Royal Mail’s rise came on the back of news of a High Court ruling that a union postal ballot of employees for industrial action was unlawful. Fullers’ fall was down to it announcing that its central overheads this year will be materially higher than management previously expected.

Here, I’ll look at the immediate impacts on the two companies, and also give my views on the medium- and longer-term prospects for their businesses and investors.

Happy to buy

Fullers’ announcement on Friday stems from the £250m sale of its brewing business to Asahi earlier this year. There is a transitional services agreement (TSA), under which Fullers bears central overheads until May next year.

Clearly, management misjudged the costs, although it also told us costs have been adversely impacted by a migration to a new enterprise resource planning (ERP) system, which has not yet delivered the expected benefits.

As a result, the company expects pre-tax profit for its financial year ending 28 March 2020 to be in the region of £31m, broadly in line with the prior year on a comparable basis. My sums say earnings per share (EPS) will be around 46p, which gives a price-to-earnings (P/E) ratio of 21.3 at a current share price of 980p.

Fullers has a record of seven decades of unbroken annual dividend growth, and I can’t see it changing this year. A modest increase in the payout to, say, 20.25p would be well-covered by EPS, and give a yield of a bit above 2%.

Despite the company’s slip-up on central overheads – and another near-term headwind in the shape of industry-wide cost pressures – I believe the company’s medium- and longer-term future is bright. With its long history of prudent management, strong balance sheet, and well-invested estate, I’d be happy to buy the shares today.

Happy to avoid

Last week’s news that Royal Mail has managed to prevent a damaging December strike has certainly been welcomed by the market. It’s reckoned the company could get a £30m windfall from the general election, due to a big volume boost from electioneering mail and postal votes. And then, of course, there’s the crucial Christmas trading period.

However, the news also serves as a reminder that Royal Mail has a highly unionised workforce. Generally, I believe this tends to hamper flexibility, technological innovation, and the speed at which the company is able to implement change.

I’d anticipate another union ballot – and a strike – next year, leaving the company’s cost-saving target of up to £200m looking overly optimistic. But it’s the long-term impact of fraught management-union relations that concerns me.

And that’s not the only structural negative for the business and investors. Letter volumes are in long-term decline, as more customers and businesses migrate to digital communication. I see downside risk to the rate of attrition here.

The growing, but highly competitive parcels market isn’t sufficiently attractive to overlook the business’s structural issues, in my view. As such, despite a P/E of 10.2% and 6.5% dividend yield (at a share price of 231p), I see Royal Mail as a stock to avoid.

The post Will the Royal Mail share price ever get back to its 330p IPO price? appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Fuller Smith & Turner. 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.

The UK and Germany saw a contraction in GDP in the second quarter of this year, sparking fears both economies are on the brink of recession. This could play into the hands of what I consider two very strong businesses. Namely, Premier Inn owner Whitbread (LSE: WTB), a FTSE 100 giant, and Fuller, Smith & Turner (LSE: FSTA), a smaller-cap pubs and hotels group.

Fuller possibilities

Founded in 1845, and still a family-controlled business, Fuller, Smith & Turner is renowned for its prudent management, strong balance sheet and seven decades of unbroken annual dividend increases. At a current share price of 1,130p, its market capitalisation is £365m (or over £600m if we include two classes of share that aren’t traded on the stock market).

Earlier this year, it sold its beer business to global drinks group Asahi for £250m — a “substantial premium to the value attributable to the company’s shareholders if the beer business had remained under Fuller’s ownership.”

The board plans to distribute between £55m and £69m (100p to 125p a share) to shareholders, and I expect to hear more on this in an AGM statement next week. Chief executive Simon Emeny also impressed upon investors that the sale of the beer business has “the added advantage of putting us in a strong position to deal with potentially turbulent times ahead as the UK navigates the implications of exiting the European Union.”

He added: “I cannot think of a better time to be entering a transitional year, having bolstered the balance sheet and reduced our debt, putting our business in pole position to take advantage of attractive opportunities that arise.”

I think a rating of 18.5 times this year’s forecast earnings, represents good value for a company with its impressive history and in its current position. I’d be happy to buy the stock today and hold it for the long term.

