Right now, I can see shares in each category for investors to consider. And they’re not always the most obvious names.

Associated British Foods 

The FTSE 100 currently has a dividend yield of 3.3%. And Associated British Foods (LSE:ABF) is exactly in line with this. 

That makes the next question a straightforward one – is this an above-average business? I think it might be.

The company’s main asset is Primark. And while it’s a retailer, it’s important not to underestimate just how valuable it is. Primark recently reported a fall in like-for-like sales across Europe. But that’s not as significant as it might be. 

It certainly highlights a key risk. When consumer spending is weak, lower sales can lead to price cuts that weigh on margins. Unlike the majority of publicly-traded retailers, though, Primark is still expanding rapidly. Especially in the US.

The firm currently has around 38 stores in the US. But there’s talk of this growing to over 100 by 2030, which is a big increase.

While success isn’t guaranteed, the early signs are promising. And there are also expansion plans in other countries. That means Primark’s growth isn’t limited to like-for-like sales. And it’s why I think dividend investors should take a look. 

Grainger

Despite excess inventory in the UK housing market, affordability issues remain. Enter Grainger (LSE:GRI).

Ultimately, housing is a basic need. And if people aren’t in a position to buy – for whatever reason – they have to rent.

The firm owns and leases residential properties. And it has 11,000 properties with 5,000 more in its pipeline for future growth

In terms of the dividend, the situation is a little complicated. Grainger is becoming a real estate investment trust (REIT). That means the dividend will become mandatory. But the firm should benefit from tax exemptions on its rental income.

Analysts think the result will be a yield of around 5.5%. And that might well be attractive in today’s market. 

There’s obviously a shortage of housing in the UK, so demand for Grainger’s properties should stay strong. But there are risks. One of these is regulation. Shifting standards can result in higher costs and while Grainger is well-positioned right now, that could change. 

In terms of dividends, though, this looks like an interesting business in a durable industry. And I think it’s worth a closer look. 

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Income investing

There’s more than one way to be a dividend investor. But the best opportunities are often high-quality companies that the market underestimates.

In my view, both Associated British Foods and Grainger meet this description. Neither is a high-octane bushes, but that’s not the point. 

Both combine decent dividends with strong growth prospects. And that’s what I think investors looking for passive income should prioritise.

The post 2 UK dividend stocks to consider buying in April appeared first on The Motley Fool UK.

Whether they have done so or not, the good news is that although January has marched onwards it is not over yet.

There is still time for someone who wants to start investing this month to do so.

Getting ready to invest this month

The practicalities need not be time-consuming.

If someone wants to start investing, they need a practical way to do so.

Those could include share-dealing accounts, Stocks and Shares ISAs, and trading apps. It is normally possible to set one up quickly.

A new investor also needs to understand some of the key basics about how to invest, such as valuing shares and spreading  a portfolio across different companies.

Is there enough time to do that this week? I think so.

What’s the point of investing?

One mistake I believe some people make when they start investing is not setting a clear objective and planning how they might get there.

It can be easy to see the point of investing as making money. But that is an oversimplification.

There are different ways somebody may make money by owning shares. Price rises are one, but dividends can also help an investor build wealth.

Meanwhile, some things might eat into the money invested rather than help it grow, including share price falls. Small-seeming trading fees and commissions can add up over time too, which is why I mentioned taking time to choose the right platform for buying and owning shares.

So I think it is helpful when someone starts investing for them to be as clear as possible about what their goals are and how they think they need to invest to try and meet them.

Of course, that can change with time and experience. But at least having a clear starting point can help provide a direction of travel.

On the hunt for shares to buy

Another thing to think about, of course, is what shares to focus on.

One share I think investors should consider is Associated British Foods (LSE: ABF).

That may be a somewhat unpopular view right now! After an unexpected profits warning, the share price is already down 11% this month.

But I think a long-term view can be helpful, from the day one starts investing.

Associated British Foods has challenges, not only with demand in its Primark chain of cheap clothes shops, but also in the food business. Revenues in the sugar business have been falling, for example, and I see that as an ongoing challenge for the company.

