Investing in wine is often seen as a good supplement to a portfolio of stocks and bonds.
Normally it is seen in a similar light to an investment in antiques, fine art, or classic motor vehicles.
If stored in a properly bonded warehouse, it’s true that the tax implications on the investment can be negligible.
Despite this, I feel that wine is an incredibly risky investment. Multiple things can go wrong, from bad vintages to mishandling of the bottles.
Personally, when it comes to investing, I value simplicity. I’d rather buy the following two shares, collect a regular dividend, and hope to see price growth over five to ten years.
Bunzl
Over the past year, the Bunzl (LSE: BNZL) share price has slumped by 15%.
The specialist international distribution and outsourcing group posted its Q3 trading update in October. The results were disappointing due to “mixed macroeconomic and market conditions.”
Gross revenue growth was reported to have increased by 4% at actual exchange rates. However, at constant exchange rates, this equated to growth of only 0.5%. Underlying revenue fell by 1%, due to previously announced lower sales to a large grocery customer in North America.
Growth through acquisitions is at the heart of the business’s ongoing strategy. It has made a committed spend on acquisitions of approximately £100m so far this year. Further discussions are ongoing.
Fellow Fool Harvey Jones notes that Bunzl has 26 consecutive years of dividend hikes. Its prospective dividend yield is 2.5%.
An international business such as Bunzl is always going to be susceptible to macroeconomic issues. But with a price-to-earnings ratio of 16, I think now represents a good buying opportunity.
Whitbread
Premier Inn owner Whitbread (LSE: WTB) has also seen its share price slump, with a drop of over 4% in the previous year.
In its latest results, Whitbread acknowledged the challenging market conditions. Revenue was broadly flat, with weak regional market conditions to blame.
The leisure industry in the UK has also been in decline over the year. However, with operations also focussed in Germany, I think the company is well-positioned in the budget hotel market over the long term.
In addition to this, the business has trialled higher specification ‘Premier Plus’ rooms. Following good customer feedback, is now on track to having 500 Premier Plus rooms across its chain, with the hope of increasing this to 2,000 over the next year.
With a prospective dividend yield of just over 2% and a price-to-earnings ratio of 26, the Whitbread stock price may seem to be a touch on the high side. However, following efficiency measures including cost-cutting exercises and investment in technology, when market conditions and customer confidence is regained, I believe that the business will be in a strong position to capitalise on improvements.
As such, I think this is definitely a company to keep a close eye on.
