Lloyds has suffered especially due to its lack of overseas earnings and heavy reliance on the UK economy, which isn’t the most reliable thing in the world at the moment. Since a Brexit deal is looking more certain, things have begun to improve.

Lloyds (LSE: LLOY) may have jumped significantly but that’s not to mean that it’s overpriced. In fact, it still looks like a steal to me.

Rising up

Lloyds has jumped 12.2% since the positive Brexit news but is still looking relatively cheap with a price-to-earnings ratio of 9. While the share price has been up and down this year, this wouldn’t be the case if it weren’t for Brexit. The bank appears to have dealt with diversity well and now is back on the rise.

Lloyds is also improving itself as a business; rapid digitalization is helping to cut out manual costs. Furthermore, the expanding mortgage and credit card area of the business is also bringing in more customers and revenue. The bank appears to be well-placed to deal with Brexit in comparison to smaller banks. The fact it has already risen is a good sign.

Huge dividends

If the cheap share price and rise-despite-Brexit aren’t enough, Lloyds offers a dividend yield worth shouting about. It currently stands at a tempting 6.2% in comparison to the FTSE 100 average of 4.5%.

This is a healthy reward that investors can rely on as payout cover is expected to increase to 2.2 times next year. Profits would have to plummet 50% for the dividend to receive a cut, which is a highly unlikely scenario.

The dividend payouts are consistently growing too. Lloyds has increased its dividends by 43% in the past three years. This is impressive growth that I wouldn’t be quick to ignore.

Looking ahead

My attention will be focused on Lloyds on 31 October as it reports its third-quarter earnings. Yes, this is the same day as Brexit but no, that doesn’t have to be a bad omen. While some investors will be distracted by Brexit news, many will be looking to see how Lloyds performs.

Initially, the report may not all be rainbows and sunshine and we can expect a fall in the short-term thanks to the Brexit volatility. However, the long-term outlook appears to be a positive one for both Lloyds and investors alike. The stock seems to have a lot of offer and at the current price, it’s hard to ignore.

The post Why I’d invest in Lloyds today appeared first on The Motley Fool UK.

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fional has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

This also means that the stock market will benefit. As companies cash in by using 5G technology, more investors are going to start paying attention. I believe that it’s important to invest now before 5G is nationwide in 2020.

On the road to recovery

BT (LSE: BT.A) jumped 8% in September but the stock is still underperforming the market so far this year. However, it looks like things are slowly starting to look up for BT and I believe that it’s set to profit from the 5G revolution.

Currently, BT has a forward price-to-earnings of just 7.3 and a healthy dividend yield of 8.5%. These tempting figures are backed up by a promising focus on customer confidence in BT’s business plan.

This week, BT announced the new ‘Halo’ plan, a package that offers superfast broadband with unlimited 5G. It’ll also be the first provider to offer both broadband and 5G mobile in one package. On top of this, BT’s 5G went live on Friday in 20 cities, with the hope to bag more customers with the new 5G package.

To drum up further interest in its 5G offerings, BT is planning to transform 600 EE stores into dual-branded BT/EE stores across the UK. According to BT, this will put 95% of the UK population within 25 minutes of receiving help from a BT assistant. This focus on customer service will help to boost BT’s name in the industry.

BT has also said it will upgrade 700,000 customers and businesses around the UK to superfast broadband, free of charge, by June 2020. All of these efforts to improve customer confidence and grow as a business lead me to believe that BT shares will be rising in 2020.

Game-changer

Keywords Studios (LSE: KWS) is a gaming stock set to grow from 5G that some may overlook. The company will benefit from improved network speeds that will make gaming all the more appealing. It seems to have been in the right place at the right time, currently claiming to be the leading international technical services provider to the global video games industry. This is so important as gaming popularity has sky-rocketed in recent years and is only expected to grow more. 

Investors have been having the same positive sentiments towards gaming with Keywords’ value soaring 400% from September 2016 to August 2018. Furthermore, in its most recent update, the company stated that first-half revenue was set to be around 39% higher, to €153m, thanks to “particularly strong growth”. Pre-tax profits are also up 15% higher than the previous year.

On top of this, Keywords’ annual earnings per share have risen a significant 49% in the past three years. This is why I’m keen to cash in before 5G takes over in 2020 – I believe that we could see huge profits from investments.

