Two dividend stocks that perhaps go under-the-radar compared to bigger brand names are DCC (LSE: DCC) and WPP (LSE: WPP).
Could they still provide solid returns to help transform my portfolio into a winning one? Let’s dig deeper!
DCC
Third-party support services conglomerate DCC isn’t a well-known name out there, in my opinion. The business provides a number of services, including being one of the largest bottled gas suppliers in the world, as well as providing marketing operations for a number of businesses.
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From a bullish view, DCC’s diversification, as well as wide presence, is a huge draw. Diversification is a great way to mitigate risk. However, another aspect of this business and its shares looks unmissable to me. DCC has 25 years of consecutive dividend growth behind it. Although the past is not a guarantee of the future, this tells me shareholder value is high on the firm’s agenda.
A dividend yield of 3.5% isn’t the highest out there. However, with such a strong track record for growth, there’s a good chance this could grow nicely. Although, it is worth remembering that dividends are never guaranteed.
Furthermore, the share price was badly impacted by the pandemic in 2020, but it has made huge strides since then. The good news right now is that the shares still aren’t overly expensive. At present, they trade on a price-to-earnings ratio of just 15. However, based on recent activity, this could be out of reach soon if the shares’ ascent continues.
From a bearish view, some of its operations are at the mercy of cyclical headwinds. A prime example is that of its bottled gas business. When prices were high, the firm capitalised and did well. If this were to fall, earnings and performance could be dented.
Overall I reckon DCC is a great stock to buy for returns. I’d love to buy some shares the next time I have some free funds.
WPP
Advertising supremo and one of the largest agencies of its kind, WPP looks like a good option to me. In fact, I’d buy some shares when I next have some investable cash.
I’ll start with some risks I believe could cause issues. Advertising and marketing spending has been a victim of recent economic turbulence, especially in key markets such as the US and China. Continued volatility could impact earnings and returns. Plus, many firms are also looking at moving marketing and advertising in-house, rather than relying on firms like WPP to manage for them. This is something I’ll keep an eye on.
However, the bull case looks very attractive. Starting with some fundamentals, the shares offer a dividend yield of 5.4%. Plus, they look dirt-cheap on a price-to-earnings ratio of just nine.
For me, WPP’s fully integrated offering, which includes digital advertising, e-commerce, brand consulting, and more is hard to ignore. Furthermore, it operates in over 100 countries globally and is in prime position to capitalise on the digital revolution as the world, and the way we communicate, continues to change at a rapid pace. Future earnings and returns could rise, if you ask me.
