1 brilliant FTSE 100 stock to consider buying in March

This FTSE 100 company looks unloved but the dividend record is impressive and the good times may soon return for the business.

| More on:
Yellow number one sitting on blue background

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Within the FTSE 100 index, I see Kingfisher (LSE: KGF) as an unloved stock with attractive characteristics.

My plan would be to dive in with deeper research right now with a view to buying some of the company’s shares during March to hold for the long term.

DIY and trade supplies

This home improvement company owns a network of retail stores in the UK and continental Europe. Sales take place online too with the firm offering both delivery and click & collect services.

Of its several brands, I’m most familiar with Screwfix and B&Q and regularly use both in my role as chief fixer-upper around the house!

But is it a good idea to buy what you know? Sometimes it can be, particularly when a stock falls temporarily out of favour with investors as Kingfisher appears to be.

In fairness, the stock market isn’t completely irrational when it marks share prices down. It’s no secret that the pandemic, the war in Ukraine and the cost-of-living crisis have led to some big shifts in the general economic landscape. Sometimes it feels like we poor consumers have been financially squeezed until the pips squeak!

One of the outcomes is that Kingfisher has a volatile earnings record over the past few years. The business is sensitive to economic cycles and shocks. It’s often easy for consumers to delay spending on home improvements and repairs when financial times are tough. So it’s possible Kingfisher could see more troubled trading ahead and there’s some risk in that for investors.

An impressive dividend record

However, I’m encouraged by the remarkable strength shown in the company’s multi-year dividend record. There was a wobble in the shareholder payment during the pandemic year, but the dividend soon came bouncing back. This table tells the story:

Year to January2018201920202021202220232024(e)2025(e)
Dividend per share10.8p10.8p3.33p8.25p12.4p12.4p11.9p12p
Dividend growth4.04%0(69.2%)148%50.3%0(3.76%)0.55%

We’ll get the final figures for that estimated dividend for the year to January 2024 with the full-year results release due on 25 March. But if the company meets its estimates, the dividend will have delivered a compound annual growth rate of around 2.76% through the period shown.

That’s not bad considering the challenging times we’ve lived through. So what will the business be capable of if economic conditions improve in the coming years? My assumption is better trading will likely happen and the dividend may move higher still.

Meanwhile, with the share price in the ballpark of 227p, the forward-looking yield for the current trading year to January 2025 is just above 5%. That looks pretty good to me. I’d be keen to lock an income stream like that into my portfolio.

Although positive outcomes are never certain, general economic conditions look set to improve in the UK and Europe, especially if inflation remains under control. For that reason, Kingfisher looks like a brilliant FTSE 100 stock to consider buying in March and I‘m keen to see the upcoming report.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Kevin Godbold 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.

More on Investing Articles

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Investing freedom — but inside a pension

Strapped consumers might be cutting back on investing, but they’re still keeping up their pension contributions. The only problem? A…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

Forget gold! I’d rather buy these 3 FTSE high-yielders in a Stocks and Shares ISA

Gold looks like a risky investment to me as the price hits an all-time high. I'm ignoring the fuss to…

Read more »

Young female business analyst looking at a graph chart while working from home
Growth Shares

This 55p UK stock could rise more than 300%, according to a City broker

This UK stock has fallen from above 800p to below 60p. But analysts at Citi believe it’s capable of a…

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

I think this FTSE 250 trust has all the right ingredients to lock in long-term profits

Today I'm examining the prospects of a private equity investment trust on the FTSE 250 that caught my attention recently…

Read more »

Young black man looking at phone while on the London Overground
Investing Articles

2 under-the-radar UK shares investors should consider snapping up

Two UK shares have caught the eye of our writer. She explains why investors should be taking a closer look…

Read more »

Investing Articles

Are these 2 ultra-high-yielding income stocks a good buy for me?

These two income stocks often split the debate amongst investors. So what does our writer think of them as potential…

Read more »

Senior woman potting plant in garden at home
Investing Articles

5% yield! This dividend stock could be great for my retirement

Our writer explains why this dividend stock appeals to her as she’s investing to build wealth to enjoy in the…

Read more »

A young Asian woman holding up her index finger
Investing Articles

I’d aim for a second income of £1,000 a month with this super-reliable dividend stock

I think a great way to build a second income stream is by investing in dividend stocks via a Stocks…

Read more »