I reckon the market continues to undervalue the impressive top line momentum over at RSA Insurance Group (LSE: RSA), and that now makes it a great time for eagle-eyed investors to pile in.
The company saw net written premiums gallop 14% higher during January-March, it advised last month, to £1.7bn, while at constant currencies they rose 4%.
Clearly, sterling’s crash lower has helped to inflate the top line more recently, but this is not the whole story as underlying demand for RSA’s financial products continues to move steadily skywards. Indeed, volume growth accounted for 2% of the growth enjoyed during the first quarter.
In Scandinavia and Canada, premiums rose 2% and 6% at stable exchange rates, while in the UK, premiums stomped 7% higher.
Record breaker
So while RSA has seen its share price march to record highs above 630p per share this week, the firm still offers irresistible value at current share prices in my opinion.
For 2017, an expected 10% earnings rise leaves the FTSE 100 giant dealing on a forward P/E ratio of 14.5 times, below the yardstick of 15 times or below what is widely considered excellent value. And RSA is expected to keep its long-term growth story running in 2018 with a 19% advance.
Its bright profit outlook is expected to keep powering dividends skywards. The insurer is expected to pay a 21.7p per share dividend this year, up from 16p in 2016 and producing a chunky 3.4% dividend yield. For 2018, the yield leaps to 4.7% thanks to an estimated 29.4p reward.
Bottle up bumper returns
Juice giant Britvic (LSE: BVIC) is another London stock offering plenty of excitement to dividend chasers.
Although the business is expected to endure a rare earnings dip in the 12 months to September 2017 — a 2% decline is currently anticipated — this is not expected to put a dent in Britvic’s long-running progressive dividend policy. A 25.4p per share payment is currently estimated for the year to November 2017, up from 24.4p and yielding 3.6%.
Moreover, the estimated dividend steps to 26.6p for next year, supported by a predicted 5% profits improvement and nudging the yield to 3.8%.
And current earnings projections also make the Robinsons and J2O maker a great value pick, the business trading on a forward earnings multiple of just 14.6 times.
Britvic saw revenues increase 11.5% during the six months to March, to £756.3m, with organic sales bubbling 3.7% higher during the period. This helped earnings before exceptional items rise 6.7% year-on-year to £73.6m.
The Hertfordshire firm saw all of its units reporting growth during the period. And while the company may face increased headwinds in the UK as rising inflation crimps shopper spending power, I am confident Britvic’s cluster of market-leading labels should allow it to deal with the worst of these problems.
Besides, it can also look to its international divisions to deliver brilliant sales rises, and particularly as the company ramps up its exposure to the white-hot growth markets of the Americas.
With Britvic also stepping up measures to drive cost efficiency, I fully expect dividends at the company to keep growing at a healthy rate.
