecast earnings, with a yield of 2.3%. But I think this could be an excellent buy-and-hold stock.

How to invest if you’re worried about another crash

Stock market conditions remain very uncertain, in my view. If you’re unsure how to invest in these difficult circumstances, one option is to hedge your portfolio. Rather than doing something clever (and risky) with derivatives, my approach is to own shares in IG Group Holdings (LSE: IGG).

FTSE 250 firm IG is the UK’s largest online financial trading business. Clients can place leveraged bets on the movement of a huge range of financial securities. When markets get volatile – as we saw in March and April – IG enjoys a sharp rising in trading activity.

IG’s pre-tax profit rose by a staggering 52% to £295.9m during the 12 months to 31 May. This lifted the group’s operating profit margin to nearly 45%.

Although profits are expected to be lower this year, IG has always been a highly profitable business. With the stock trading on 15 times forecast earnings and offering a yield of 5.9%, I think the shares are still priced to buy.

Buy and forget

Utility shares used to be boring and reliable. I’m not sure if this is still true, but one company that has lived up to this promise is Telecom Plus (LSE: TEP).

This group trades as Utility Warehouse and is essentially a reseller, offering its members utility services, broadband, mobile, and other home services under one bill.

Telecom Plus’s selling points for customers are value and simplicity. The group markets by word-of-mouth and a small army of self-employed agents. It’s a system that seems to work well, perhaps helped by the fact that founder Charles Wigoder still chairs the company and controls 17% of its shares.

Although the stock currently looks fully-priced on around 22 times forecast earnings, cash generation is strong, and the shares offer a forecast dividend yield of 4.2%. The payout has not been cut since 2005, suggesting that this is a fairly reliable payout.

I see long-term growth and income potential in Telecom Plus and rate the stock as a long-term buy.

The FTSE 250 stalwart owns the Utility Warehouse brand. And the company describes itself as “the UK’s only fully integrated provider of a wide range of competitively priced utility services spanning the communications, energy, and insurance markets”.

The dividend is up

The unique selling angle is the firm’s customers – which it calls members — can benefit from the convenience of a single monthly statement, “consistently good value across all their utilities and exceptional levels of service”.

But not only is the selling angle a bit different, so is the promotional model. Telecom Plus doesn’t advertise, but relies instead for its growth on word-of-mouth recommendations from its army of “satisfied” members and partners. I reckon there’s something old-fashioned about that approach (in a good way). And the strategy wouldn’t look out of place in many smaller mum-and-dad-type family businesses. 

The figures are good. In the full year to 31 March, revenue rose almost 9% year on year, and adjusted earnings per share moved 4.7% higher. The directors expressed their approval and optimism about the outlook by slapping 9.6% on the full-year dividend.

Chief executive Andrew Lindsay said in the report, the “record” results demonstrate the “resilience and strength” of the business model. He’s pleased with “how well” the company’s partners and employees have adapted to the Covid-19 environment. The effects of the pandemic on the business have been “limited”.

Counter-cyclical qualities

Lindsay reckons the business can behave counter-cyclically. It achieves that because partners (which act as salespeople) can earn money by promoting the money-saving advantages of the service. Indeed, in tough economic times, the attractions of the service can appeal even more to potential new members (read ‘customers’).

He reckons the firm’s partners are getting used to social distancing and growth is returning to pre-lockdown levels. Meanwhile, Telecom Plus has little debt, which contrasts with the billions borrowed by energy and utility companies. The energy and utility sectors are attractive for their defensive qualities. But I reckon Telecom plus, with its agency business model, provides a real alternative for investors.

Indeed, the company can benefit from the cash-generating nature of dealing in energy and other utilities. But isn’t operating under a weight of borrowings that could squash shareholder returns if things go wrong.

I think the share’s recovery from the recent stock market crash demonstrates its suitability for a long-term portfolio. We may have missed the coronavirus bottom with this share, but I reckon it remains attractive. Indeed, with the share price near 1,438p, the historical dividend yield sits just below 4%.

This small-cap operates in the Central and Eastern European spirits market, and in particular in Polish and Czech territories. It’s no small fish either. Through a stable of more than 40 brands it has managed to outperform the market in recent times in key segments like vodka. Both values and volumes are booming and are likely to continue doing so in the current climate.

Right now Stock Spirits provides great value for money. As well as sporting a forward P/E ratio of just 11 times it boasts a chunky 4.7% dividend yield too. It’s a top buy in these tough times.

Dial into big dividends

Telecom Plus (LSE: TEP) is another big-yielding safe haven I’d gladly load into my Stocks and Shares ISA.