Still, all is not lost. The company has a diversified range of assets that give it some protection from the economic cycle. It owns a welter of well-known and well-loved brands, from Twinings to Silver Spoon.

I see this as a somewhat dull but solidly run, profitable business that has long-term potential thanks to well-established operations and quality brands.

I do not think the current share price fully reflects that.

The post It’s already the last week of January! Time to start investing? appeared first on The Motley Fool UK.

The problems stem from a poor Christmas trading period. CEO George Weston initially said: “Primark has had a challenging start to the financial year, with a mixed performance.” And Primark really has been the jewel in the crown for the company for some time.

Like-for-like sales

The latest update confirms just a 1% increase in total sales compared to the same period a year ago. That’s maybe not too bad. But like-for-like sales have been a bit of a worry, falling 2.7% in the period. These figures are in line with the earlier estimates, so there’s no change. But it does eliminate the uncertainty, with the weaker trading at least no worse than feared.

Looking at Associated British Foods’ retail business in general, sales in the period rose 4.2% at actual currency — better than the original 4% estimate. Grocery sales were largely unchanged.

These aspects of the company actually look reasonable to me. I really wasn’t expecting Primark, or retail in general, to have a great holiday season this year. Not with all the turmoil in the economic situation in the UK and globally. So, not brilliant, but no great worry — that’s my take.

Not Primark

When it comes to ABF’s other businesses, I’m less happy. Sugar revenue did worse with a 4.3% fall than the earlier 2% drop estimated. Agriculture down 4.1% and Ingredients dipping 2.9% are largely in line with the initial figures. On a geographic basis, sales in Europe (excluding UK and Ireland) fell 1% in total, but declined 5.7% on a like-for-like basis.

All in all, I see Associated British Foods as a confusing mess for investors thinking of buying. Almost half the company’s sales come from Primark, a trusted brand with a loyal following. It’s the first place I looked when I needed a suit last year — though I found nothing appropriate for my corporeal magnitude and I ended up paying more than I hoped at Marks & Spencer.

Still, socks, underwear, t-shirts… it’s where I go. I like Primark, and I see a positive future for it when inflation gets back to treading a downward path.

Time for change?

One statement in November’s full-year results stood out to me. “Board review of group structure announced, which may lead to a separation of the Primark and Food businesses,” it said.

If that should happen, I’ll definitely consider buying Primark shares. But for now, I’ve no interest in sugar beet or pig food. At least the latest news has put a stop to the month’s ABF share price fall. And I could see a slow recovery coming.

The post What next for the ABF share price after this latest update? appeared first on The Motley Fool UK.

Complacency creeps in

The pop over the past couple of weeks has come more from positive global risk sentiment. Even though this is good, I think the UK stock market is being carried by this, rather than by strong UK-specific factors. In fact, given the state of the economy, I believe some investors are becoming complacent.

The latest GDP figure for Q3 showed anaemic growth of 0.1%. In more recent data, the unemployment rate has risen to 5.1%, the highest level since 2021. There’s also growing chatter about a rise in struggling firms. This fuels worries about underlying economic weakness that could hit corporate earnings.

Yet for the moment, the stock market is being carried higher. This is fuelled in part by rising valuations for AI and tech companies in the US. If we see a correction in this area, it could pull the FTSE 100 lower. At that point, people might start to behave more as if the UK economy isn’t in the best shape, compounding the problems.

Given that the UK data has been deteriorating in recent months, along with the increase in US tech valuations, I think the odds of a crash have risen.

How to handle it

I don’t want to be seen as someone who’s completely doom and gloom. Despite my view that the odds of a big move lower are increasing, I still don’t believe we’re going to see a sharp fall immediately. However, I think it’s worth considering some defensive stocks at the moment to help protect a diversified portfolio.

For example, Associated British Foods (LSE:ABF) is a food company that owns famous brands, including Kingsmill bread and Ovaltine, as well as operating at the beginning of the supply chain via manufacturing and selling raw ingredients.

Over the past year, the share price is up 5%, with a dividend yield of 2.93%. This doesn’t make it a high-growth stock, but it has several qualities that make it a good defensive idea. For example, it generates revenue from multiple divisions, some of which are entirely unrelated to others. Furthermore, it owns brands that sell everyday groceries and staples. People buy these regardless of the economic cycle.

It’s a global company too. So even if the UK underperforms, it can offset any negative impact here from sales around the world.

And of course, we can’t ignore its Primark unit. It’s one of the biggest names in fast fashion and is continuing to expand in the UK, Europe and US.

As a risk, it’s exposed to commodity prices (such as wheat and sugar), which can be very volatile. This can mean that costs of production could increase without much warning. And Primark, while huge, has been rather sluggish of late. Despite this, I think it’s a good stock to consider if someone is worried about the chance of a crash.

The post The FTSE 100 hits 10k! Here’s why the odds of a stock market crash have risen appeared first on The Motley Fool UK.

The company has been considering separating out Primark – its largest business. But results had better start improving before it gets around to doing that.

Weak sales

Primark accounts for almost half of the ABF’s total sales. So investors are justifiably interested in how the business is doing and a key measure of this is like-for-like sales growth.

The company is busy opening new stores and this naturally causes revenues to rise. But it can’t do this forever, so it also needs to find ways to increase sales in its existing outlets.

Like-for-like sales growth measures exactly this. During the Christmas period, however, this was negative for the business overall, 2.7% lower than it was the year before.

Management put this down to weak consumer confidence in mainland Europe, where the company struggled most. The 1.7% growth in the UK isn’t exactly spectacular, but neither is it disastrous in a market that’s undeniably challenging across the board.

I think the firm probably has a lot of scope to increase its store count significantly in the US. And this is a very promising market for Primark to expand into further. 

In Europe, however, the problem is one that investors will be very familiar with. Since 2024, like-for-like sales have faltered, stalled, and then gone into decline – and that’s a problem.

Investing in Primark

Primark has a well-earned reputation for being a strong retailer. And its popularity with customers in the US means, as I mentioned, that it might well have some attractive growth prospects there.

That growth potential meant ABF shares got a boost in November when the firm announced that it was thinking of splitting out its Primark division. But the latest results create a problem here.

For that kind of move to work, investors need to be positive about the retailer’s prospects. And like-for-like sales going backwards isn’t likely to generate this feeling.

At the moment, investors can invest in Primark as part of ABF’s broader portfolio of assets. But these are generally less exciting than the value retailer. 

With the stock falling, though, this might not matter. Investors might think the share price is low enough that Primark is worth the entire market value by itself.

Primark’s annual sales are around £10bn and ABF has a market value of £13bn. Given this, I think it might be worth considering as a potentially undervalued opportunity.

A buying opportunity?

Associated British Foods shares look like good value to me. The question, though, is whether they’re the best opportunity available right now. 

That might come down to specific facts about what an investor is looking for. I think the stock might be a nice way to consider adding a value tilt to a growth-focused portfolio. 

This isn’t the situation with my portfolio right now, though, so I’m going to keep this one on the bench. I’ll see how things develop with my other investments and adjust accordingly.

The post New year, same problems for this FTSE 100 stock? appeared first on The Motley Fool UK.

While individual company issues are clearly at play, I see this as more than just a stock-specific wobble. For me, it raises an uncomfortable question: is the struggling consumer starting to pose a wider threat to markets as we head into 2026?

A tough festive period

The update covered the 16 weeks to 3 January – a crucial trading window for retailers. Primark, which accounts for roughly half of group revenues, delivered a mixed performance.

In the UK, sales rose around 3%, with like-for-like growth of 1.7% and some market share gains. Management pointed to stronger womenswear performance and continued investment in price perception and Click & Collect.

Elsewhere, performance deteriorated. Like-for-like sales in continental Europe fell 5.7%, while volatile US trading dragged overall Primark growth below expectations, prompting higher markdowns and weaker profitability.

Looking ahead, management now expects Primark sales growth in the first half of 2026 to be in the low single digits, with operating margins around 10%. That’s hardly inspiring for a business that many investors hoped would thrive during a cost-of-living crisis.

Food businesses feel the pinch too

What concerns me more is that the consumer squeeze isn’t confined to retail. ABF’s Food divisions also experienced mixed trading, particularly in the US, where demand weakened more sharply than expected.

In both Grocery and Ingredients, the company now expects adjusted operating profit to come in moderately below last year’s level. That’s a notable downgrade, especially given the defensive reputation many food brands enjoy. It suggests households are becoming more selective even when it comes to everyday staples.

At group level, the picture is uninspiring. Revenue for the period fell 1% at constant currency, and management now expects group adjusted operating profit and earnings per share to be lower year on year.

A warning signal for 2026?

Some retailers, including Tesco and Marks & Spencer, reported strong Christmas trading. However, I don’t see this as evidence of a healthy consumer. Instead, it highlights how polarised spending has become, with shoppers prioritising essentials and trusted brands, while discretionary spend remains under pressure.

I’ve long viewed ABF as something of a bellwether for the consumer economy. It straddles value fashion and everyday food – areas that should, in theory, be resilient when times are tough. The fact that both sides of the business are under pressure is telling.

Consumers may still be spending, but they are clearly spending less and becoming increasingly cautious. That’s not just a challenge for retailers as it has implications for earnings growth across large swathes of the market.

My view as a shareholder

I own ABF shares and intend to hold them. It remains a well-run, conservatively-managed business with strong brands and long-term potential. However, despite the steep fall in the share price, I’m not tempted to buy more.

The update reinforces my belief that the consumer is stretched and that visibility for 2026 remains poor. Until there are clearer signs of a meaningful recovery in demand, I’m happy to sit on my hands – and keep a close eye on what ABF might be telling us about the wider market

The post ABF share price plunges 11% after profit warning – could this be a rare buying opportunity? appeared first on The Motley Fool UK.

On the plus side, the FTSE’s mild drop means the index remains packed with excellent bargains today. The low prices of many quality stocks may in fact spur a possible buying spree in December, also a traditionally robust month for equities.

Take the following UK blue-chip shares: Babcock International (LSE:BAB), Associated British Foods (LSE:ABF), and Scottish Mortgage Investment Trust (LSE:SMT). Each has seen its share price slump over the last month.

Could they be about to explode into life?

Strong riser

Babcock International is one of the best-performing FTSE 100 stocks so far in 2025. It’s up 125%, even after a high-single-digit share price drop since late October.

Yet despite these gains, the defence giant still offers excellent value compared to other industry heavyweights. Its forward price-to-earnings (P/E) ratio is 20.9 times, far below the broader European defence industry’s 29.

Babcock’s shares have dropped on speculation of a poential peace deal between Ukraine and Russia. It’s a scenario that could have a large impact on weapons demand.

However, I’m confident in the defence market picture irrespective of any ceasefire in Eastern Europe. NATO countries are likely to continue re-arming, as fears over a changing geopolitical order and falling US military support grow. I think Babcock will resume its bull run as investors reassess this outlook.

Historically cheap

Dangers remain for Associated British Foods, as weak consumer spending hits sales at its Primark unit. The FTSE firm is also suffering from weak sugar prices and restructuring costs across its other operations.

The conglomerate’s shares have slumped 8% in the last month. Could this be an attractive entry point for long-term investors? I think it might be — which might, in turn, prompt a price recovery.

Associated British Foods shares now trade on a forward P/E ratio of 11.5 times. That’s way below the 10-year average of 17.

This isn’t a stock for the faint hearted. But there’s solid reasons to expect trading to rebound over time, led by global expansion at Primark. Its aggressive growth strategy could leave it in great shape to capitalise on the value retail market, which has scope for further significant growth, according to analysts.

Top tech trust

Scottish Mortgage Investment Trust has dropped 8% in value over the last month. Investors have sold up or reduced their positions due to its exposure to AI stocks like Nvidia and Amazon.

Given fears over a potential AI bubble, this isn’t at all surprising. Further price weakness may be expected if the market stays spooked.

Having said that, Scottish Mortgage’s share price drop suggests a buying opportunity to me. November’s decline means the trust trades at a tasty 10% discount to its net asset value (NAV) per share.

