The Motley Fool

A FTSE 250 dividend growth stock I’d buy as a no deal Brexit approaches

Image source: Getty Images

Prime minister Theresa May is on the verge of exiting Downing Street for the last time, at least in her role as Britain’s political leader. Her attempts to guide the country through the malaise of Brexit have proved a failure. But brace yourself. Things could be about to get even more turbulent.

We’re five months away from the current Brexit date of October 31 and a number of seismic scenarios remain very much in play. A leadership contest to find a new prime minister; fresh negotiations with the European Union on the terms of withdrawal; another Article 50 delay; a second referendum, or even a general election…

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Particularly concerning for many investors, though, is the possible replacement of premier May with someone taking a harder line towards the European Union, an individual who may be prepared to pull the UK out of the continental trading bloc under no deal conditions.

Profits powering higher

I recently explained why utilities business SSE, despite the classically-defensive nature of its operations, may not in fact be a lifeboat in uncertain times like these. I believe that B&M European Value Retail (LSE: BME) might be a better investment as an economically-destructive Brexit looms over the UK.

While the rest of the UK retail sector is suffering from crimped consumer spending power and waning investor confidence, this FTSE 250 retailer is shrugging off these troubles thanks to the low cost of its colossal range of products. Sure, like-for-like revenues in its core UK marketplace may have clocked in at just 0.7% in the 12 months to March, but any sort of growth in the current climate is to be commended in this environment.

Besides, thanks to B&M’s efforts to expand its store network, profits are growing at a brilliant pace. Pre-tax profit rose 8.7% in fiscal 2019 to £249.4m, helped by a 17.1% improvement in headline revenues, and plans to deliver 50 new own-brand fascia stores in the current year — up from 44 last year — bodes well for the bottom line from this year onwards, too.

A lifeboat in troubled times

The rate at which both profits and cash are growing (cash generated from operations rose to £259.4m last year) means that B&M has remained a generous dividend grower, the firm upping the full-year payout for the period just passed by almost 6% to 7.6p per share.

It’s probably not a surprise to anyone that City analysts are expecting more chunky payout growth for the foreseeable future too. Payouts of 9.2p and 10.6p per share are estimated for this year and next, respectively, figures that yield a chunky 2.5% and 2.9%.

Of course there’s bigger near-term yields to be found, but in the context of Brexit not all of them are in good shape to keep growing profits and dividends like B&M.

If you’re fearful about how European Union withdrawal will affect your portfolio I believe this retail star is a great way to protect your wealth.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of B&M European Value. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.