The planet is edging closer and closer to complete standstill. People are staying at home in larger and larger numbers as the coronavirus rips through global populations, whether that’s voluntarily or at the behest of authorities.
It’s a crisis that we’re a long way from coming out of too. President Trump yesterday suggested the pandemic could last beyond August.
From an investment perspective then, it’s essential to have exposure to shares which will defy the likely washout of corporate profits in 2020 and possibly beyond. Unilever is one share I suggest could remain in rude health, thanks to its broad range of market-leading soaps and other personal hygiene products. I believe Unite Group (LSE: UTG) is another.
Chugging along
Unite’s in a very different field to Unilever. But comments from the student accommodation provider this week have helped soothe fears of a shocking profits slump.
It said there’s been “no noticeable impact to date on Unite’s sales performance for the 2020/21 academic year” due to the coronavirus. Both sales and enquiries to foreign students remain in line with prior years, it added. And a reservation rate for the upcoming academic period, of 77%, matches the figure reported at the same point in 2019, it added.
In addition to this, Unite claimed it doesn’t expect the impact of Covid-19 on its earnings “to be material.” Still, it plans to take action to offset any bottom-line stress associated with the pandemic by scaling back business activity over the summer to reduce variable costs. Summer business accounted for just 3% of the group total last year, the FTSE 250 firm noted.
5%-plus dividend yields
The fight against the pandemic remains in its relatively early stages. And there could be more twists and turns to come. Still, for the time being, trade at Unite continues to rattle along at a reassuring level. And it’s hoped actions by global governments to tackle and contain will cause the impact of the virus to decline well before the start of the academic year in October.
City analysts have kept their predictions of healthy earnings growth at Unite unchanged in the wake of Monday’s trading update. They expect annual earnings to rise 16% in 2020. What’s more, the number crunchers anticipate more strong growth next year (a 15% increase is currently estimated).
These predictions make the business pretty good value for money too, following recent heavy share price weakness. Its forward price-to-earnings (P/E) ratio currently sits at 17.2 times. Unite has long traded on a multiple in the mid-to-late 20s. There’s much to celebrate for income chasers too, as the student digs supplier carries dividend yields of 4.9% and 5.7% for 2020 and 2021 respectively.
Unite has fallen a whopping 42% in value during the past month. In my opinion this represents a brilliant buying opportunity. Even if the company suffers a hit to near-term profits, the long-term outlook for this business remains extremely robust. This is a top stock for dividend chasers to consider today.