Telecoms and utilities are two of the most popular sectors when economic conditions are trying like now. The earnings visibility of companies therein tend to be stronger than those in most other market segments. And Telecom Plus, through its role as gas and electricity supplier and broadband and mobile phone services operator, straddles both sectors.

Don’t just consider the FTSE 250 firm as the perfect lifeboat in these troubled times though. Trading at the business continues to pick up pace and Telecom Plus delivered record revenues and profits in the last financial year (to March 2020). Customer numbers have continued to climb (up 2.7% in the recently-finished period, to above 650,000) while the list of services it provides also keeps ballooning (up 6.2% to 2.69m).

The telecoms titan’s shares don’t come cheap, as reflected by a slightly-toppy forward P/E multiple of 24 times. I’d be happy to accept paying a premium price for it though, given the peace of mind (and the robust profits picture) that its range of essential services provide. Besides, a chunky 4.2% dividend yield for fiscal 2021 helps to take the edge off.

Another top ISA buy

Defence is one more popular rush-to-safety stock sector during troubled periods. Recent news flow shows that the appetites of some of the world’s major military powers to boost weapons spend remains healthy, despite the coronavirus outbreak and its far-reaching economic implications.

It’s one of the reasons I reckon BAE Systems (LSE: BA) is a great pick for ISA investors today. This particular FTSE 100 stock is, of course, a major supplier to the world’s largest defence spender, the US, where its hardware is used in planes, ships and for a wide variety of other applications. It can expect to do more business with Washington (and its allies) after it sealed a $275m deal to acquire Raytheon Technologies’s Airborne Tactical Radios division last week.

Despite these qualities, BAE Systems is pretty cheap. It carries a forward earnings multiple of around 11 times. The defence giant boasts a 4.7% dividend yield for 2020 too. I reckon it would look good in any ISA, irrespective of its obvious safe-haven appeal right now.

However, I think it’s worth remembering the UK’s second index has beaten the FTSE 100 by 45% over the last 10 years. I’m pretty sure that last month’s crash has created some bargain opportunities for long-term investors. Today, I want to share three of my top tips with you.

Focus on the future

Emerging markets often have great growth opportunities, but there can be pitfalls too. In my experience, it’s hard for private investors to do well in these remote markets. Although I’m a dedicated DIY investor, I think this is an area best left to the experts.

One of my preferred companies in this sector is emerging markets debt specialist Ashmore Group (LSE: ASHM). This FTSE 250 share has fallen by 40% so far this year. But I think this sell-off is likely to be a great long-term buying opportunity.

Ashmore is run by founder Mark Coombs, who still owns about 35% of the business. So his interests are well aligned with private investors. The group has an outstanding record of profitability and generated an operating profit margin of 64% last year.

The group has plenty of cash and has never cut its dividend since listing in 2006. At current levels, the shares offer a forecast yield of 5.5%. I don’t expect Coombs to cut the dividend. I also believe the shares — on just 11 times forecast earnings — are very cheap at this level.

I’d buy this FTSE 250 share for income

My next pick is Telecom Plus (LSE: TEP). This group sells electricity, gas, mobile and broadband to customers under the Utility Warehouse banner. But, unlike regular utilities, Telecom Plus isn’t an energy supplier, but a reseller.

This business model has proved pretty successful over the years. And although new customer recruitment — which is usually done by word-of-mouth — is likely to slow during as a result of the coronavirus pandemic, I think the firm’s profits (and dividend) should be fairly stable.

The market seems to agree — the Telecom Plus share price has only fallen by 17% this year, compared to a FTSE 250 fall of 34%.

I see this share as a good long-term buy for income. Telecom Plus generates plenty of cash and I think the current 4.5% yield will be safe. I’d be a buyer at this level.

This FTSE 250 stock could double

My last pick might seem risky, but hear me out. Kingfisher (LSE: KGF) owns B&Q and similar chains in France and Eastern Europe. The group also owns Screwfix, which has grown very strongly over the last few years.

Unlike some retailers, Kingfisher has come into this crisis with almost no debt and strong free cash flow. This has left the group in a much better state to survive the coronavirus pandemic than some other retailers.

A second attraction is that, so far, the group’s stores have been classified as essential businesses and allowed to remain open. So, although trading is likely to be down, Kingfisher is still generating revenue.

New chief executive Thierry Garnier is determined to return the business to growth. I think he’ll succeed. And with this FTSE 250 share trading on just 7 times forecast earnings, I think there’s plenty of upside potential for patient buyers.