I am looking to make my cash work for me and, given current bank interest rates on savings, I am looking for companies where they offer the possibility of a good dividend and the potential for capital appreciation. When the markets turned down last March, even sound companies were hurt. But those who were digesting takeovers, or were in any way fragile, were unmercifully pummelled by nervous and over anxious investors. Let’s look at two shares that I have just purchased.
The first was founded in 1825 – Standard Life Aberdeen (LSE: SLA) – and provides asset management services. The company offers investment solutions and funds, long-term savings and investment products to individual and corporate customers, and life insurance and savings products. It also makes real estate investments.
Its dividend yield last year was 7.24%, which makes it very attractive to me as an income share. It is expected to be 6% this year and is normally paid at the end of May. For your information, the record date for the next dividend payment will be around the beginning of April. If you are a shareholder on this date, you are entitled to the forthcoming dividend.
Rupert Hargraves of this parish spoke highly of Standard Life in December, and he offered some compelling arguments that this would be its year. These included the fact that the new CEO, Stephen Bird, seemed to be getting to grips with the relatively recently merged entities, Standard Life and Aberdeen Asset Management.
Another company that has had indigestion issues with a takeover is Mitie Group (LSE: MTO). The company was founded in 1987 and, through its through its subsidiaries, provides strategic outsourcing services in the United Kingdom and internationally. It acquired Interserve’s facilities management business and had a rights issue to reduce debt levels. The share price fell from 80p to nearly 35p this past year.
Kirsteen Mackay covered the price plunge at the time, and highlighted the potential upside once the dust settled. Investors who bought at that point would be up 20% now.
In late November 2020, Mitie revealed that while profits and revenues fell in the first half, they were profitable. “Our financial performance in the first six months of the year proved more resilient than expected with a much improved second quarter,” Chief Executive Officer Phil Bentley said.
A great sign of confidence is the fact that senior executives have been buying at the 43p mark (at this moment, Mitie shares are trading at 42p). After all, they know how well they are doing on a day-to-day basis.
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Michael Breen owns shares in Standard Life and Mitie Group. 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.