Premier prospects

The same goes for £5.7bn-cap Footsie company Whitbread, whose £3.9bn disposal of Costa Coffee earlier this year puts it in a strong position to grow its Premier Inn business, not only in the UK, but also in Germany.

The German hotel market is a third larger than that of the UK, and even more fragmented. Small independent operators are suffering a structural decline to the benefit of branded hotels, and an economic slump could increase the pressure on smaller operators.

Whitbread is looking to accelerate growth in Germany, including by “acquisitions of small to medium existing hotel portfolios.” Indeed, it’s already announced an acquisition of 19 hotels from Foremost Hospitality Group, which is expected to complete in February 2020.

At a share price of 4,276p, Whitbread trades on 19.8 times this year’s forecast earnings. Again, I think this represents good long-term value for a strong business that’s positioned to take advantage of any attractive opportunities to accelerate growth, particularly in the German market where it’s at an early stage of expansion.

The post 2 FTSE stocks that could win from recessions in the UK and Germany appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Fuller Smith & Turner. 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.

Greene King (LSE: GNK)

FTSE 250 — founded 1799 — share price 664p — market-cap £2,058m

Has a chief executive of 14 years standing. The biggest of the three groups, with two breweries and an estate of 2,798 outlets across England, Wales and Scotland. Also, a nice perk of discounts on food and drink for shareholders owning a minimum of 100 shares.

Fuller, Smith & Turner (LSE: FSTA)

FTSE SmallCap — founded 1845 — share price 1,150p — market-cap £637m

Another venerable pubs group and brewer, it also offers shareholder perks (on a minimum holding of 500 shares). Descendents of the founders remain major shareholders and stewards of the business. Geographical focus of 385-pubs estate is London and southern England.

City Pub Group (LSE: CPC)

FTSE AIM — founded 2011 — share price 237.5p — market-cap £146m

Relatively new company, but key members of team are industry veterans. Previously founded Capital Pub Company in 2000, sold to Greene King in 2011 after it trumped an offer from Fullers. City owns fewer pubs (44) than Fullers, but geographic footprint is similar.

Valuation

The table below shows some key metrics for the three companies.

The asset valuation P/TNAV (market-cap divided by tangible net asset value) is broadly similar for the three companies. The variances in the other metrics — the earnings valuation EV/EBITDA (enterprise value divided by earnings before interest, tax, depreciation and amortisation), net debt/EBITDA (a measure of balance sheet strength) and dividend yield — largely reflect their relative stages of growth/maturity.

If I already owned these stocks, I’d be inclined to continue to hold. However, for a different reason in each case, I’m not moved to buy right now.

Waiting game

Most of my Motley Fool colleagues are keen on Greene King, because of its cheap earnings rating and high dividend yield. However, while property-backed pub groups can tolerate a higher level of debt than many businesses, and Greene King’s net debt/EBITDA is within management’s target range, I do find the level a little concerning. Particularly as one analyst has suggested there’s something of an element of smoke and mirrors in the company’s current programme of refinancing high-interest bonds. I’d like to have a close look at the next annual report before committing here.

I’m holding off on Fullers for the moment because it’s recently agreed to sell its brewery (and associated businesses). This is a big deal. The EV of £250m being paid for the assets compares with a current total group EV of £860m. I’m minded to wait and see how Fullers’ numbers stack up after this significant disposal.

Finally, City deserves a higher earnings rating as a fast-growing business. But I think the EV/EBITDA of 19.5, as well as P/TNAV of 1.9, are just a bit too high. Predecessor Capital was sold to Greene King at ratings of 13.7 and 1.7. I reckon the market has inflated City’s valuation due to management’s past success with Capital, and I’m looking for a lower entry level.

The post 1 FTSE 250 high-yielder and 2 small-caps I’m considering buying appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Fuller Smith & Turner. 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.

Global giant

Have you got a jar of Marmite, Bovril or Colman’s mustard in your food cupboard? PG Tips in your tea caddy? Hellmann’s mayonnaise in your fridge? Ben & Jerry’s or Magnum ice cream in your freezer? Persil washing powder or a Cif cleaner under your kitchen sink? Domestos, Dove soap or TRESemmé shampoo in your bathroom?