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fional has no position in any of the shares mentioned. The Motley Fool UK has recommended Keywords Studios. 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.

Likewise, SSE (LSE: SSE) has also seen its share price fall. In the past three years it’s dropped 26%. Having said this, could it now be back on the rise?

I’m going to take a look at both companies to understand why they could be undervalued and whether they are worth investing in.

Daylight robbery?

Currently, Royal Mail shares are incredibly cheap after consistently dropping in value throughout the years. The shares did benefit from a 3% rise in September but they are still down 5.8% since the end of August.

However, if you look at the fundamentals, Royal Mail shares still look incredibly attractive, so is it just harshly undervalued? With a forecast dividend yield of 7.4% and a price-to-earnings ratio of under 9, it appears to be screaming buy. So, why aren’t investors cashing in, and what’s causing such a low valuation?

If we take a closer look at Royal Mail in terms of its earnings, it’s easy to see that there are some concerns. Earnings per share are projected to fall a staggering 49% in 2020. This is after a decline of 45% already in 2019. Furthermore, the projected dividend will only be covered 1.5 times by forecast earnings. This is far from comfortable when the company is suffering from cash flow problems.

Royal Mail is very aware of the potentially dire situation that it’s currently in and plans to invest around £1.8bn in its UK business over the next five years. However, this might not be enough to turn everything around and it could be too late, considering the rate shares are dropping.

Taking everything into account, it appears to me that Royal Mail is deserving of its low valuation. For now, I think that its’s worth staying away from this stock.

Looking better

On the other hand, I think that SSE could bring investors great rewards. While the share has been falling, it’s up 15% from its July lows. In September, it revealed a $500m deal to sell its retail business to rival OVO Energy. This will really help the company to pay off some of its debt and reinvest into the business.

The current dividend yield of 6.6% is very tempting, and I feel that it’s much more reliable than Royal Mail’s dividend. Furthermore, I think that SSE has a great business plan moving forward, focusing much more on renewable energy as people begin searching for alternatives to gas and oil. The company appears to be well-positioned to benefit from the UK’s gradual transition to low-carbon energy.

The sustainable business plan, million-dollar deal with OVO Energy and the high dividend make SSE a buy for me.

The post Royal Mail vs SSE: Which falling share price should I buy? appeared first on The Motley Fool UK.

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fional 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.

I think so and I believe that the future is also very bright for the bank.

A rocky past

It hasn’t all been rosy for RBS as disappointing August half-year results had the share price plummeting 15% in one month. I think that RBS can be slightly more sensitive than other stocks to concerns about the UK economy and Brexit. However, I don’t believe this should make the stock unattractive.

Long-term prospects

RBS is very attractive to me as a long-term investment that could bring some great rewards. Despite a rise in share price, the RBS is still valued low with a price-to-earnings of just 8. The low-valuation of shares used to be down to the lack of a dividend and loss-making performance. However, RBS is currently offering an attractive dividend yield of 2.7%.

On top of this, the 2020 dividend is predicted to yield 6.8%. This is a huge rise and makes the investment now worth it for me. With a higher dividend yield, the share price is likely to rise along with it, so I’d buy now. The predicted dividend cover is expected to be 1.8 times next year. This is a high enough margin of safety to make it worth it for my portfolio.

A volatile market

With economic uncertainty rife in the UK and Brexit concerns, any banking company is going to be up and down in the next few months. However, RBS has made tremendous progress in the past few years in an effort to rebuild its balance sheet. Profits have managed to recover more than £3bn despite uncertainty.

Understandably, forecasts and valuations for all UK banks are on the low end due to Brexit. This just leads me to believe that RBS is currently undervalued and could rise dramatically next year. The bank’s performance has been strong and continues to recover despite the odds being against it.

In the next 12 months, analysts are predicting a 133% increase in the current trading of shares. Alison Rose is set to be the new CEO of RBS in November, helping to navigate the bank post-Brexit. She has been described as having a “sure touch” and many are confident in her leading the bank toward success.

If patient investors are looking for a great income stock, I believe that RBS will reap huge rewards. This is a stock that I’d consider a long-term investment that could result in regular, high-paying dividends. You just have to be willing to sit back, relax, and wait to see the stock recover fully.

The post The RBS share price is rising, here’s why I’d invest now appeared first on The Motley Fool UK.

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fional 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.

In total, the stock has fallen nearly 90% since January and there is a lot to be concerned about.