I’m confident the long-term outlook for Scottish Mortgage remains robust. It has significant exposure to hot growth segments like robotics, e-commerce, cybersecurity, and quantum computing, alongside AI. I think the FTSE 100 trust could rebound in December if market sentiment improves, boosted by a likely US Federal Reserve interest rate cut.

The post Could these FTSE 100 bargain shares bounce back in December? appeared first on The Motley Fool UK.

The average long-term return from the FTSE 100 is around 6.8% a year. And this means the amount you need to invest to target a £1,000 monthly income might be less than you think.

How much do you need?

The biggest thing when trying to figure out how much is needed to target £12,000 a year is how long do you have? It’s a simple question, but the answer is hugely important.

To earn that amount next year, you’ll probably need to invest at least £184,615. And dividend tax means the amount is actually likely to be quite a bit higher than this.

For investors with more time though, the amount they need comes down. Another route involves investing £1,000 a month at 6.5% for 12 years.

That mean splashing out a total of £144,000. And another advantage is that – unless the rules change – you can do this in a Stocks and Shares ISA and not have to pay tax on dividends.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

In general, having more time is a big help. Looking even further ahead, the average FTSE 100 return is enough to turn £200 a month into something generating £12,000 a year after 30 years.

That’s a total of £72,000 invested. So someone looking for a £1,000 monthly passive income straight away has to find an extra £112,615 compared to someone with a 30-year time horizon!

Where to invest?

Whatever the strategy, earning durable income means finding quality shares to buy. And fortunately for investors, the UK stock market has a number of high-calibre names.

One example is Associated British Foods (LSE:ABF). A 3% dividend yield means investors will need some growth to reach a 6.5% annual return, but I think they have a decent chance.

The company’s main asset is Primark and it’s fair to say that the budget fashion retailer has faltered recently. In the UK, a tough backdrop caused like-for-like sales to fall 3.1% in its 2025 fiscal year.

That’s bad and this is an ongoing risk in a relatively saturated market. But things look much more positive in the US, where I think there’s a lot for scope for future growth. 

The US has suspended its de minimis exemption for goods coming from China and Hong Kong. And that should make it harder for online competitors like Shein and Temu.

I think that gives Primark a big opportunity. And while Associated British Foods has been talking about the possibility of separating Primark, I hope it doesn’t with what I see as a potential opportunity.

A hidden gem?

Right now, the only way to invest in Primark is by buying shares in Associated British Foods. And I think the US division’s potential is currently being overshadowed by the weak UK sales.

I think this is a reflection of the wider UK stock market. There are some really interesting opportunities for investors, but they aren’t always in plain sight — even in the FTSE 100.

The post How much do you need to invest in dividend shares to aim for a £1,000 monthly passive income? appeared first on The Motley Fool UK.

The results

The headline number from ABF’s FY25 results was a 13% drop in operating profit to £1.7bn, mainly due to a collapse in sugar prices. This sent the sugar division into loss-making territory. As a result, free cash flow more than halved to £648m, highlighting the impact on the group’s cash generation.

In Retail, operating profit rose 2% to £1.1bn, supported by 1% sales growth thanks to new store openings. But the headline masks some underlying weakness.

In the UK, which accounts for 45% of retail sales, like-for-like sales fell 3.1%. The cost-of-living crisis continues to weigh on consumer spending. However, there were signs of improvement in H2, particularly in womenswear.

The grocery division saw adjusted operating profit fall 4% at constant currency, despite strong growth from international brands Twinings and Ovaltine.

In the UK, Allied Bakeries experienced lower sales and a widening operating loss. The company is hoping that the takeover of rival Hovis will support a recovery.

Primark split?

In a major development, ABF has announced a review of its group structure, considering splitting Primark and its Food business into two separate companies. While no decision has been made yet, I believe such a bold move could be a game-changer for long-term shareholder value.

Both divisions are strong but have different dynamics. Primark has an internationally recognised brand, strong customer proposition, and significant growth opportunities. This is evident through continued new store openings and expansion into new markets.

