The stock is one of the FTSE 250’s worst performers so far this year and a profit warning just sent the share price even lower. From a long-term perspective, though, there’s a lot to like.

Healthy eating

I don’t think I can imagine a business I’d like to be in less right now than sugar. It’s a commodity product where I think the market is in decline as consumers shift towards healthier choices. 

Fortunately, that’s not what Tate & Lyle does any more – it sold off its sugar refining business back in 2010. In fact, it’s kind of the opposite these days. 

The firm’s products are focused on things like protein and low-calorie sweeteners. And it’s actively working to help food producers reduce the amount of sugar in their products. 

Despite this, the stock hasn’t been a success recently. The firm has returned £1.27 in dividends per share since 2020, but this hasn’t been nearly enough to offset a £4.18 drop in the share price.

Why is the stock down?

Earlier this week, Tate & Lyle warned that revenues and profits are set to be lower in the first half of its financial year. The reason is relatively simple – demand has been weak. 

This largely looks like a macroeconomic issue. In a tough environment, consumers are reducing their consumption volumes and shifting towards cheaper alternatives. 

As a result, food manufacturers are buying less in the way of ingredients. The firm is doing what it can to offset this, but sales are stil likely to be lower than the previous year.

This highlights an important cyclical risk, which it might be easy to miss in the context of a food business. And investors haven’t responded well to the news, which is why the stock is down. 

Competitive strengths

Consumers can’t reduce their food intake forever, though, and Tate & Lyle does seem to be on to a long-term trend with the move to healthier eating. And it has a number of key strengths. 

Its specialist expertise and existing relationships with major food manufacturers is a big positive. The scale of its operations also gives it an advantage when it comes to acquisition opportunities.

The firm’s move to acquire CP Kelco last year is a good example. Tate & Lyle’s global reach gives it an immediate opportunity to expand the business into new markets. 

Given this – and the long-term demand for food products that comes from a growing population – it’s easy to see why investors have been buying the stock. And then there’s the dividend.

Time to buy?

As a result of the latest decline, Tate & Lyle shares come with an unusually high dividend yield. That can be a sign of a business in distress, but I don’t think that’s the case here. 

The company looks like it’s well-positioned to benefit from a long-term shift towards healthy eating. And I think that means investors should think seriously about taking advantage of the dip.

The post At a 15-year low, are Tate & Lyle shares a screaming buy? appeared first on The Motley Fool UK.

But that isn’t always the case.

By comparing the trailing (ie past 12 months) P/E with the forward P/E, it’s possible to see how much earnings are expected to grow. If the two are equal, earnings are likely to remain flat. But if the forward number is lower, it suggests profits are forecast to rise.

Of course, there are caveats. Forward P/E ratios are based on analysts’ forecasts, which aren’t always accurate. If unexpected risks hit earnings, the gap between trailing and forward P/E can close for the wrong reasons — with the share price falling rather than earnings improving.

Still, I like to use this method as a starting point. And right now, I think I’ve found two cheap shares that could stage a decent recovery in the coming year.

Taylor Wimpey

Taylor Wimpey (LSE: TW) has been in the doldrums. The housebuilder’s share price has slumped 40% over the past 12 months as stubborn inflation keeps the UK housing market under pressure. Earnings growth has plunged by 65% in the past year, leaving it with wafer-thin margins and a disappointing 1.97% return on equity (ROE).

Yet it’s not all doom and gloom. Revenue actually grew 4.2% over the past 12 months, and analysts are expecting earnings to bounce back. That explains why the stock currently trades on a lofty trailing P/E of 40, but a forward P/E of just 11.5.

Backing this up is a low price-to-book (P/B) ratio of 0.81, which suggests the market is pricing the company below the value of its assets. Of course, without a market recovery, the share price might continue to tank. 

But with a 9.59% dividend yield, it wouldn’t be a complete loss. For me, Taylor Wimpey looks like a classic turnaround candidate with income appeal built in.

Tate & Lyle

Tate & Lyle (LSE: TATE) has also struggled, dropping 20% over the past year. In June, UBS slapped a Neutral rating on the stock with a 590p price target, citing a lack of volume growth and limited prospects.

This followed underwhelming results in May, when the company warned full-year revenue growth would be capped at 4% due to rising tariff-related costs between the US and China.

That explains the valuation mismatch: Tate & Lyle’s trailing P/E stands at 35, but its forward P/E is just 11.1. The business enjoys strong cash flow, a solid balance sheet and offers a respectable dividend yield of 3.67%.

The big sticking point here is trade tariffs. They’ve weighed heavily on profits, but with mounting pressure on the US to ease tariffs, there’s a chance the company could benefit from a significant rebound if conditions improve.

Final thoughts

As a holder of Taylor Wimpey, I’m biased — but I do believe the stock looks undervalued, with the potential to deliver both growth and income. Tate & Lyle, meanwhile, is another intriguing option, although its future hinges heavily on tariff negotiations.

Both are cheap shares in my book, and both could reward patient investors considering them now if forecasts play out.

The post 2 cheap shares to consider ahead of expected earnings growth appeared first on The Motley Fool UK.

Plenty of potential

Now, before we dismiss this as just another boring food ingredients company, let’s sprinkle some intriguing facts into the mix. The shares are trading at about £6.48, giving the company a market-cap of £2.5bn. But here’s where it gets interesting. According to a discounted cash flow (DCF) calculation, the shares appear to be trading at a whopping 41.5% discount to its estimated fair value.

But wait, there’s more to this recipe. Analysts are forecasting an 11.58% annual earnings growth, which is enough to make any growth-hungry investor’s taste buds tingle. And let’s not forget the cherry on top — the company’s earnings surged by 40.9% over the past year. Not too shabby for a business that’s been around since 1903, eh?

A sour taste

But what about the risks? Well Fools, no investment comes without its potential bitter aftertaste. While the current 2.9% yield might look tempting, history suggests it’s about as stable as a soufflé in an earthquake.

Moreover, the food ingredients industry is as cutthroat as it gets. The firm faces stiff competition from rivals like Associated British Foods. Plus, with many consumers increasingly switching focus to healthier products, the company needs to keep innovating. The shares have had a mixed few years as a result, with supply chains and inflation challenging the sector.

But here’s where things get interesting. Management’s been pivoting towards healthier ingredients at a rapid pace. It’s been pouring resources into developing low-calorie sweeteners and dietary fibres, positioning themselves nicely for the health-conscious consumer trend.

According to a recent report by Grand View Research, the global sugar substitutes market’s expected to reach $10.27bn by 2025, growing at a CAGR of 4.2%. If the firm can grab a generous slice of this expanding pie, well, that could be the icing on the cake for investors.

Let’s not forget the company’s solid balance sheet, which gives it the financial flexibility to weather storms and seize opportunities. It’s like having a well-stocked larder – you never know when you might need those extra ingredients.

One for the future

So what’s the Foolish bottom line? I think Tate & Lyle could be a sweet addition to a well-diversified portfolio. With its current potential undervaluation, strong growth prospects, and strategic positioning in emerging market trends, I suspect it has the potential to be a real treat for patient investors.

In the end, whether Tate & Lyle turns out to be a delicious investment or leaves a sour taste in the mouth will depend on how well the FTSE 250 company executes its strategy. But at its current price, it certainly looks like a tempting morsel for this Fool. I’ll be buying some shares at the next opportunity.

The post This FTSE 250 giant could be a sweet deal at the current price appeared first on The Motley Fool UK.

But since rebranding in 2023, the food and beverage manufacturer has faced some hurdles. A push to become more sustainable and appeal to health-conscious consumers is proving costly. It could pay off in the long run – but it won’t be an easy challenge.

Strong growth

Despite positive results in late May, Tate & Lyle shares fell that 14% in June. That brings its total share price losses to 17% since announcing those latest FY earnings.

Despite a 2% drop in revenue, earnings per share (EPS) rose to 45p from 31p, beating analysts’ expectations by 8.8%. Profit margins and net income also grew by 7.3% and 41% respectively.

It also announced the completion of the sale of its remaining stake in Primient, a high fructose corn syrup brand. The move will help it focus fully on its more profitable speciality food and beverage division.

As is common with divestments of this sort, net proceeds have been tipped to fund a share buyback programme. That should be good news for investors, assuring a large influx of cash into the stock.

So why the drop?

With all the good news, investors would expect the shares to be soaring, not falling. So why the loss?

One reason may be the announcement that the company plans to buy CP Kelco for £1.5bn. The acquisition would form part of the shift in focus towards more sustainable and healthier food. Kelco sells pectin and similar nature-based gums and ingredients.

However, the acquisition is out of the ordinary for a company like Tate & Lyle. It’s a lot of money considering it only has a £2.4bn market-cap and already holds half a million in debt. Shareholders may fear dividends could be cut to help fund the acquisition.

Growth in the face of competition

Whatever the reason for the price drop, it means Tate & Lyle shares now appear to me to be bargains. Based on future cash flow estimates, the shares are undervalued by 42%. And with a price-to-earnings (P/E) ratio of 13.2, that’s well below the industry average of 18 and has lots of space to grow. Subsequently, there’s a good consensus among analysts that the share price will increase 40% in the coming 12 months.

But it’s not the only food producer in the UK. It faces stiff competition from other brands that are arguably already more sustainable. Premier Foods is a slightly smaller outfit that’s enjoyed 318% growth in the past five years. Known for Mr Kipling’s cakes and Oxo cubes, it already has a well-established ‘Enriching Life’ sustainability initiative in action since 2020.

Tate & Lyle will need to play a game of catch-up if it hopes to compete. The price looks cheap and the company has strong value in its established brands. But pivoting to appeal to a new generation of more health-conscious consumers will surely test the company’s reserves. Nonethless, I think it’s worth consideration.

The post Down 14% last month! What’s going on with the share price of this FTSE 250 British icon? appeared first on The Motley Fool UK.

One iconic name that always stands out is Tate & Lyle (LSE: TATE). The company is steeped in history and was one of the original constituents of the FTSE 30 index established in 1935.

Its name comes from Victorian-era sugar refiners Henry Tate, who funded the building of London’s Tate Gallery, and Abraham Lyle. The latter gave his name to Lyle’s Golden Syrup, one of the world’s oldest brands.

Nowadays, the company focuses on sweeteners and thickeners after the sugar brands were sold in 2010. It says: “Open any fridge or kitchen cupboard, in any household, in practically any part of the world, and you’re likely to find products containing our ingredients and solutions.”

The dividend-paying stock is down 22% over five years. Should I add it to my ISA this summer?

Profits are growing

The firm’s annual report covering the 12 months to 31 March was pretty solid. Adjusted EBITDA rose 7% year on year to £328m, while adjusted diluted earnings per share increased 18% to 55.5p. Free cash flow improved by £49m to reach £170m.

That said, revenue fell 2% to £1.65bn due to easing inflation and a strategic focus on margin improvement over volume, including cost-cutting measures.

It’s worth pointing out that the operating margin has improved from 8.5% in 2019 to 12.6% last year. So that’s encouraging to see.

The company also announced that it has completed the sale of its remaining interest in Primient for $350m. This business deals with ingredients like high fructose corn syrup and corn starch.

Selling the remaining stake in Primient means Tate & Lyle is now focused on speciality food and beverage ingredients. These offer higher margins and potentially faster growth.

The company said net proceeds from the sale would fund a share buyback programme.