These are just a few of over 400 brands owned by FTSE 100 Anglo-Dutch consumer goods giant Unilever (LSE: ULVR). It owns some of the best known and biggest selling household brands in the world, including 12 that have sales of more than €1bn a year. On any given day, 2.5bn people around the world use Unilever products.

The group is a cash-generating machine and is of such a size it can easily buy other blue-ribbon brands, if they become available. For example, earlier this month, it announced the €3.3bn acquisition of Horlicks and other health food drinks in India, Bangladesh and 20 other predominantly Asian markets from GlaxoSmithKline.

I view a rating of a little over 20 times calendar 2018 forecast earnings as excellent value for this world-class business. And I expect years of continued dividend growth from an initial yield of 3.2%.

Emerging markets story

Mid-cap PZ Cussons (LSE: PZC) can’t match Unilever for global spread, nor does it own any brands that generate sales of more than €1bn a year. Total sales for its current financial year (ending May 2019) are forecast to be around £740m. However, it does operate in a fair number of countries, including a notable presence in emerging markets. And it owns some very decent brands, including Imperial Leather, Carex and Original Source.

Growth has been checked in recent years by a challenging economic backdrop in Nigeria (one of its most significant markets). However, I believe the story of increasing population and affluence in emerging markets remains intact, and bodes well for the company’s long-term prospects.

A rating of 16 times forecast earnings for its current financial year is cheap by historical standards and a prospective dividend yield of 3.9% is well above its historical average. With earnings and dividend growth forecast to resume in the company’s next financial year, I see great value here for long-term investors.

Venerable UK business

Brewer and pubs group Fuller, Smith & Turner (LSE: FSTA) is a UK-focused business. Its estate, which includes many landmark houses, is concentrated in London and the south east. Its positioning in and around one of the world’s most vibrant capital cities has enabled the business to thrive since its foundation in the mid-19th century.

Remarkably, descendants of the founders remain significant shareholders. And there are Fullers and Turners on the board of directors, ensuring the business continues to be conservatively stewarded with a long-term perspective. The company has a terrific record of annual dividend growth, putting many FTSE 100 firms to shame.

Trading on 14 times forecast earnings for its current financial year (ending March 2019), and with a prospective 2.3% yield, I see this is another great-value dividend stock that could pay you for the rest of your life.

The post 3 dividend stocks that could pay you for the rest of your life appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK owns shares of PZ Cussons. 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.

Great opportunity

On the surface, the headline numbers in today’s half-year results from Fullers weren’t impressive. Revenue increased 6%, but adjusted pre-tax profit and earnings per share were both down 1%. The National Living Wage and business rates had an adverse impact (a sector-wide issue) but it also took a conscious decision to front-load its investment programme to ensure its estate is in “the best possible position to benefit from the busy Christmas period and beyond.”

This is typical of how it always looks to the longer term, just as it continued to invest during the last recession and later reaped the rewards. The company has faced far greater challenges than Brexit in its 173-year history and I believe the current depressed share price of 912p represents a great opportunity to buy a stake in the business. The forward 12-month price-to-earnings (P/E) ratio of 13.8 is cheap by historical standards, while the dividend, which has been increased every year since the 1950s, yields 2.3%.

Quality global enterprises

While Fullers is a brilliant UK-focused business, Relx and Diageo are top-quality global enterprises. Relx provides information and analytics to customers in attractive growth fields, including scientific, medical and legal. Diageo owns powerful consumer drinks brands, including Johnnie Walker whisky, Gordon’s gin and Guinness stout.

The fundamental quality of Relx’s and Diageo’s businesses are manifested in growing revenues, high profit margins and high returns on shareholders’ equity. I believe both companies are more than capable of continuing to deliver terrific results for investors in the decades to come.

Buy the dips

Having dipped below 1,500p during the October market sell-off, Relx’s shares are currently trading at 1,620p. Similarly, Diageo’s shares dropped to near 2,500p but are now up to 2,800p. Buying on the dips during market turbulence is a good strategy with high-quality businesses like these, and Relx was highlighted near its lows by my Foolish colleague Kevin Godbold. Has the opportunity now passed? Or, with both stocks still below previous highs, are their valuations still attractive?

