Profit up almost 12%! This FTSE stock has growth and a decent dividend for shareholders

I’d consider shares in this FTSE company, which is rolling out its expansion across the UK and Canada — and paying dividends.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

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

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.

The FTSE 250’s Hollywood Bowl (LSE: BOWL) has come a long way since the lows of the 2020 pandemic.

Both the business and the share price have been recovering well. But today’s (3 June) interim results report suggests the company has now become a strong growth story. Furthermore, it’s paying generous dividends along the way.

Created with Highcharts 11.4.3Hollywood Bowl Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

In the six months to 31 March, the company had 71 tenpin bowling and entertainment centres in the UK. However, it’s also growing fast in Canada, with 11 centres at the end of the period and an impressive revenue advance of almost 47% year on year.

Should you invest £1,000 in Howdens right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Howdens made the list?

See the 6 stocks

Expanding well

Much of the progress comes from acquisitions. So I see the firm as a consolidator and improver in its sector. Indeed, refurbishment and business optimisation is a big part of the directors’ game-plan here.

Revenue rose by just over 8% in the period and that delivered an almost 8% improvement in free cash flow and almost 12% in adjusted profit before tax. All of that filtered down to boost adjusted earnings by just over 6%, and the directors increased the interim shareholder dividend by nearly 22%.

Meanwhile, with the stock price near 337p, the forward-looking yield is just below 4% for the trading year to September 2025. That looks like a potential income worth having in my share account while waiting for further growth in operations to materialise.

But there are risks, of course. The most prominent is the undeniable cyclicality in the business. We only need look at the collapse of earnings, dividends and the share price in the pandemic to see the truth of that.

Businesses like this are often just the next general economic shock away from causing shareholders to lose money. The trouble is, we never know when, or if, that shock will come.

On top of that, I’d keep an eye on the firm’s debt levels if holding this one. Borrowings seem to be under control right now, and the business enjoys strong cash flow when the economic times are good. However, sometimes acquisitive companies can become carried away and fund growth by over-extending their finances.

A positive outlook

The outlook statement is positive and optimistic. City analysts expect normalised earnings to improve by just over 6% next trading year to September 2025.

That’s not a stunning rate of growth. But I reckon the ongoing expansion programme and the high dividend yield make the stock worth consideration.

However, Hollywood Bowl isn’t the only FTSE 250 company on my list. I’m also keen on staff recruitment business SThree, and molten metal flow engineering and technology company Vesuvius.

Others I’m focusing on include heat treatment and thermal processing services provider Bodycote, and vertically integrated construction materials enterprise Breedon.

Positive investment outcomes are not certain for any of the stocks mentioned here. However, they all have a decent-looking dividend yield and prospects for growth in earnings ahead. As such, I see them all as worth deeper research and consideration for my diversified portfolio.

Should you invest £1,000 in Howdens right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Howdens made the list?

See the 6 stocks

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 recommended Bodycote Plc and Hollywood Bowl Group Plc. 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

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

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

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »