While Tritax Big Box (LSE: BBOX) may not be completely immune to the impact of Brexit on the domestic economy, I reckon the company’s bias towards top-quality, modern facilities should provide the base for solid earnings and consequently dividend growth.
As Tritax notes: “Many of our properties have an e-retail focus and/or automation aiding home deliveries or store replenishment.” With online shopping sales continuing to surge — the Office for National Statistics noted that UK internet sales climbed 22% year-on-year in September — and retailers slashing costs to ease margin pressures, I’m confident demand for Tritax’s vast spaces will remain robust.
And I believe the company’s aggressive expansion drive should keep earnings chugging higher long into the future too.
Just this month Tritax exchanged contracts on the purchase of logistics facilities in Birmingham and Northamptonshire — sites currently let to Euro Car Parts and Whirlpool respectively — for a combined £115.5m. This was followed by a £56.5m agreement to buy a distribution warehouse and lorry parking facility in Thurrock, currently let to The Co-operative Group.
Under real estate investment trust (or REIT) rules, the likes of Tritax are required to distribute 90% of taxable income in the form of dividends. This bodes extremely well for the company’s income-hungry stakeholders, in my opinion.
Indeed, with Tritax expected to enjoy a 10% earnings rise in 2016, the City has pencilled-in a 6.2p per share dividend, resulting in a market-mashing yield of 4.5%. And a predicted 6% bottom-line charge in 2017 is expected to nudge the total payout to 6.4p, creating a jumbo 4.7% yield.
Full of fizz
Investor appetite for pub operator Greene King (LSE: GNK) has seeped through the floor in recent times, the stock last dealing at 22-month lows below 720p per share.
Of course the leisure sector remains in danger of falling very fast should Brexit pains dent its customers’ wallets. But Greene King’s tills are still picking up the pace, and like-for-like sales rose 1.7% in the 18 weeks to September 4, up from 1.5% in the year to April and outperforming the wider market.
And the FTSE 250 (INDEXFTSE: MCX) giant is confident that its brand improvement drive, a strategy that will see it investing vast sums of money in its core fascias like Hungry Horse and Flaming Grill, should create terrific revenues opportunities looking ahead. Meanwhile the firm should also benefit from hefty cost synergies associated with its acquisition of Spirit Pub Company last year.
City brokers share this positive take, and expect Greene King to print earnings rises of 3% and 4% for the years to April 2017 and 2018 respectively.
And these bubbly bottom-line forecasts are expected to feed into dividends of 33.8p and 35.7p for these years. Consequently Greene King boasts very good yields of 4.7% and 5% for 2017 and 2018.