Relx is on a forward 12-month P/E of 18, with a prospective dividend yield of 2.7%. When I last wrote about the company (last year), the share price was a little lower than today (but so were earnings forecasts) and the P/E was 19. Due to the quality of the business, I viewed the stock as very buyable on that rating. As the P/E is now 18, I maintain the same view today.

Diageo’s forward 12-month P/E is 21.7 and its prospective dividend yield is 2.5%. This is very similar to figures of 21.9 and 2.5% when I last wrote about the company (during the summer). I rated the stock a ‘hold’ at that time, but suggested a dip in the share price (then 2,750p) would be a good buying opportunity. The dip having come and gone, I’m back to rating this higher-premium stock a ‘hold’ for the time being.

The post 3 quality stocks I’d buy and hold for decades appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo and RELX. 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.

According to data from Schroders, if you’d invested $1,000 on 1 January 1993 in the MSCI World Index, your capital would have increased to $3,231 by 7 March 2018, representing annualised growth in your wealth of 5.9%. However, if you’d reinvested all your dividends, the same $1,000 investment in the MSCI World would have produced a return of $6,416, representing annualised growth of 8.3%. This is the miracle of compounding at work… you earn returns on your returns and these snowball over time.

Crème de la crème

Now, market indexes, such as the MSCI World or the FTSE All-Share, include companies that don’t pay dividends and many companies that will have had dividend cuts during a 25-year period, or spells of no dividend growth.

Relatively few FTSE All-Share companies have been able to increase their dividends each and every year for more than two decades. But such companies that have are highly prized by investors. Indeed, in time, they could be generating enough dividends for you to quit your job and live off the income. Of course, there’s no guarantee that these companies will continue their records in the future, but I’ve got three for you that I believe have good prospects.

Global giant

Drinks giant Diageo(LSE: DGE) is a £68bn FTSE 100 blue chip. It has a stable of highly valuable brands: Johnnie Walker whisky, Smirnoff vodka, Gordon’s gin, and many others. The group’s drinks are enjoyed by people in more than 180 countries around the world.

Well-loved brands, geographical diversification and the defensive nature of the business (alcohol consumption tends to hold up well through economic cycles) have helped Diageo deliver a history of annual dividend increases going back into the 20th century.

Sip on a dip

The company came through a lean period for earnings a few years ago but was still able to increase its dividend. The outlook for earnings growth is now much improved, with City analysts forecasting high-single-digit advances this year and next and, of course, continuing increases in the annual dividend.

The shares have made strong gains as the earnings outlook has improved. They’re trading at around 2,750p as I’m writing, compared with sub-2,000p 24 months ago. The 12-month forward price-to-earnings (P/E) ratio is 21.9 and the prospective dividend yield is 2.5%.

Now, I mentioned earlier that dividend growth stars like Diageo are highly prized by investors. As such, they tend to trade on premium P/Es and below-market-average yields. Unfortunately, Diageo’s P/E is currently towards the higher end of its historical range and its yield is towards the lower end.

I agree with my Foolish colleague Kevin Godbold that long-term investors should still do well from the stock but I think the ideal time to buy is when the yield on offer is nearer 3% (and sometimes above). Personally, I rate the stock a ‘hold’ at the current level but would see a dip in the share price — pushing the current 2.5% yield up a bit — as a good buying opportunity.

Soap not bubbling

PZ Cussons(LSE: PZC) is another company in the consumer goods industry. In addition to Cussons’ venerable Imperial Leather soap brand, it owns other personal care & beauty brands, such as Carex and St Tropez, as well as home care brands. In some of its markets it also operates in the electricals and food & nutrition segments.

While Diageo has come through a period of lean earnings, Cussons is in the midst of one. In fact, it’s forecast to post a 20% fall in earnings per share when it reports results for its financial year ended 31 May — before a return to modest growth in fiscal 2019. Its international exposure isn’t as broad as Diageo’s. Economic conditions have been tough for some years in its large Nigeria market and this has recently been compounded by headwinds in another large market, the UK, where consumers are shopping more cautiously as a result of economic uncertainty.

Dividend record at risk

In its results last year, Cussons delivered a dividend increase for the 44th consecutive year. However, the City consensus is for a 5% reduction in the payout this year. I don’t believe the company is in a position where it has to cut the dividend. Much will depend on what the board thinks is prudent and how keen it is to maintain that terrific record of annual increases.