The food business, by contrast, has historically been less understood by the financial markets, despite its highly attractive portfolio, deep global expertise, and long-term potential. The review could help unlock that value by providing clearer visibility for investors.

Importantly, any split would see Wittington Investments, ABF’s largest shareholder, maintain majority ownership of both businesses. For me, the family-run nature of the business remains a major attraction, even in the event of structural changes.

Risks

The short-term risks for the ABF share price are mounting. Primark’s growth is largely driven by new store openings rather than underlying consumer demand. With the cost of living crisis ongoing, there is little relief in sight for UK shoppers.

The sugar business faces continued pressure from weak prices. Following a failed attempt to secure government support, the company has decided to close its Vivergo bioethanol plant. This has resulted in an impairment charge of £161m, of which £32m is cash costs.

In addition, closure costs of £30m, including £26m in cash, will continue to put pressure on future free cash flow.

Bottom line

Despite short-term pressures, I remain positive on ABF. The group’s strong fundamentals, cash generation, and growth initiatives provide a solid base.

I view the potential split of Primark and Food as a catalyst that could unlock significant long-term shareholder value, giving each business clearer visibility and allowing investors to better appreciate their individual strengths.

As an existing shareholder, I am adopting a wait-and-see approach on any final decision before committing additional capital. But I continue to view the long-term stock’s prospects with optimism.

The post ABF share price hits FTSE 100 spotlight on FY25 results and talk of Primark-Food split appeared first on The Motley Fool UK.

On Thursday (10 September), the food and clothing giant slumped by double-digit percentages due to underwhelming Primark sales numbers. At £19.51 per share, the FTSE 100 company is now down almost 6% in the calendar year.

I’m wondering if this represents an attractive dip-buying opportunity for eagle-eyed investors. Encouragingly, City analysts are (broadly speaking) expecting the shares to bounce back strongly over the next 12 months:

But how robust are these forecasts? And, as a long-term investor, should I consider adding the Primark owner to my portfolio anyway?

Key European market splutters

In theory, the company’s focus on value clothing should provide protection against broader weakness in consumer spending. However, the scale of the retail downturn means that even low-cost specialists like this are struggling.

Things aren’t all bad, with Primark reporting a “good sequential improvement” in UK and Irish sales in the second half of the year versus the first. It has also reported “strong” sales in the US in the six months to September.

But trouble persists in Mainland Europe, with sales growth cooling across the territory. Roughly 18% of Primark’s sales come from Spain and Portugal, where sales growth is tipped to slow to 2% for the second half, from 8% in the first.

And in France and Italy, sales are tipped to reverse 4% between April and September. They rose by 4% in the previous six months.

Primark generates 16% of group sales from France and Italy, and 12% from Northern Europe. Here the business is also experiencing trouble, and a 2% top-line decline is being predicted for the second half. Sales rose 1% in the first.

Under the cosh

Recent weakness means Primark’s total sales are now tipped to rise 1% over the second half. That’s below growth of 3%-4% that City analysts had been tipping.

It’s not just problems in Europe, and what this could mean for the company’s expansion strategy that have spooked investors. Trading in the UK and Ireland is robust, but investors fear a slowdown as the UK economy splutters. The same goes for Primark’s small growth region of the US.

From a long-term perspective, I remain optimistic about the company’s retail unit, which provides almost half of group sales. Steady expansion gives it opportunities to capture structural growth in the value retail market. It’s also investing heavily in areas like Click & Collect to capitalise on the e-commerce boom.

However, the scale of Primark’s problems come as some surprise, as Associated British Foods’ share price slump this week indicates. And it’s not just here where the FTSE 100 company is struggling — profitability at its Grocery unit is under strain due to heavy restructuring costs. Meanwhile, the Sugar division remains plagued by weak prices for the sweet commodity.

Given its mounting issues, I’m not convinced the firm’s shares will rebound as sharply as City analysts think over the next year. While I like the look of it over the long term, I think risk-averse investors should consider buying other UK shares instead.

The post Is the Associated British Foods (ABF) share price about to storm higher? appeared first on The Motley Fool UK.