Avoid like the plague

Metro Bank appears to be far too risky for many as the attempt to raise money via a bond issue offering a 7.5% yield fell flat. Investors still avoided the company, demonstrating a severe lack of trust in the company’s future.

With one disaster after another, I would avoid investing a penny in Metro Bank. I have a feeling that the company could very soon be heading for the exit with some very worrying figures. It only joined the stock market in 2016 and was valued a healthy £1.6bn. In just three years the company is now valued at £500m. These numbers terrify me.

I think that Metro Bank will eat up your investment and offer nothing in return. I wouldn’t be tempted by the cheap price as I don’t think that it has anything to offer.

A much brighter future

I’m turning my attention to Lloyds (LSE: LLOY) instead, despite its share price decline. I believe that the majority of the share price decline is largely out of the bank’s control. With Brexit and fears surrounding the UK economy taking hold, I think that Lloyds shares have been unfairly underpriced.

The possibility of a no-deal Brexit poses a huge threat to all banks, not just Lloyds. So, why would I consider investing in Lloyds? Because there is a whole host of benefits that its shares can bring investors.

The Lloyds dividend yield currently stands at a very tempting 6%, which is considerably higher than the FTSE 100 average of 4.5%. This offers instant rewards for investors and is currently an exceptionally safe dividend. Payout cover is expected to increase to 2.2x next year, which means that profits would have to drop by 50% before the company would have to reduce the dividend.

Lloyds is growing and improving as a business. It’s rapidly going digital, which is helping it to cut costs, while expanding its mortgage and credit card business. On top of this, I think that the company is very well placed to deal with Brexit in comparison to smaller banks.

Lloyds is due to report third-quarter earnings on the same day as Brexit, October 31! Hopefully, this isn’t a bad omen and the company will have something positive to report. While bad news could lead to a short-term fall, I believe that in the long term, this stock has a lot to offer investors.

With a P/E of 9, I don’t think you can go far wrong by investing in Lloyds and reaping the rewards of huge dividends.

The post Forget the Metro Bank share price! Here’s why I’m banking on Lloyds instead appeared first on The Motley Fool UK.

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fional has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group. 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.

With only six months to provide fresh funding before running out of money, the future looks extremely bleak for Sirius. Instead, I’d focus on other FTSE 250 risers that could provide investors with much more stable income.

Building a home

Redrow (LSE: RDW) is one of Britain’s largest housebuilders and right now it’s extremely cheap. Its price-to-earnings (P/E) ratio is currently under 7, while its dividend yield is over 5%. These numbers look attractive to me and already make me tempted to invest.

The cherry on top is that the share price has been steadily on the rise as well. Shares are up 18% just in the past month. This is a company that seems to be constantly improving. Furthermore, Redrow reports that revenue jumped 10% for the year ended 30 June.

It seems that Brexit isn’t damaging the stock, and the company’s steady track record eases further concerns. In fact, the company has even recently said that “demand for our homes is strong with reservations running ahead of last year.”

I believe that investors can be confident with this stock, as new-build sales are still through the roof, despite political and economic uncertainty. In my opinion, investors could be seriously missing a trick by overlooking Redrow. The low P/E, high dividend yield and strong performance make this a buy for me.

Continuous success

JD Sports (LSE: JD) has seen shares rise 15% already this month, and it has had a very successful first half of 2019. Despite a harsh climate for UK retail, JD has managed to continuously expand its physical presence. Physical retail represents 80% of its total sales.

JD appears to be focusing its efforts on expanding markets internationally. In the last six months alone, the company has added a total of 31 stores in Europe, Asia and the US. Total revenue is up 47% this year, thanks to the acquisition of Finish Line. The good news keeps coming as the company has also announced it is increasing dividend payouts by 3.7%. The yield may only be 0.25%, but this is a step in the right direction.

One thing to note is that JD stocks are on the expensive side, with a P/E ratio of 26. However, I believe the company is one to invest in, thanks to its huge potential for growth. Management has said that it aims to open many more international stores this year. Research house Global Data predicted that sportswear sales will rise 9% in 2019. All of this leads me to believe that JD has much more room for growth and is a worthy investment.

The post Forget Sirius Minerals! 2 FTSE 250 shares I’d buy instead appeared first on The Motley Fool UK.

