I believe the highly-defensive nature of freshly-listed Biffa’s (LSE: BIFF) operations should make it a terrific dividend selection for the years ahead.
The waste management giant — which only launched on the London Stock Exchange in October — announced in March’s pre-close update that “underlying trading is consistent with our expectations at the time of the half-year results in November.”
Through its Industrial & Commercial (I&C) division (responsible for 59% of group revenue), Biffa is one of the UK’s biggest waste collectors from businesses of all sizes.
A steady stream of contract wins (the company added Next, AB Inbev, KFC and John Lewis, among others, to its client list during the past year) is helping revenues to keep swelling — total sales grew 7.2% during April-September, to £497.5m. MeanwhileBiffa’s insatiable appetite for acquisitions is also helping to drive the top line.
The Buckinghamshire business has made around 20 bolt-on buys during the past three years at its core I&C arm, and commented last month that “we are actively pursuing a strong pipeline of acquisition opportunities.” And the fruits of autumn’s IPO certainly lend Biffa the financial ammunition to keep its M&A strategy rolling.
I believe the long-term profits picture is becoming ever-more compelling at Biffa, and City analysts expect a 16% earnings advance in the year to March 2018 alone. This is anticipated to support a 6.8p per share dividend, up from a predicted 3p last year and yielding a chunky 3.6%.
And an estimated 7% earnings rise in fiscal 2019 is expected to finance a 7.3p payment, driving the yield to 3.8%.
Sure, Biffa may not be the biggest yielder on the market at present. But I reckon the essential nature of its operations makes it one of the more secure dividend bets out there.
What a dish!
A period of almost unbroken earnings growth has seen dividends at Inmarsat (LSE: ISAT) chugging merrily higher in recent years.
While Inmarsat is expected to endure a little earnings turbulence in the near term (a 25% bottom-line dip is predicted for 2017), shareholder rewards are expected to stay on an upward path thanks to the company’s impressive cash generation.
Indeed, last year’s dividend of 53.96 US cents per share is anticipated to rise to 57.7 cents in the present period, meaning Inmarsat carries a stonking 5.5% yield. And an anticipated 15% earnings bounce in 2018 is expected to support a 60.2 cent payout, a figure that yields 5.7%.
Inmarsat is not just a shrewd income pick for near-term investors however, with the rising demands of an increasingly-interconnected world likely to drive sales of the firm’s hi-tech services long into the future.
The tech titan is experiencing some revenues pressure (and particularly at its Maritime arm) as its rivals move in on its patch, forcing prices across the industry firmly lower. But the massive investment it is making in fast-growth areas like In Flight Connectivity (or IFC) at its Aviation division should allow it to hurdle these problems and keep delivering plump shareholder returns.
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Royston Wild has no position in any 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.