The rate at which Smurfit Kappa Group (LSE: SKG) is lifting dividends convinces me that it could turbocharge your investment income and help assist you in quitting your job.
Shareholder payouts from the packaging play have swollen 114% during the past five years, culminating in 2017’s total dividend of 87.6 euro cents per share. Even as fast-rising input costs have forced earnings to fall more recently, Smurfit Kappa’s robust balance sheet has allowed it to continue hiking the dividend.
A combination of its terrific cash generation and predictions of a return to earnings growth from this year — rises of 54% and 4% are forecast for 2018 and 2019, respectively — causes City brokers to project further dividend growth over the medium term, too.
A 94-cent reward is predicted for 2018, and a 98-cent dividend for next year. Yields subsequently stand at a chunky 2.7% for this year and 2.8% for the following period.
International Paper may have binned its recent takeover approach for Smurfit Kappa but this isn’t a reflection of the company’s long-term growth outlook, which remains compelling. Indeed, the Footsie company boosted its operational and geographic wingspan still further this month with the €460m purchase of Reparenco of the Netherlands, a move which bolsters the firm’s recycled containerboard capacity in Europe.
I reckon a low forward P/E ratio of 14 times and a sub-1 corresponding PEG reading of 0.3 seals Smurfit Kappa’s position as a terrific share to buy today.
Schroders (LSE: SDR) is another FTSE 100 share that has lifted dividends at breakneck speed in recent times (95% during the past five years, to be precise).
A 2% earnings decline predicted for 2018 means that payout growth is poised to slow considerably in the nearer-term period, however. A 113.9p per share dividend is currently anticipated for the current fiscal period, up fractionally from 113p in 2017.
However, investors should not forget that this figure still yields an impressive 3.6%. What’s more, a return to earnings growth next year (through a 5% bottom line rise) drives the anticipated dividend to 119.7p. Consequently the yield steps up to 3.8%.
Schroders has endured no little pressure in recent months as fund outflows have continued. However, the company’s profit outlook over a longer-time horizon remains pretty solid, in my opinion, in part due to a determination to boost its presence in emerging markets.
In particular the asset manager is looking to Japan and China to deliver strong revenues growth in the coming years, nations in which it’s currently underexposed. Schroders currently sources around 25% of sales from the Asia Pacific region, but as populations boom and personal income levels increase, I’m expecting returns from this hot continent to shoot higher in the decades ahead.
At today’s share price Schroders carries a forward P/E ratio of 14.2 times, comfortably under the watermark of 15 times which indicates very good value. I reckon the business is a great share for both growth and income investors to pile into today.
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Royston Wild 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.