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fional owns shares of JD Sports Fashion. The Motley Fool UK has recommended Redrow. 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.

What effect will this have? While no one really knows, one thing we do know is that this will have a huge impact on the stock market. While last week, the UK stock market was on the rise, this week, reality has hit.

I’m backing one stock that could be virtually untouched by Brexit and another I have faith in despite hesitant investors.

Huge growth

Ashtead (LSE: AHT) is a British stock I’d back to defend my portfolio against a hard EU exit. It’s an equipment rental company that’s demonstrated exponential growth in recent years. So much so that Ashtead’s share price has risen by 125% in the past five years. The share price rise 16% in the past three months alone. This is all despite fears of a market slowdown due to Brexit.

Ashtead saw a very impressive 17% rise in first-quarter revenue to £1.3bn. A lot of this was thanks to huge growth in the US. In fact, 90% of the company income is coming from the other side of the Atlantic. This is why I’m so confident in this stock, a no-deal Brexit will be practically irrelevant to this company as only 10% of its income comes from Britain.

City analysts predict an 18% rise in earnings-per-share this year and a further 11% increase next year. Dividend yields may be very modest, being only 1.7% at the time of writing. However, this is more than comfortably covered 4.7 times by earnings. The P/E has dropped to only 11.4 this year which leads me to believe the shares are reasonably priced. An investment to beat a no-deal Brexit? I think so.

Surviving Brexit

Barratt Developments (LSE: BDEV) shares surged 6% higher last week as optimism surged that a no-deal Brexit could be avoided. Sadly, this optimism appears to have waned this week. However, I believe Barratt could still be a good investment other seem to agree as it’s still rising, despite looming Brexit fears.

The housebuilder has seen earnings per share rise around 30% per year over the past six years. The company currently has an attractive dividend yield of 4.5% and city analysts predict this will be around 7% in 2020. The dividend is also covered a comfortable 1.6 times, which leads me to believe that investors’ ROI will be safe. Despite Brexit negatively affecting the UK property market, Barratt continues to fight back, and is likely being boosted by the government’s Help to Buy scheme.

Earlier this month, the company posted a 9% increase in annual profit before tax to £909.8m, which seems to mean it’s bucking the Brexit trend. Having said this, Help to Buy is being scaled back in the coming years and it’s hard to predict how our EU departure will affect the property market, making this share a little risky. However, I remain confident that Barratt Developments will continue to grow, albeit slightly slower.

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fional 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.

Thankfully, some stocks are offering huge dividends and I believe they’re likely to maintain the yield for years.

Investing in oil

Royal Dutch Shell (LSE: RDSB) may seem like a risky investment as the shares have fallen by nearly 10% in a year. While oil and gas can be a risky investment, it’s unlikely that the industry is going to disappear any time soon, despite the search for more sustainable options.

A redeeming factor is the very tempting 6.6% dividend yield Shell is currently offering. City forecasts also predict that the dividend is more than comfortably covered by earnings. I think that it’s a good idea to invest in Shell while it’s still cheap. Thanks to a weak oil price this year, the stock could potentially be undervalued.

While many investors are sceptical as they believe that oil and gas is a declining industry, I believe that it’ll remain important for decades still to come. Shell’s P/E ratio is a reassuring 11.62 while the industry average is 20-25. This supports the idea that it’s undervalued. The high dividend yield seems to be safe for the time being and the low price makes me very tempted to invest.

Chemical reaction

Johnson Matthey (LSE: JMAT) is a chemical and sustainable technologies company that offers a modest but reliable dividend. What really works in the company’s favour is that it’s considered a leader in the chemicals business. To have such a good reputation in a niche and regulated business is a very strong position to be in.

The dividend yield may only currently stand at 2.66% but this modest approach is actually a great business plan. The dividend is currently covered 2.7 times by earnings per share and it’s remained this way for the last 10 years. So it might not be the highest yield, but it’s practically as safe as it gets. Furthermore, it means that the business is putting more money into growing even more, meaning that the dividend could continue to rise in the future.

I’d consider Johnson Matthey one of the safest stocks to invest in among the FTSE 100 companies. This may be a bold claim but the company’s earnings would have to drop a staggering 50% for the dividend to even be in remote danger. On top of this, the company is expected to see a rise in EPS of over 9% in the current year. I’d be very confident in relying on consistent dividends from Johnson Matthey.

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fional 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.

