Up 60% in 2025, this FTSE 250 stock still yields 5.7%!
There can’t be many stocks that have jumped in value this year and still offer a very chunky dividend yield. But I’ve spotted one from the FTSE 250 that I suspect is flying under the radar of plenty of income chasers.
What is this ‘secret’ FTSE 250 stock?
The stock is question is Ninety One Group (LSE: N91). Formerly a part of Investec, the investment manager has a focus on emerging markets, such as Asia, Africa and Latin America. Its share price has been charging ahead in 2025. A gain of 60% vastly outperforms that of the mid-cap index (+7%).
So what’s been going so right?
Well, assets under management have been growing at a fair clip. Indeed, this hit £140bn by the end of June as investors grew keen to revisit previously out of favour markets, including the UK. That means higher fees and, ultimately, revenue.
Ninety One has also been expanding via the acquisition of Sanlam’s UK active asset management arm. Sensing this will unlock growth in time, brokers have been raising their price targets on the shares.
Above-average dividends
But Ninety One’s shareholders haven’t just seen the value of their stakes shoot upwards this year. They also received a dividend of 6.8p per share in August.
As things stand, the stock has a dividend yield of 5.7% for FY26 (which ends in March 2026). In addition to being way above the yield of the FTSE 250 as a whole (3.5%), this looks set to be covered by expected profit.
All this makes a valuation of 13 times forecast earnings look decent, both relative to the Financials sector and the market as a whole.
What if the market turns?
Like all asset managers, Ninety One’s ability to keep its share price heading up is heavily dependent on money continuing to come in. This will depend on a few things.
First, its funds will need to perform well and better than those of rivals. Currently, this is not the case with at least some of them. If this continues, retaining clients could become harder.
More generally, business could suffer if markets begin to struggle. A crash — and the widespread panic it generates — could do real damage to revenue.
Going back to the dividend stream, I can also see that Ninety One’s distributions have been a bit volatile since it started paying them in 2020.
To be fair, it only became an independent entity in that pandemic-ravaged year so we don’t really have sufficient data to make a judgement on whether this form is likely to continue. But ideally, I want to see an unbroken streak of hikes.
Worth considering
Taking into account the concerns mentioned above, placing too much weight on Ninety One to keep that cash flowing in is risky. Then again, I’d say the same thing about any listed company.
However, I also reckon the £2.1bn cap is a decent example of a lesser-known mid-cap to consider buying as part of a full-diversified portfolio, especially by those looking to replace or add to their primary income while also getting a bit of growth in the mix.
Half-year results — due on 17 November — will be worth reading.
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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
