I don’t view the washout that has smacked stock markets in recent sessions as cause for alarm for most investors. The cornerstone of my own investment strategy is to buy and hold shares for a minimum of five years, and I remain convinced that those I have selected for my own portfolio will recover these losses and indeed create monster returns.
The FTSE 250 has fallen 7% since the turn of October, and this leaves plenty of opportunity for dip buyers to slip in and grab a bargain.
6% dividend yields
Let’s start by looking at Hays (LSE: HAS). The recruitment specialist’s market value has tanked by almost 25% since the start of the month but this is folly, in my opinion.
Given the rate at which earnings are growing, and consequently the pace at which dividends are rising as well, I reckon the company could make share pickers an absolute fortune in the coming decades.
Hays’ outstanding growth potential was laid bare in yet another set of strong trading numbers released last week. Leading the headlines was news that group net fees hit yet another all-time high in the three months to September, up 7% (or 9% on a like-for-like basis).
The FTSE 250 firm has now delivered a stunning 22 months of quarterly growth on the spin, and given the tracks it is making in overseas markets this trend is set fair to continue. Hays reported that 17 of the countries it operates in reported net fee growth of 10% or higher, and that fees in 10 of its nations hit record tops.
It’s not a mystery then that City analysts are forecasting that the company’s long-running growth story will continue with a 9% profits rise in the year to June 2019, a figure that also leaves Hays dealing on a dirt-cheap forward P/E ratio of 12.7 times.
Its fizzy profits outlook, allied with its strong balance sheet (it had £80m of net cash on the books as of last month) also bodes well for dividends. Right now the number crunchers are anticipating an 9.9p per share reward this year, a figure that yields a mightily-impressive 6.2%. I believe that the business offers plenty of upside at current prices, and could even make some investors a million or more in the years ahead as part of a Foolish portfolio alongside other great companies with strong moats.
Box up a beauty
Tritax Big Box’s (LSE: BBOX) share price has proved a lot more resilient than that of Hays in recent sessions, its share price ducking just 2% since the beginning of October.
I consider it to be a similarly-terrific buy for serious long-term investors given the increasing importance of e-commerce to the world’s biggest retailers and consumer goods manufacturers, and thus the favourable demand picture for the sort of large warehousing and logistics spaces that Tritax specialises in.
In the near term, City analysts are forecasting earnings rises of 10% and 5% in 2018 and 2019 respectively, and owing to real estate investment trust rules which require firms like Tritax to pay at least 90% of their profits to their shareholders via dividends, the City expects improved rewards of 6.7p and 7p for these respective years as well.
Tritax’s forward P/E ratio of 20.9 times may not be much to write about, but its yields of 4.6% and 4.8% for 2018 and 2019 certainly are.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Tritax Big Box REIT. 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.