On the positive side — and in contrast to Diageo — Cussons’ depressed share price of 225p means its 12-month forward P/E of 16.3 is towards the lower end of its historical range. Meanwhile, its prospective yield is at the higher end: 3.7% if the dividend is maintained and 3.5% if cut in line with the City consensus forecast. Despite this FTSE 250 company’s current difficulties, I believe it has excellent long-term prospects and I rate the stock a ‘buy’.

Blue-chip smaller company

Brewer and pubs company Fuller, Smith & Turner (LSE: FSTA) released results for its financial year ended 31 March earlier this month. The board said it was increasing the annual dividend by 4%, “continuing seven decades of unbroken growth.” If ever a FTSE SmallCap company could be described as a blue chip, Fullers is surely it.

Despite all the Brexit hoo-ha, I expect London to remain, as it has been for centuries, one of the most dynamic capital cities in the world. And I expect Fullers, with its London and south-east focus and well-invested estate of brilliant pubs, to thrive alongside it — as it has done since it was founded in 1845.

At a share price of 950p — down from 976p when I last looked at it — Fullers trades on a forward P/E of 14.8, which I reckon represents great value. The prospective dividend yield is only 2.2% but the payout is covered more than three times by earnings. And thinking of the miracle of compounding over seven decades, I rate the stock a ‘buy’.

The post 3 dividend growth stocks that could help you quit your job appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of PZ Cussons. The Motley Fool UK has recommended Diageo. 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.

Building a second income stream from high-quality dividend stocks is a fantastic way to create wealth over the long term. And the best part is, this strategy requires little effort on your part. Here are two companies that I believe are perfect candidates to help you accomplish this goal. 

Slow and steady 

Pub group Fuller Smith & Turner (LSE: FSTA) might not be the first income stock on investors’ radars, but that does not mean you should overlook this income champion. 

Over the past six years, the group’s dividend per share has grown at an average annual rate of 8.2%. Today the shares yield 2.1%, compared to the market average of 3.7% and trade at a forward P/E of 15. 

You might be wondering why I believe Fuller’s is a great income stock with a yield below the market average. The reason is that payout is covered three times by earnings per share, and the company, which is one of the largest pub and hotel groups in the UK, has a strong balance sheet and bright growth outlook. 

Today’s full-year numbers from the group showcase its strengths. For the 52 weeks ended 31 March, revenue jumped 5%, “above the industry average” for managed pubs and hotels. Adjusted earnings per share increased 4%. 

Off the back of these numbers, management has increased the full-year dividend by 4% to 19.6p per share. 

These are tough times for the pub industry with costs rising thanks to Brexit, rising business rates, a higher minimum wage and apprenticeship levy, factors that are causing strain across the industry. However, it seems as if Fuller’s has been able to offset these issues. “During the year, we have had to absorb a number of cost pressures” today’s release noted. “Despite this, we have continued to grow profits and the impact has been mitigated to a margin dilution of 10 basis points” it continued. 

Fuller’s efforts to mitigate these pressures are a testament to the group’s structure, and efforts by management to cut waste. Reinvestment in operations has been essential to staying ahead of the rest of the sector. The company spent £28.2m on refurbishment, new pub openings, automated equipment for its Chiswick Brewery and IT investment throughout the year. Capital spending was easily covered by £51m of cash generated from operations. Dividends only cost the firm £11m, so there’s plenty of headroom for further dividend hikes. 

Considering all of the above, I believe Fuller’s can help you build a second income from shares despite its relatively low yield. The dividend is well funded, and the company is spending millions investing in itself to drive growth. 

Secure income 

Secure Trust Bank (LSE: STB) is another stock I believe can help you build a second income stream. At the time of writing, this stock supports a dividend yield of 4.4%, above the market and the banking sector average of 3.5%. 

In my view, over the past five years, Secure Trust has quickly established itself as a high-quality income stock. For 2018 the firm is expected to distribute 83.2p per share, up 46% from 2012’s payout of 57p giving an average annual growth rate of 6.7%.

