Over the past two years, easyJet (LSE: EZJ) shares have been up and down almost as often as its planes. But that erratic spell comes at the end of a five-year period that has seen a 280% price rise, to 1,446p, while earnings per share (EPS) and dividends kept on growing.
First-half results should be with us on 10 May, but will that help settle the nervous jitters? Although there’s a slowing of growth on the cards with an EPS rise of only 5% forecast, easyJet’s March statistics showed a 4.3% rise in passenger numbers over the same month a year previously, and a 7.2% rise in the rolling 12-month count.
Even if this year doesn’t beat that 5% growth prediction, the further 15% EPS rise forecast for 2017 would drop easyJet’s P/E to under nine! Some safety factor is justified due to the inherent risk with airlines, but easyJet shares just look too cheap to me — especially with very well-covered dividend yields of 4% and 4.8% pencilled-in for the next two years.
Steady cash
Speaking of dividends, the cash cow that is SSE (LSE: SSE) is set to deliver full-year results on 18 May, and we should be seeing an inflation-beating rise in the annual cash payment once again — and with the shares at 1,505p, the yield should reach 6%.
That’s not a flash in the pan either, as SSE has been consistently handing out yields around that level for years, in line with its policy of maintaining dividend rises “of at least RPI inflation“. This year’s should be safe, as the company has already confirmed it at the halftime reporting stage in January.
EPS growth should continue in single-digit percentages, and that’s enough to keep SSE shares on a P/E of only around 13.5. That’s below the FTSE average, with dividend yields around twice the average. SSE shares seem like a must-have for any diversified portfolio.
A rising dividend star?
Also on 18 May, we’ll be getting full-year results from Burberry (LSE: BRBY). Earnings growth at the fashionista has been slowing dramatically, from double-digits a few years ago, to just 2% last year — and we even have an 8% fall expected for the year just ended in March. A lot of that is down to China, which is a big market for Burberry clobber, and the wealthy there have been tightening their fashionable Burberry check belts in line with that country’s slowdown and a bit of an austerity drive.
Burberry shares have responded with a 36% fall since late February 2015, to 1,185p, but that could be a bit of an over-reaction. Longer term, Burberry’s market should continue to thrive, with forecasts suggesting a return to decent earnings growth by March 2018.
In the meantime, Burberry’s dividend has soared from 20p per share in 2011 to 35.2p in 2015 — and though rises are set to slow in line with earnings, they should still beat inflation and should give us a yield of 3.3% for 2018.
