The company made no mention of any upcoming payout cuts when it updated the market last week. Instead it will make a decision on whether to pay a full-year dividend for the current year (to April 2020) when “a clearer view on the scale and duration of the impact of COVID-19” becomes apparent in the summer.
But be prepared, I say. Difficult times for the UK economy could see sales for its big-ticket items fall off a cliff. The FTSE 250 retailer saw electrical sales surge 23% in the prior three weeks to the release. This reflected quarantined Britons loading up on laptops, TVs, and the like. This is undoubtedly a flash in the pan, though, and I expect revenues to settle back to their depressing norms before long, with weakness in its mobile operations in particular set to dominate.
I don’t care about Dixons Carphone’s giant 8% forward dividend yield. I for one am avoiding this share at all costs.
More big yields!
It’s not all bad news, though. Plus500 (LSE: PLUS) is one share I’d be very happy to invest my hard-earned investment pennies into today.
This FTSE 250 dividend stock is the biggest online trading platform provider for contracts for difference (or CFDs) in Europe. And it is doing a roaring trade at the moment as the coronavirus crisis creates mass volatility on financial markets.
Plus 500 said in mid-March that it had witnessed “a significantly increased level of customer trading activity alongside strong momentum across all financial and operational KPIs.” Heightened levels of market volatility means that revenue from customer income has been “very strong” it added, while it has also enjoyed gains from customer trading performance.
It said that uncertainty over how long current volatility will last – allied with the impact of regulatory changes in Australia – means that the full-year outcome is difficult to predict. What it did say, however, was that “we expect revenue and profitability for the full year to be substantially ahead of current consensus expectations.”
A better FTSE 250 dividend stock
It’s no big surprise, then, that Plus500’s share price has actually risen while broader equity markets have remained under pressure. It recently touched one-year highs above £11 per share, in fact. It’s fair to expect the company to continue marching higher, too, as spreading infection rates, and a likely rise in government lockdown measures in response, likely keep investor nerves on edge.
What’s more, Plus500’s share price is low enough to support more meaty gains. A forward price-to-earnings (P/E) multiple of 8.1 times sits well inside bargain-benchmark territory of 10 times or above. This reading’s particularly attractive when you consider the strong possibility that brokers will be frantically upgrading their earnings forecasts when first-quarter financials come out on 7 April.
As I said earlier, Plus500 is a particularly attractive stock choice for income investors. This is due to its mighty 5.7% dividend yield. There are some long-term regulatory issues that the trading giant still has to hurdle. At recent prices, though, I reckon it could be considered too good to pass up on. And particularly as payout cuts continue across the rest of the market.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.