Here are three of my favourites FTSE 100 value shares for the New Year. Each offers a brilliant blend of earnings and dividend growth.
Phoenix Group
Weakening economic conditions in the UK are a worry for cyclical shares next year. Financial services provider Phoenix Group (LSE:PHNX) is one whose profits are susceptible to tough conditions.
In this landscape, demand for discretionary products like life insurance and wealth management tends to slump.
But with interest rates expected to continue falling, City analysts think 2025 could be a bright year for the Footsie firm. Annual earnings are tipped to rise 22% next year.
This leaves it trading on a price-to-earnings (P/E) ratio of nine times. With dividends also tipped to rise, the dividend yield on Phoenix shares is a whopping 11%.
That gives it the largest dividend yield of the FTSE 100 for next year. And unlike with many high-yield stocks, a strong balance sheet — the Solvency II capital ratio was 168% as of June — puts Phoenix in great shape to meet current dividend estimates.
BAE Systems
Unfortunately, 2025 looks set to be another year of conflict. War in Ukraine is intensifying, while geopolitical ruptures in the Middle East are widening.
Meanwhile, worries over broader Russian expansionism and Chinese foreign policy continue to grow in the West. This all means sales at defence giant BAE Systems (LSE:BA.) are predicted to keep rising, driving a 12% increase in year-on-year earnings.
It also means the Tier 1 arms supplier is tipped to keep its long-running policy of dividend growth going. Subsequently, the dividend yield here is a solid 3%.
Earnings are in danger if Elon Musk — the future efficiency chief in Donald Trump’s upcoming administration — decides to trim arms spending. But on balance, I think things are looking good for the defence giant.
And recent share price weakness leaves it trading on a forward P/E ratio of 15.2 times. This is a good distance below its recent average just below 20 times.
JD Sports Fashion
My final pick, JD Sports Fashion (LSE:JD.), isn’t one for the faint of heart. Its share price has toppled in 2024 thanks to a couple of profit warnings, the most recent of which was in November.
This doesn’t exactly give the business momentum going into the New Year. Yet with interest rates falling across its markets, things could get easier in the months ahead as consumer spending is resuscitated, pushing its shares higher again.
Latest news from the US — JD Sports’s largest market — is certainly encouraging. It showed consumer spending rise a healthy 0.4% in November.
City analysts expect earnings growth to steadily strengthen over the next 12 months. Annual rises of 5% and 14% are tipped for the financial years to January 2025 and 2026, respectively.
These support expectations of dividend growth and yields of 1% and 1.2% for these years.
With a forward P/E ratio of 7.4 times, I think JD shares are worth serious consideration from investors seeking recovery stocks.
