2 growth and dividend stocks for shrewd investors

Royston Wild looks at two shares with brilliant all-round investment appeal.

| 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.

Ibstock (LSE: IBST) found itself trending lower in Thursday business following the release of half-year numbers. The stock was last down 6% from the mid-week close and peeling further away from the summer’s record peaks of 260p.

But there was nothing in the release to suggest a sudden souring in investor appetite. The brickmaker announced that revenues soared 8.7% during January-June, to £228.3m, a result that powered pre-tax profit 2.7% higher to £38.9m.

The Group has delivered a robust first half performance,” chief executive Wayne Sheppard commented. “UK brick volumes were well ahead, driven by good activity levels in the UK new-build housing sector and our concrete businesses also enjoyed solid growth.”

And Sheppard remains broadly optimistic looking ahead, noting that “the longer term fundamentals underpinning the new-build housing market in the UK – government support, good mortgage availability and an under-supply of new homes – remain in place, although we continue to be alert to any changes in customer confidence stemming from political uncertainty after the recent General Election result and the ongoing Brexit negotiations.”

A rosy future

There is nothing hugely alarming in Ibstock’s latest release that would cause me to revise my bullish take on the business. Indeed, the upcoming opening of its 100m-brick capacity plant in the fourth quarter should give revenues an extra shot in the arm — the new facility will raise group capacity by 13% when fully operational.

Instead, I would view today’s weakness as a non-surprise given the huge share price gains Ibstock has chalked up over the past six months, during which time it had gained more than 30% in value up until today’s release.

The City expects the Leicestershire company to enjoy a 4% earnings rise in 2017 alone, and to follow this with a 12% advance next year. And these projections create pretty good value for money, the building materials play dealing on a forward P/E ratio of just 12.5 times.

There is plenty for dividend chasers to get excited about, too, Ibstock’s solid earnings picture and excellent cash generation expected to keep dividends shooting higher. 2016’s payment of 7.7p per share is expected to rise to 8.4p and 9.6p in 2017 and 2018 respectively. And these forecasts also create meaty yields of 3.6% and 4.1%.

Be bowled over

I also reckon Hollywood Bowl (LSE: BOWL) should be on the watchlist for those seeking great growth and income shares.

While the bowling behemoth is expected to endure a 20% bottom-line fall in the year to September 2017, it is expected to come roaring back with a 17% rise in the upcoming year. This projection also makes Hollywood Bowl brilliant value, the stock boasting a P/E rating of 14 times, and PEG reading of 1, for fiscal 2018.

And those seeking meaty dividend growth should also give the company serious attention, a predicted 5.4p per share for the outgoing year being up from 0.19p in 2016 and yielding 3.1%. Furthermore, the 6p reward anticipated for 2018 nudges the yield to 3.5%.

With tenpin fever in the UK steadily on the rise, and Hollywood Bowl capitalising on this trend with its alley refurbishment and expansion scheme, I reckon investors can look forward to solid returns looking ahead.

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.

Royston Wild owns shares in Ibstock. The Motley Fool UK has recommended Hollywood Bowl. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

3 essential factors for investors to consider when aiming for passive income success

Mark Hartley outlines three of the most important considerations investors are faced with when attempting to secure a lucrative passive…

Read more »

Investing Articles

£10,000 invested in Barclays shares 1 month ago is now worth…

Barclays shares have carried on where they left off in 2024, by climbing far faster than the FTSE 100. Harvey…

Read more »

Investing Articles

I’ve been watching the easyJet share price like a hawk. Here’s what it did last week

Harvey Jones can't take his eyes off the easyJet share price. He thinks it looks good value and ready to…

Read more »

Investing Articles

A £10,000 investment in Nvidia stock 6 months ago is now worth…

Nvidia stock's shown a lot of volatility for a mega-cap company in recent weeks. Dr James Fox explores how an…

Read more »

Investing Articles

4 reasons Ferrari could continue to be a stock market winner

The global luxury goods market may have struggled in recent years, but you wouldn’t guess that from Ferrari’s soaring stock.

Read more »

Investing Articles

5 perfect starter stocks to consider for a Stocks and Shares ISA in 2025

Wondering which shares to buy for a newly opened Stocks and Shares ISA? Our writer thinks these five investments are…

Read more »

Row of terrace houses.
Investing Articles

Thinking about buy-to-let? Consider these UK stocks instead

Owning UK property stocks could be a better way to invest in buy-to-let, though there are drawbacks. Royston Wild explains.

Read more »

Investing Articles

Here’s a plan to target £7,500 a month in passive income

This writer outlines a roadmap that someone could consider taking to try and aim for a substantial future passive income…

Read more »