And the sustainability of this distribution is set to increase substantially over the next two years if City expectations are to be believed. Analysts have pencilled in earnings per share growth of 38% for 2018 followed by growth of 33% for 2019. The dividend is expected to grow at a more moderate pace — 5.3% for 2018 and 7% for 2019 — the result being that dividend cover will rise from just 1.1 in 2016 to 2.2 by 2019. 

With this being the case, Secure Trust’s investors are not only set to receive a market-beating dividend yield, but they should also benefit from capital growth as well. At present the stock is trading at a forward P/E of 13.2, falling to just 9.9 by 2019 based on current growth expectations.

The post You could build a second income stream with these champion dividend growth stocks appeared first on The Motley Fool UK.

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Rupert Hargreaves owns no share 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.

Vodafone (LSE: VOD) is one high-yielder I’d buy today, while pubs group Fullers (LSE: FSTA), which released a trading update this morning, is a robust dividend-growth stock I’d also be happy to purchase.

Yin and yang

The table below shows some historical and forecast dividend data for both companies, illustrating their different dividend profiles.

* Vodafone changed its reporting currency to euros in 2017 with the exchange rate of 11.45p/14.48¢ for 2016 providing the base for future dividends declared in euros.

At a current share price of 228p (and at current exchange rates), Vodafone offers a 5.75% dividend yield based on the forecast payout for 2018. Set against this high yield, dividend growth has been — and is forecast to be — relatively modest. This is the opposite of Fullers, where markedly higher dividend increases come with a lower yield. The forecast 2018 payout for the pubs group gives a yield of 2% at a current share price of 976p.

Different profiles in terms of yield and growth don’t make one company an inherently better investment than another. I mentioned earlier that carefully chosen stocks of each type can be blended with the aim of producing both a superior starting yield and inflation-busting growth. But I’ll explain briefly now why I believe Vodafone and Fullers both merit the ‘carefully chosen’ qualification.

Ringing endorsement

With high-yield stocks, the risk of a dividend cut is a primary consideration. Vodafone has come through a period of transition and heavy investment, during which the risk of a cut was somewhat elevated. However, while the payout remains uncovered by accounting earnings, the group’s free cash flow has advanced rapidly of late. In fact, management has upgraded previous guidance of “around €5bn” for the current year to “exceed €5bn.”

Vodafone’s dividend is looking increasingly secure and with the massive investment of recent years boding well for the future, I’m inclined to agree with my Foolish colleague Royston Wild who named the telecoms colossus as a FTSE 100 dividend stock he’d buy and hold forever.

A toast to a special dividend record

Fullers said in its trading update today that it had delivered “a solid performance” over the 42 weeks to 20 January, despite “what remains a challenging trading environment.” Management referred to “our long-term vision and prudent financing” in looking to the future. These are qualities the company has always possessed.

I’ve previously written in some detail about its long history, which includes an extraordinary record of increasing its dividend for over seven decades, making it an unsung hero in my eyes and a blue-chip dividend growth stock well worth buying for the long term.

The post Vodafone Group plc isn’t the only dividend champion I’d buy today appeared first on The Motley Fool UK.

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G A Chester 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.

What many investors don’t realise is that this company is one of the few companies in the world that has an extraordinary record of increasing its dividend for over seven decades. 

And today the company added to that record by announcing a 4% increase to its interim dividend alongside its half-year results. 

Upbeat trading 

For the 26 weeks to the end of September, the family-owned company reported a 4% increase in pre-tax profit to £23.8m and a 5% increase in adjusted earnings per share to 34.2p. What’s more, revenue expanded across all divisions as CEO Simon Emeny said that in the 33 weeks since 1 April 2017, like-for-like sales in its Managed Pubs have risen 3.7%, while like-for-like profit in its Tenanted Inns is up 2% and total beer and cider volumes in The Fuller’s Beer Company are up 1%.

These figures are highly impressive, especially when the rest of the pub industry is suffering from multiple headwinds such as the rising minimum wage and a squeeze on consumers’ incomes. Indeed, only yesterday peer Mitchells & Butlers announced that it was slashing its dividend after adjusted operating profit for the year to the end of September fell 3.1%, thanks in part to rising costs. 