Dividend

The stock seems fairly valued at 12 times forward earnings. Another positive thing to note here is that net debt has been reduced significantly. At year-end, it was £153m, down from £626m in 2022.

Last year, the dividend was raised by 3.2% to 19.1p per share, giving a yield of 2.8%. It’s reassuringly covered more than two times by earnings.

However, dividend growth has been disappointing in recent years. And the 3% forward yield doesn’t look too appealing. For context, the yield was 4% two years ago and the share price has fallen 20% since then.

My verdict

Over the last six years, the company has been executing a strategic transformation to become a growth-focused speciality food and beverage solutions business. While margins are certainly heading in the right direction, I think lack of revenue growth might weigh on the stock.

Looking ahead to this year, the firm anticipates slightly lower revenue, with EBITDA growth between 4% and 7%. And analysts aren’t forecasting much top-line action next financial year.

Long term, the global speciality food ingredient market is expected to grow at around 6% on a compound annual basis.

All things considered, it’s hard for me to get excited about either the growth rate or the 3% yield. I’d rather invest in stocks offering much faster growth or 6%+ dividend yields.

The post 1 iconic FTSE 250 stock to sweeten up my Stocks and Shares ISA this summer? appeared first on The Motley Fool UK.

But what exactly are they? And why does this strategy help protect wealth? Let’s dig in.

What are defensive stocks?

A defensive stock is a general term to describe any equity whose underlying business generates a reliable cash flow even during times of economic uncertainty. These are generally mature industry leaders offering products or services always in demand.

Defensive companies aren’t known for delivering exceptional growth. And during bull markets, they typically underperform benchmark indexes like the FTSE 250 or S&P 500. But since earnings have a habit of consistently pouring in, they regain favour in bear markets, even more so among income investors who seek reliable and consistent dividends.

Defensive vs cyclical stocks

The opposite of defensive stocks is cyclical stocks. These businesses are highly susceptible to external factors beyond their control, such as the macroeconomic environment. As a result, owning cyclical companies can be a bit of a roller-coaster ride, surging when times are good and plummeting when things turn sour.

Typically, cyclical businesses offer products or services that aren’t always in fashion due to fluctuations in supply and demand.

For example, consumer discretionary retailers tend to suffer during economic uncertainty as households seek to cut unnecessary spending. Alternatively, if the price of a metal plummets due to oversupply, mining companies can struggle to deliver impressive earnings.

Top UK defensive stocks

Here are some of the top defensive stocks in the UK in order of market cap as of February 2026:

Unilever

Unilever Plc is a fast-moving consumer goods company that offers food, personal care, and home care products. Since being established in 1894, the firm has expanded into one of the largest branded consumer staple businesses within the United Kingdom.

Its products can be found in almost all major supermarkets and include items such as Hellmann’s mayonnaise, Dove shampoo, Peril washing up liquid, and Cif surface cleaner, among hundreds of other brands.

British American Tobacco

British American Tobacco is the second-largest cigarette company in the world. Based in London, the company manufactures and sells a wide range of tobacco-based products, including combustible tobacco, loose tobacco, and oral nicotine.

With healthcare scrutiny rising, the industry is ramping up internal investments into less harmful product lines, namely electronic cigarettes and heated tobacco. Today, it hosts a wide portfolio of brands, including Dunhill, Kent, Pall Mall, and Rothmans, among others.

Reckitt Benckiser Group

Reckitt Benckiser is a global consumer goods enterprise targeting the hygiene, consumer healthcare, and nutrition market sectors. It’s worth noting that the majority of its brands are found in the first two areas, which are typically underserved by its competitors, like Unilever.

Its products can be found in supermarkets worldwide, including brands such as Air Wick, Finish, Woolite, Clearasil, Durex, and Veet.

