Stock market

I’d take this FTSE 250 stock for juicy returns and growth in a heartbeat!

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FTSE 250 Responsible Tri-tax Eurobox (LSE: EBOX) is a stock I plan to buy as soon as I have some investable cash.

I think it would be a no brainer to help me grow my wealth through dividends and capital growth!

Here’s why.

Could falling interest rates boost stocks?

Tritax is incorporated as a Real Estate Investment Trust (REIT). It simply means that it is a property business that must return 90% of profits to shareholders in return for tax breaks and other incentives. This type of shareholder return policy is an attractive feature that I find myself drawn to.

Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content in this article is provided for informational purposes only. It is not intended to be, nor does it constitute, any tax advice.

Higher interest rates have pushed down many stocks, such as tratex, as property prices have suffered, and borrowing costs have risen. With the prospect of interest rate cuts more realistic now than in recent months, I think shares could soon rise.

Shares are down 3% over the 12-month period, trading for 57p as I write, compared with 59p last year. However, I think this is where the value is. So, I’m looking to buy some shares before the price possibly goes up.

Risk vs reward

Tritax’s dividend yield of over 7% is very attractive. In addition, it is much higher than the FTSE 250 average of around 2%. However, I understand that profits are never guaranteed.

Breaking down Tritax’s valuation, the shares look reasonable value for money, in my opinion. They currently trade at a price-to-earnings ratio of around 13.

Next, the demand for logistics and warehouse space has grown rapidly in recent years, particularly in the UK. This is mainly due to the boom in e-commerce and changing shopping habits. I know I tend to buy lots online, compared to visiting my high street once again. Looks like I’m not alone.

Businesses need warehouse spaces to meet this demand, and that’s where Tritax comes in. This means growth could be on the cards for REITs.

I think the biggest problem that Tri-Tax is facing is the continued economic problems. Let me be clear, there is no guarantee that interest rates will be cut. Besides, even if they are, no one can tell when it might happen, or how much.

Because of this, Tritax may still face problems such as limited growth opportunities due to high borrowing costs. In addition, continued unrest may undermine existing rental agreements. Overall, performance and returns may suffer here. I will be watching closely.

Fortune favors the bold.

Despite Tritax’s fortunes being tied to the economy, the reward far outweighs the risk. Being overly cautious could mean I miss a great opportunity. However, it would be remiss of me not to consider the downsides.

A big part of Tritax’s ability to move forward is the changing face of procurement, as well as the underserved European market. With a decent set of fundamentals, I think there’s more than enough meat on the bones for me to take advantage of here.


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