Building a diversified portfolio of FTSE 250 shares is a great way to consider building long-term wealth. Spreading capital across a variety of mid-cap UK shares spreads out risk. It also allows an individual the chance to capitalise on multiple investment opportunities.
One way investors can diversify is by buying a selection of value, growth and dividend shares. The first two categories can provide significant capital appreciation over time. The final one can provide a stable income over longer periods that can be reinvested to amplify compound gains.
With this in mind, here are three top FTSE 250 shares for new ISA investors to consider today.
Value
A rapid rise in weapons spending bodes well for defence businesses like Babcock International Group. But unlike fellow industry heavyweights such as BAE Systems, this particular share still looks dirt cheap, on paper.
For this financial year ending March, Babcock trades on a price-to-earnings (P/E) ratio of 11 times. This makes it one of the cheapest defence stocks currently listed on the London Stock Exchange.
On top of this, the firm’s price-to-earnings growth (PEG) ratio’s just 0.3 for this fiscal period. This is below the widely accepted value benchmark of 1 and below.
Babcock, which provides engineering and training services to armed forces in the UK and overseas, saw revenues soar 11% year on year In the six months to September.
Supply chain issues remain a threat to this defence stock. But I think this is more than baked into Babcock’s rock-bottom valuation.
Growth
Building materials suppliers aren’t out of the woods just yet. Brickmaker Ibstock (LSE:IBST) remains vulnerable to the Bank of England keeping interest rates in or around current higher-than-normal levels, denting the housing market recovery.
However, I’m optimistic the FTSE 250 company can cast off its troubles of recent years. Home sales data”s strengthening and may continue to if (as expected) rates are cut and competition among mortgage providers heats up.
In this landscape, construction could rise substantially from recent levels. Several major UK housebuilders have already pledged to kickstart building activity from 2025 onwards. This is why City analysts expect Ibstock’s earnings to soar 37% and 34% in 2025 and 2026 respectively.
Given the advanced age of Britain’s housing stock, the firm can also expect robust demand from the repair, maintenance and improvement (RMI) sector.
Dividends
The FTSE 250’s packed with great real estate investment trusts (REIT) to buy. These firms are designed for income investors, as sector rules state at least 90% of rental profits must be distributed in the form of dividends.
Supermarket Income REIT‘s (LSE:SUPR) one of my current favourites. And it isn’t just because its dividend yield of 9.2% for this financial year (to June) is a sector high.
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It’s also because the company’s consistently raised dividends in spite of weak economic growth and inflationary pressures in the UK. This reflects the trust’s focus on the ultra-defensive food retail market, allied with its blue-chip tenant list that includes FTSE 100 grocers Tesco and Sainsbury’s.
Supermarket Income’s share price may struggle to grow if interest rates remain around current levels. But the prospect of more large and dependable dividends still makes it worth considering, in my book.
This post was originally published on Motley Fool