Imperial Brands

Imperial Brands is the sixth-largest tobacco company globally, with headquarters in Bristol. It offers a range of tobacco-based products such as cigarettes, loose tobacco, rolling papers, and cigars. After some industry consolidation, the group now owns and operates multiple globally recognised brands, including Winston, West, Davidoff, Gauloises, and Rizla.

In recent years, the firm has been focused on expanding its next-generation product line through its newly introduced Pluze heated tobacco solution and Blu vaporisation devices.

Tate & Lyle

Tate & Lyle is a food producer based in the UK that provides ingredients for beverages, various soups, sauces, and food dressings. One of its most famous brands, Lyle’s Golden Syrup, was sold off in 2010 as part of management’s strategy to veer away from sugar-based products.

Today it focuses on a wide range of alternative products that can be found in pre-prepared meals or bought individually from supermarkets, including soups, stews, broths, mayonnaise, yoghurt, ice cream, soft drinks, juice, and coffee and tea.

Top defensive sectors

There are quite a few defensive sectors for UK investors to choose from. So, let’s go through the four most popular.

1. Consumer staples

Regardless of what the economy might be doing, there are some things that we simply can’t live without. As such, consumer staples products are often the last to be reduced or eliminated from a shopping list. This includes food, drinks, hygiene, and, for some, tobacco.

Branded staples products can experience a reduction in sales volume. But this is typically offset by raising prices. Meanwhile, supermarkets and other staple retailers can sometimes see a surge in overall volumes as households stock up on essentials in fear of worsening economic conditions.

2. Utilities

The economy may be in tatters, but without water, electricity, or gas, businesses and households cease to function. Consumption can drop as individuals seek to cut usage, but this tends to have a negligible impact on the industry.

3. Real Estate

Thanks to the creation of real estate investment trusts, it’s become easy for investors to tap into the property market without needing to take out a mortgage. But the real estate industry is quite vast, containing many different sub-sectors for various property types, each of which behaves differently during economic turmoil.

• Households and apartments – People need shelter. Subsequently, the default rates on rents and mortgages tend to remain low as consumers cut discretionary spending to meet their monthly rent.
• Offices and retail parks – With consumer spending dropping, businesses, especially front-end discretionary retail, can struggle financially. As such, office spaces and retail park lots can end up becoming vacant. And finding a suitable replacement tenant during an economic wobble can be difficult. As such, these types of properties end up losing value.
• Warehouses, factories, and hospitals – Industrial properties are often at the heart of most operations and are typically the last to go should a downsizing occur. But if tenants are large, established enterprises, the default rate typically remains low, maintaining rental cash flow and property values.

4. Healthcare

Even if the cost of living goes up, patients still need access to medicine and healthcare facilities, regardless of price. As such, big pharma, hospitals, and other healthcare services businesses tend to continue chugging along nicely.

The exception is young biotech. As these companies often don’t have a meaningful revenue stream, they remain dependent on external financing, whose availability tends to decline while the cost of borrowing increases during periods of economic uncertainty.

Investing in international defensive stocks

The process of investing in defensive stocks outside the UK is nearly identical. However, there are a few extra parameters to consider.

With international stocks being listed on foreign exchanges in different currencies, any share price returns or dividends received could be adversely impacted in pound sterling terms. And when economies are wobbling, volatility in exchange rates is not uncommon.

Another factor to think about is industry regulation. Much like in the UK, sectors like healthcare, utilities, and real estate are all subject to slightly different regulatory requirements in different countries. As such, a valid British investment thesis may be invalid in international markets like the US.

When is the best time to invest in defensive stocks?

As previously mentioned, investors often rush towards defensive stocks throughout every period of economic instability. By staying in the stock market versus moving to bonds, gold, or UK gilts, investors can still generate relatively low-risk returns through dividends from this class of equities.

Unfortunately, this is where a timing problem emerges.

When a bull market starts to ramp up, defensive stocks often lose favour due to their underperformance, and investors migrate back towards cyclical growth. This causes the share prices of these mature businesses to drop, causing more investors to move on.

