The appeal of GCP Student Living (LSE: DIGS) as an income stock is twofold. Firstly investors can get access to a decent — if admittedly not exactly spectacular — dividend yield of 3.6% for the current fiscal year (to June 2020), created by an anticipated 6.3p per share payout.
Secondly, the student accommodation provider has raised annual dividends for the past five years and looks in great shape to continue hiking them well into the next decade too.
Admissions into UK universities are booming, not just from homegrown students but from all over the world. A whopping 86% of all GCP’s beds are taken by foreign nationals, a fact helped in no small part by the location of its property portfolio bang in the middle, or just outside, London.
There’s a colossal shortage of available properties and this is driving rents at GCP steadily higher (up 4.4% on a like-for-like basis in the current academic year).
And through steady expansion, the small-cap’s in a great position to capitalise on this fertile landscape, making GCP worthy of a hefty forward P/E multiple of 27.9 times, in my book. City analysts are predicting a 19% earnings rise in the current financial period alone.
The flying dividend machine
BBA Aviation (LSE: BBA) is another share I’d happily buy for next year, despite the possibility of some turbulence in North American air traffic as the economy there cools. I’m particularly tempted by the prospect of more dividend growth, a 15.5 US cent per share currently being forecast, which yields a chunky 4%.
I’ve long lauded BBA and the steps it’s taken to expand its geographic footprint and range of aviation services through a mix of colossal organic investment and gamechanging M&A.
Sure, the business and general aviation market in the States might be flat at present — it grew just 0.3% in the six months to June — though these measures should set the FTSE 250 firm up to ride a booming market once the US and global economies pick up momentum.
Set to soar?
Indeed, according to a report by Honeywell Aerospace, there are expected to be around 7,600 new private jets introduced to the market between 2020 and 2029, around 60% of which will be hoovered up by clients in BBA’s main territory of North America.
This growth is expected to be underpinned by soaring demand from multinational business and a booming list of mega-rich clients, helped by a stream of “new and innovative aircraft models” with better performances and providing improved customer experiences.
At current prices, BBA carries a P/E ratio of 18.2 times for 2020, a little above the widely-accepted value watermark of 15 times and inside. I consider, though, this a premium worth paying, given the company’s robust long-term outlook and the steps it’s taking to consolidate its position in this market.
It’s a share, like GCP Student Living, that I’d buy today and hold through the next decade, at least.
