I’ll admit it: there is something romantic about the idea of finding an old piece of furniture, reworking it, and selling it for a huge profit.
Over the previous several years, upcycling has taken off. People are creating online businesses by rummaging around for old treasures and they’re reducing waste at the same time.
Good idea for earning some extra income, then?
I don’t think so.
As with anything, the image you have in your mind, of stumbling across a piece of treasure in an antique yard will probably never happen. Instead, you’ll be searching low and high for a gem. Once you’ve found it, the hard work starts.
Take an old cabinet, for example. You might need to sand it down, give it a couple of coats of paint, varnish it and then change the handles. Then you’ll have to list it on your online store, answer enquiries, negotiate the price, and finally sell it.
It sounds like a lot of hassle for what are potentially thin margins. I think buying the dividend stocks below could be a better bet when it comes to providing a regular source of income, with a lot less aggravation.
Kingfisher
This stock appears to be cheap at the moment, and I believe it is trading at a price below its intrinsic value. Kingfisher’s (LSE: KGF) price-to-earnings ratio is below 12 at the moment and has a prospective dividend yield of 5%.
Its stock price has dropped by over 30% in the past two years, partly due to the extremely weak growth of revenue over the period, and to a drop in profit.
In its third-quarter trading update to the end of October 2019, Kingfisher reported its group sales were down by 3.2% when measured in constant currency.
All this information indicates a company that is struggling. But like my fellow Fool, Rupert Hargreaves, I believe the business’s new CEO, Thierry Garnier, could end up making positive changes.
In the Q3 update, Garnier admitted the results were disappointing. At the time, he had only been in his new role for eight weeks, but his early assessment attributes the lacklustre results to organisational complexity, and not getting the benefits of group scale.
Garnier has made three new appointments to his executive team to help address these problems.
British American Tobacco
With customer behaviour changing, and a perhaps inevitable move towards more people vaping, British American Tobacco’s (LSE: BATS) share price has dropped by almost 30% in the past two years. That being said, the share price has rebounded, with a gain of 20% in the past three months. What is going on?
Regulatory changes are always going to cause a headache for tobacco companies. However, BAT believes that some new regulations being brought in by the US Federal Drug Administration could have a positive impact on its business.
The guidance, which will affect the vapour market in the US, has highlighted the issue of preventing access and appeal of vapour products to younger people, while acknowledging that a properly regulated vapour category provides a credible alternative to smoking. BBAT’s subsidiary, Reynolds American Inc., is reportedly ready to comply with the new flavour guidelines.
This news could ensure the company is well-positioned in the future market.