Yet, despite the slow downward trajectory of the defensive stocks in this situation, the underlying businesses are still chugging along. With cash flow supporting dividends, the yield rises. This actually creates buying opportunities for value investors. And it’s a tactic that Warren Buffett is constantly deploying.

However, eventually, a catastrophe will hit again. And as investors decide defensive stocks are now the best place to be, share prices rise, pushing the yield down.

Subsequently, anyone who’s late to the migration ends up owning overvalued defensive shares with a low dividend yield. They won’t benefit as much from the income returns during the economic turmoil. And in some circumstances, when growth stocks regain favour, they could actually lose money as their overvalued stock drops.

With that in mind, the best time to buy defensive shares is often during a bull market when they’re cheap and sell during a bear market when they’re expensive – the complete opposite of what most emotionally-driven investors do.

The post Top UK Defensive Stocks of 2026 appeared first on The Motley Fool UK.

Royal Mail

Royal Mail (LSE:RMG) is currently trading at a 36% discount versus three months ago. Moreover, at 331p, the current price is massively down on last summer’s 600p.

But beyond the obvious upside potential, I believe Royal Mail will grow strongly in the future. The pandemic forced the London-headquartered firm to put parcels at the heart of its operations. Royal Mail has seen a massive increase in the number of parcels being posted through its service. This should help the group transform its revenue.

Moreover, just a few years ago, it was sorting the majority of parcels by hand. This was eating into the firm’s margins. But this year, that figure is expected to be half, representing a considerable change. I think there’s plenty of upside here and will be buying Royal Mail shortly.

Rising inflation, leading to higher wages, is one risk for this stock. Wages are one of the firm’s main costs, and wage inflation could be exacerbated by a strong union.

Crest Nicholson

Housebuilder Crest-Nicholson (LSE:CRST) returned to pre-tax profit in 2021 after a tough pandemic. While performance figures are still down on a few years ago, the company has made strategic changes to reposition the business.

In January, Crest said 2022 should be less volatile that previous years, noting that 63% of revenue for the financial year was already covered. They also suggested that the new leadership team had established a strong footing for future growth.

The stock is current trading around 276p a share. That’s massively down from just five years ago when the company’s share price exceeded £6. Like many housebuilders, the share price has continued to fall despite the positive performance data.

However, the impact of interest rate rises on demand for new homes, cladding repayments and inflation represent ongoing risks for the business. These have all weighed on its share price.

I own shares in Crest and will continue to hold.

Tate & Lyle

Tate & Lyle (LSE:TATE) isn’t exactly a beaten-up share, but there are promising signs for this food ingredients business. The group now focuses on products like sweeteners, thickeners and bulk commodities, having let go of its sugar brand.

It has sought to transform itself, selling off less profitable parts of the organisation. Instead, the company is focusing on higher-growth areas. The parts of the business sold off have been holding back the company’s margins. Without them, Tate & Lyle’s operating margins rise from 11.1% to 14.8%.

The stock is currently trading around 736p a share, down from highs of over 800p. It is also offering an attractive 4.17% dividend yield. Moreover, £500m of the £900m made by shedding less profitable units has been earmarked for shareholders.

One issue is that the firm’s dividend yield is not as well covered by earnings as I’d like. The dividend coverage ratio in 2021 was 1.77.

The post Here’s how I’d invest £5K in my Stocks and Shares ISA to maximise growth potential appeared first on The Motley Fool UK.

Branded luxury goods

Branded luxury goods company Burberry CLSE: BRBY) sells its products around the world.

And it does so online and via stores, outlets, concessions and franchisees in department stores. On top of that, the business licenses the manufacture and distribution of some products bearing the Burberry trademark to third parties.

There’s been some financial progress over the past few years. Since 2016, net profit has delivered average growth of just under 4% a year. And the compound annual growth rate of operating cash flow is running just below 10%.