It’s becoming increasingly possible that a disorderly no-deal exit could be the fate of the UK, although I wouldn’t want to take bets given what has happened in Parliament in recent days. But these uncertain times do call for certain stocks to be avoided at all costs, which I’ll discuss below. However, I do believe that some stocks are still worth investing in, no matter what the Brexit outcome.

Don’t bank on it

Investing in banks is already risky business considering the current market. However, Barclays (LSE: BARC) is one that I’d really want to avoid. Being one of the most hated banking stocks in the UK, it clearly isn’t just me who is sceptical about the investment.

Before Brexit reached the stage it has, Barclays was struggling even with strong economic conditions. The main reason behind the uphill battle was low-interest rates. Total income dropped 1% in 2018 Q4. To make things worse, Barclays’ credit impairments hit £296m last year, this is the highest level that they’ve hit for years.

If a no-deal Brexit were to happen, I think that things would only get worse for the company. The fact that investors are already lacking in confidence suggests that it’s unlikely there’ll be much backing for Barclays after Brexit. I wouldn’t be tempted by the dividend yield of 5.1% as I think the share price will only keep plummeting.

Beating the Brexit blues

Unilever (LSE: ULVR) is one stock that I’d back even if there’s a no-deal Brexit. The company has a huge and very impressive portfolio of food, drink and homecare brands that are household names. Some of these brands include Dove, PG Tips, and TRESemmé. The high demand for these products seems unlikely to dwindle, no matter what the economic state of the country is.

For the second quarter of this year, Unilever’s sales rose 7.4%. While analysts are expecting earnings per share to grow by around 13% by the end of this year. Furthermore, analysts also predict that the dividend yield will increase by 9.4%. Not only should the company stand strong, but investors should also even get higher dividends! These promising figures give me confidence that the company has what it takes to continue its growth throughout Brexit.

The diverse range of products and resilience against the economic climate really does make Unilever my stock of choice in the face of a no-deal exit (and if that exit is delayed or cancelled too).  

The post One stock I’d buy and one I’d avoid if there’s a no-deal Brexit appeared first on The Motley Fool UK.

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fional has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Barclays. 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.

With 5G having arrived on a small scale but being set for wider rollout 2020, even if initial take-up is slow, it will (like 4G) become the industry standard at some point. So now’s the time to turn our attention to stocks with 5G potential. Many companies will benefit from the launch of the network and I believe that this year is the time to invest to reap the rewards before prices soar.

Mobile giant

Vodafone (LSE: VOD) is a bit of an obvious investment for those looking at 5G stocks. The company was one of the first to try out the new technology in 2017, giving it the chance to get ahead of the competition. On top of this, there seems to be hope that Vodafone could be recovering from a harsh few years. In July, the company announced that it planned to create Europe’s largest tower company. This news sent the shares soaring over 10% higher in just one day.

The good news keeps coming as analysts predict a 77% rise in earnings per share by 2020. And part of this should be due to the launch of 5G that would continue the company’s recovery story. OK, the past year or so hasn’t been too kind to Vodafone, and it found itself cutting cut dividends by 40%. However, I see this as a wise move to boost the company’s balance sheet and free up cash so it can invest more in 5G and the tower company scheme. The more money it can invest in the development of the technology, the better. Vodafone could be a top player in the 5G arena which would yield rewards for investors further down the line.

I think that it’s a good idea to take advantage of Vodafone’s current share price before 5G really comes into play.

Brilliant software

Keywords Studios (LSE: KWS) is a technical service provider to the video game industry and could be a very wise investment when it comes to 5G. The developments 5G will bring include improved network speeds that will increase the appeal of already popular mobile gaming still further. Gaming will be more accessible than ever and Keywords Studios should reap the rewards of this popularity.

Gaming has exploded in recent years with huge technological advances and the rise of gaming ‘influencers’ encouraging more young people to play. This has benefitted Keywords Studios with its value soaring a huge 600% since 2016. Furthermore, the insane popularity of Fortnite helped boost the company’s pre-tax profit last year by 65% — a strong example of the direct correlation the popularity of gaming has on the company.

Keywords Studios’ annual earnings per share have risen a huge 49% for the past three years and I think that this figure could be even more impressive after the launch of 5G.

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fional has no position in any of the shares mentioned. The Motley Fool UK has recommended Keywords Studios. 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.