After remaining rangebound for most of the year, tailoring titan Moss Bros (LSE: MOSB) has seen its share price go ballistic in recent weeks as investors piled in during the run-up to latest trading numbers.
Its value has risen 15% since the start of May, hitting three-year peaks of around 115p in the process. And I reckon the retailer has scope for further gains.
Moss Bros advised last week that total sales during the 15 weeks to May 15 had grown 3.7% from a year ago, with like-for-like revenues up 2.3%. And underlying retail sales had risen 5.5% thanks to the strength of new ranges and the growing popularity of its online proposition (e-commerce sales detonated 14.7% in the period).
There is no doubt that Moss Bros will have to remain on its toes as consumer spending power comes under intense pressure — indeed, chief executive Brian Brick commented that “we continue to be acutely aware of the economic headwinds which we will face for the remainder of the financial year” as input costs rise and real wage growth slows.
Having said that, I have confidence that Moss Bros can beat the worst of these troubles as the massive investment the firm has made in its ranges, not to mention internet and high street operations, pays off.
Payout powerhouse
Against this backcloth it comes as little surprise that City analysts expect earnings to keep rattling higher. Indeed, current projections indicate that growth of 6% and 5% for the years to January 2018 and 2019 respectively can be expected.
And this impressive outlook lays the groundwork for dividends to keep heading northwards too. Last year’s 5.89p per share is expected to rise to 6.2p in the current period, and then to 6.5p next year.
Consequently the suiter-and-booter sports gigantic yields of 5.5% and 5.7%, smashing the 3.5% average for Britain’s blue-chips to smithereens.
Bricks beauty
And those seeking above-average dividends need to check out Forterra (LSE: FORT) too. Like Moss Bros, the masonry product maker has been no stranger to rampant buying activity in recent times, the stock hitting record peaks above 260p.
Investor faith was rewarded with the release of strong financials this week, Forterra advising that trading in the four months to April “has been good, building on the momentum seen towards the end of 2016,” with revenues up 6% year-on-year.
A robust new-build residential market saw brick sales volumes “well ahead” of the same period last year while, reassuringly, Forterra affirmed that it has successfully passed on increased costs to most of its customers.
So, unsurprisingly, City brokers expect it to generate earnings growth of 8% and 10% in 2017 and 2018 respectively, figures that are expected to fuel further dividend expansion. Indeed, last year’s 5.8p per share payout should rise to 9.1p and 10.1p this year and next, figures that yield 3.6% and 3.8%. And I reckon dividends should keep rolling higher given the robustness of Forterra’s end markets.
