Are BT plc, ITV plc And Travis Perkins plc The Perfect Dividend Picks?

BT plc (LON: BT-A), ITV plc (LON: ITV) and Travis Perkins plc (LON: TPK) are set to grow their profits, and their dividends, well into the future.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

What should you look for in a company to invest in? Well, I would say it should be strongly profitable and growing, with a rising dividend. But finding such businesses is far from easy, in an environment where many firms’ earnings are being crunched. However, here are three companies with just these attributes.

BT

BT (LSE: BT-A) has grown from being solely a giant company providing telephone, to an even bigger IT services, mobile and fixed line telecoms, internet and broadcasting business. In doing so, it has become one of the winners in the shakeout of British media and telecoms firms over the past decade.

BT’s success has meant increasing profits, and a steadily climbing share price. And a quick look at the earnings per share progression shows the pace of this growth.

2013: 23.70p

2014: 24.50p

2015: 26.10p

2016: 31.0p

2017: 33.40p

Yet this company still looks reasonably priced, with a 2016 P/E ratio of 14.32, and a dividend yield of 3.18%. BT combines steady growth at a reasonable price, with a juicy income to boot.

ITV

Adam Crozier’s stewardship of ITV (LSE: ITV) has led to rocketing profits, as this firm has expanded its programming, the number of TV channels it offers, and its global reach. Hits like Downton Abbey and Foyle’s War have many viewers not just in Britain, but around the world.

This has led to earnings per share to push upwards from 8.10p in 2013 to an estimated 19.18p in 2017. The share price languished below 100p in the aftermath of the Credit Crunch, but today it has reached 239p.

And the company still looks like good value at a 2016 P/E of 13.39, with a tempting dividend yield of 3.06%. The tech revolution hasn’t meant the end of television, but it has revolutionised the way it’s delivered. All this makes ITV a clear buy.

Travis Perkins

So we have a telecoms business, and a broadcaster. By complete contrast, Travis Perkins (LSE: TPK) is a building materials and product distribution company. It may not be a household name, but one business it owns is. That’s the Wickes DIY retail chain. But there’s more and Travis Perkins also supplies building materials to firms such as Barratt Developments and Wimpey.

And this is a business that has been growing steadily in recent years, and is set to profit as the housing boom rolls on. That’s why earnings per share are estimated to progress from 105.70p in 2013 to 151.94 in 2017.

So, like BT and ITV, Travis Perkins is a growing company that is likely to do well into the future. And its stock is selling at a 2016 P/E ratio of 13.16, with a dividend yield of 2.82%. Again, the share price has risen considerably already, but I see no reason why it can’t go higher still. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »