Finding investments that can deliver a lifelong income isn’t easy. But I think the FTSE 250 shares I’m looking at today both have a good chance of delivering on this goal.
Both companies have paid dividends continuously for over 25 years. And both look decent value to me after this year’s market sell off.
Rotork: engineering excellence
Rotork (LSE: ROR) provides the super-reliable valves, actuators and instruments needed to keep gas and liquid flowing safely through industrial plants. The company’s heritage is in the oil and gas sector. But it’s also active in water, waste, nuclear power and the chemical industry.
Rotork was founded in 1957 and listed on the London Stock Exchange in 1968, so it has a fairly long history. Unlike some comparable companies, this firm has also stayed true to its original mission. I see that as an attraction. It suggests to me that Rotork is a market leader in its sector and has probably been well managed over the years.
Challenges ahead?
While I’m confident Rotork has a strong future, I’m aware that the oil and gas market contributed more than 40% of group profits last year. I wonder if there’s a risk that this market could shrink over time, as electric power replaces petrol and diesel.
I don’t know how the future will pan out. But I do know that Rotork has successfully evolved for more than 65 years. I think this business will probably continue to do well.
Its shares aren’t obviously cheap, trading on 20 times 2022 forecast earnings with a 2.8% dividend yield. However, this company has high profit margins, and the dividend hasn’t been cut since at least 1988.
If Rotork can return to stable growth after the disruption of the pandemic, I think the shares could be good value at current levels. Rotork is on my short list to buy.
Savills is my top property pick
Many UK housebuilding stocks offer high dividend yields at the moment. However, I think this could be a sign that the market expecting a housing slowdown.
Instead of housebuilders, I’m looking at buying a different type of property stock for my portfolio. The company I’m eyeing is international real estate group Savills (LSE: SVS).
This £1.6bn firm was founded in 1855 as a London property agent. Today, Savills operates globally. The business provides services to a range of commercial and industrial sectors, as well as wealthy individuals.
The group’s latest update confirmed that trading during the first part of the year was in line with expectations. I’m pretty confident that Savills will continue to be successful. I reckon the group’s diversity should provide some protection against recession risks.
My main worry about Savills is that its growth may have been boosted by ultra-low interest rates since 2009. With these now rising in most parts of the world, I wonder if Savills’ growth could slow.
However, I think that some risk is already priced into Savills stock. This FTSE 250 share currently trades on 10 times forecast earnings, with a well-covered dividend yield of 3.2%.
I reckon this stock looks a fairly safe buy at this level. I’m hoping to add the shares to my portfolio when I have some cash available.