Looking at today’s figures from Fuller’s, it would appear that the group is using its decades of experience as a pub operator to navigate today’s choppy trading environment exceptionally well, a testament to management and great news for shareholders. The firm’s outperformance should underpin continued dividend growth making this a great stock for long-term income seekers. 

At the time of writing, the shares support a dividend yield of 2% and this payout is covered three times by earnings per share, leaving plenty of room for manoeuvre. 

This is one dividend stock that you can buy and forget for the next few decades. 

Changing with the times 

James Fisher & Sons (LSE: FSJ) is another company that has proved itself over the past few decades. In fact, the business has been operating for over 170 years, so it has plenty of experience of working through both the good times and the bad. 

This has helped the firm navigate through the energy industry slump by expanding into renewables and this transition is paying off handsomely. According to a trading update issued by the firm today, revenue for the 10 months ended 31 October was 7% ahead of the comparable period last year, and the group remains on track to hit City expectations for the year. 

Unfortunately, it seems the market isn’t pleased with this update, as the shares are trading lower by 3% at the time of writing. However, while the market may have lost interest in the business, as a long-term buy, James Fisher looks highly attractive to me. 

Earnings per share are expected to hit 82.2p this year, a five-year high and up 46% from 2012. If the group can remain on this growth trajectory, and continue to re-invent itself, there’s no reason why James Fisher cannot help you make a million from investing. The shares trade at a P/E of 19.5 and yield 1.8%. 

The post These 2 ‘secret’ growth stocks could still make you brilliantly rich appeared first on The Motley Fool UK.

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Rupert Hargreaves owns no share 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.

Today’s update told us the UK housing market has remained positive, with consumer demand continuing to be robust. It said that while the company is “alert to potential political and economic risks,” it’s on track to meet full-year expectations.

Boom … and bust?

Management expects to deliver an increase on last year’s operating profit margin of 20.8%. For a volume builder, this margin is running at the boom end of the housing cycle, as is the company’s price-to-tangible book value of 2.1 times. A City consensus earnings per share (EPS) forecast of 19.13p gives an ‘undemanding’ price-to-earnings (P/E) ratio of 10.1 but with forecast earnings growth of 5.7%, the price-to-earnings growth (PEG) ratio of 1.8 is well to the expensive side of the PEG ‘fair value’ marker of one.

Housebuilders have boomed since the financial crisis, with unprecedented low interest rates and specific support for the industry, notably via the government’s Help to Buy scheme. However, with consumer debt at record levels and interest rates rising, I feel the housing cycle could begin to turn with anything less than further impactful support from the Chancellor in this month’s Budget.

Finally, I note that Taylor Wimpey directors sold shares to the tune of over £3m six weeks ago and that this has become something of a feature of housebuilder boardrooms in recent months. The company’s cyclically high profit metrics and valuation lead me to rate the stock a ‘sell’ and the tougher outlook for over-indebted consumers and boardroom share sales only buttress my view.

A Warren Buffett-type business?

I’m more optimistic about the valuation and outlook for Fuller, Smith and Turner (LSE: FSTA). While, Taylor Wimpey’s shares have recovered from the Brexit vote shock, the pub group’s haven’t. They reached an all-time high of over 1,200p a couple of years ago, but retreated to below 1,000p after the referendum and have continued to trade a little above and below that level (currently 985p).

Of course, the aforementioned tougher outlook for consumers also represents a headwind for Fullers, as do cost issues, including such factors as the impact of the National Living Wage and the introduction of the Apprenticeship Levy. However, the depressed share price seems to factor in these issues. I see potential for surprise good news in the Budget (for example, on beer duty) but, more importantly, with its focus on London and a superb estate of rare and valuable properties, Fuller remains a great proxy for the long-term dynamism and wealth-generation of the capital city.

This positioning, together with the superb management of the company, has delivered decades of value for shareholders, including over 70 years of rising dividends. With forecast EPS of 62.2p, giving a P/E of 15.8, and an immensely-covered 20p dividend providing a 2% yield, I’m reminded of Warren Buffett’s advice: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” This is certainly a company I’d be happy to buy a slice of today.

The post Why I’d sell Taylor Wimpey plc before the Budget appeared first on The Motley Fool UK.

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G A Chester 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.