In a recent article I sang the praises of Hargreaves Lansdown, a FTSE 100 share whose scintillating profits outlook means I’d be happy to buy it with my final investment pennies.
The financial services star offers the perfect blend of growth and income, not just now but in the years ahead. This great combination makes Countryside Properties (LSE: CSP) from the FTSE 250 a great stock to buy today too. And thanks to the scale of the UK’s housing shortage, an ultra-safe place to stash your hard-earned cash.
The housebuilding colossus certainly impressed last time it unveiled trading numbers in January, and a string of market updates from its peers since then has underlined just how robust conditions remain for these construction stocks.
Just this week, Persimmon celebrated a 13% pre-tax profit jump in 2018, to £1.1bn, and lauded government policy that is “very supportive of the housebuilding industry.” Government policy needs to remain so in order to solve the country’s yawning supply/demand imbalance too, a point underlined by the Conservative’s vow to keep its Help To Buy support scheme for first-time buyers running until 2023 at least.
Dividends boom
This provides investors in the likes of Countryside with some peace of mind for the coming years. Questions remain over the impact that Brexit will have on the broader housing sector, but I would argue that these concerns are more than reflected by this firm’s low, low forward P/E ratio of 7.7 times. Besides, I’m not expecting profits to tank for the newbuild specialists, given that the government still hasn’t delivered a robust plan to supercharge build rates to meet soaring demand in the coming years.
Reflecting this bright outlook, City brokers expect Countryside Properties to deliver earnings growth of 13% and 12% in the years to September 2019 and 2020, respectively. Given that the homes market is currently at its weakest for decades, this is a pretty encouraging endorsement, right?
And the good news continues with predictions of more tasty dividend growth, last year’s 10.8p per share reward anticipated to rise to 12.3p this year and again to 13.8p for fiscal 2020. Such projections yield a massive 3.9% and 4.4% and cement my opinion that Countryside is a great income share to snap up today.
Social climber
Civitas Social Housing (LSE: CSH) is another big-yielder that I’d snap up today on the back of Britain’s housing crunch.
Indeed, a lack of adequate supply in the affordable homes space in particular, an area in which this FTSE 250 firm specialises, has become a particularly hot political potato in recent years, and huge government investment here gives Civitas’ profits prospects a huge shot in the arm.
City analysts expect the real estate investment trust to keep swelling over the next few years at least, helped by the company’s thirst for acquisitions (Civitas acquired another 36 properties during the three months to December alone). And this supports predictions of further dividend growth too, the 3p per share payout of the year to March 2018 expected to rise to 5p and 5.2p in fiscal 2019 and 2020, respectively.
Its bright long-term outlook means that I don’t care about a slightly toppy forward P/E ratio of 19.6 times. I’d happily buy it and cling close for many years to come. Besides, jumbo dividend yields of 5.1% and 5.3% for this year and next, respectively, help to take the sting out of its expensive rating.
