Why Growth & Income Hunters Must Check Out Unilever plc, Big Yellow Group plc, Persimmon plc And Babcock International Group PLC

Today I am looking at the earnings and dividend outlook of four FTSE superstars.


With consumer spending power improving in developed and emerging economies alike, I reckon Unilever (LSE: ULVR) is in terrific shape to deliver spectacular returns. The enviable brand power of labels like Dove soap and Persil washing powder enables the household goods giant to keep earnings higher even in times of economic strife, while a steady stream of product innovations and roll-outs in new territories continues to strike a chord with shoppers the world over.

The City is convinced these factors should keep the bottom line chugging higher, and a projected 13% advance for 2015 is anticipated to be followed by a 7% rise the following year. Consequent P/E multiples of 21.5 times and 20 times respectively hardly set the world on fire, but I believe Unilever’s long-term growth picture merits this premium. Meanwhile projected dividends of 85.2p per share this year and 90p for 2016 create very decent yields of 3% and 3.2% correspondingly.

Big Yellow Group

With Britons running increasingly short of space I reckon storage specialist Big Yellow (LSE: BYG) should cash in big time. Improving wages and employment levels, combined with the effects of lower inflation, is blasting retail spending steadily higher, leaving little space for people to store their new bits. And when you throw the country’s rising ‘hoarding’ culture into the equation, suddenly Big Yellow looks like a great bet for delicious revenues growth.

The number crunchers expect Big Yellow to rack up earnings expansion of 12% in the years ending March 2016 and 2017, resulting in slightly-high P/E multiples of 22.8 times and 20.5 times. But like Unilever, Big Yellow should benefit from favourable structural factors which I feel should keep earnings swelling in the years ahead. On top of this, estimated dividends of 24.6p per share and 27.6p for these years produce market-mashing yields of 3.5% and 4% correspondingly.


Thanks to the UK’s worsening housing crunch, I reckon Persimmon’s (LSE: PSN) ability to generate splendid shareholder returns is as ‘safe as houses.’ Rumours have intensified in recent weeks that the Bank of England will raise rates sooner rather than later, but such chatter has been doing the rounds for the best part of two years with no movement. Regardless, new buyer demand looks set to continue outstripping supply by some distance, helped by favourable lending conditions, improving wage packets, and a lack of new stock entering the market.

As a result Persimmon is predicted to see earnings surge 17% in 2015 and 14% next year, resulting in P/E multiples of just 14.5 times and 12.7 times respectively — any reading below 15 times is widely considered great value for money. And with estimated dividends of 99.3p per share and 112.5p for 2015 and 2016 correspondingly yielding a monster 4.7% and 5.3%, I believe the housebuilder is hard to ignore.

Babcock International Group

It cannot be denied that Babcock International’s (LSE: BAB) exposure to the oil sector has weighed on investor appetite during the past few months. Still, in my opinion this should not deter potential buyers from diving in as the company’s expertise across a wide variety of engineering sectors should deliver strong returns in the long-term — this diversification helped to power its order book 74% higher during the 12 months to March 2015, to £20bn.

The City is certainly bullish over the firm’s growth prospects, and earnings are anticipated to advance 10% in the current year and 11% in 2017. Consequently the business deals on P/E multiples of just 13.4 times and 12.1 times for these years. And when you chuck prospective dividends of 26p per share for 2016 and 28.8p for 2017 into the bargain — yielding 2.6% and 2.9% — I reckon Babcock International offers pretty good bang for one’s buck.

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Royston Wild owns shares of Unilever. The Motley Fool UK owns shares of Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.