The directors have been pushing up the shareholder dividend a little each year to reflect the progress. And the only blip in the recent dividend record occurred in 2020 when coronavirus caused a reduction. Nevertheless, the dividend has been growing at an average of just under 3% a year.

Burberry headed its third-quarter trading statement in January with the statement “momentum builds”. And the directors said full-price sales grew at a double-digit percentage compared with two years previously, before the pandemic arrived. And the directors reckon the firm is making progress attracting new, younger customers to the brand.

The outlook is positive. And City analysts expect earnings to advance by just under 12% in the trading year to March 2023. Meanwhile, with the share price near 1,951p, the forward-looking price-to-earnings ratio is around 19 when set against that forecast.

The valuation isn’t ‘bargain basement’. And that adds some risk for investors because the business could miss its forecasts causing the share price to fall. However, growth is on the agenda, the brand is strong and the company has a strong balance sheet. I like this one right now.

Food ingredients

Food ingredients company Tate & Lyle (LSE: TATE) delivered an upbeat third-quarter trading update in February. And today I’m looking at the business at an exciting point in its development.

The firm is on track to complete the separation of its operations into two businesses at the end of March. One will be Tate & Lyle focused on food and beverage solutions. And the other will be ‘NewCo’ specialising in plant-based products for the food and industrial markets.

Tate & Lyle will joint-own NewCo with a company called KPS Capital partners. And TATE expects to earn gross cash proceeds of around $1.3bn from the deal. After that, it will likely benefit from a stream of dividends generated from its 50% stake in the new enterprise.  

Chief executive Nick Hampton said Tate & Lyle has re-positioned itself as a “growth-focused”, global food and beverage solutions business serving “faster growing” markets. And he sees “significant” opportunities ahead. 

However, City analysts’ estimate lacklustre growth in earnings next year. And there is some risk the company could fall short of its ambitions. If that happens, the forward-looking earnings multiple running near 17 could become problematic and the share price could fall.

Nevertheless, the balance sheet is strong. And I’d be prepared to embrace the risks and hold the stock while the company aims for growth ahead.

The post 2 top shares to buy now for the next bull market appeared first on The Motley Fool UK.

• Both of these FTSE 250 businesses demonstrate strong and consistent growth in revenue and profits
• Tate & Lyle will pay a special dividend after the imminent sale of its Americas primary products business
• Plus500 is launching a $55m share buyback scheme 

The FTSE 250 is an index full of exciting companies with strong growth prospects. I think I’ve found two firms that could perform as part of a portfolio geared up for the long term. While Tate & Lyle (LSE: TATE) has a record of results indicating constant growth, PLUS500 (LSE: PLUS) has just confirmed a share buyback scheme. Why should I add these two businesses to my portfolio? Let’s take a closer look. 

A food and beverage heavyweight

Tate & Lyle, a supplier of ingredients to the food and beverage industry, has delivered growth over the past five fiscal years. Revenue has grown — albeit only slightly — from £2.7bn to £2.8bn, and while this is far from heart-stopping, it is remarkably consistent.

What’s more, the firm is dependable regarding profitability too. Over the same period, profits before tax rose from £233m to £283m. Again, this is very consistent. Earnings per share (EPS) have also grown, boasting a compounding annual growth rate of 2.6%. These steady gains are exactly what I’m looking for in my long-term portfolio.

In a recent trading update for the three months to 31 December 2021, Tate & Lyle confirmed it was trading in line with expectations, but that the discontinued bulk sweetener and industrial starch segments were “significantly weaker”. In spite of this, revenue from continuing operations was up 18% compared to the same period of the previous year.

Furthermore, the firm will pay a special dividend of £500m after the imminent sale of stakes in its primary products business in the Americas. This is due in March 2022.      

A FTSE 250 trading platform

Plus500 is a trading platform that enables customers to trade contracts-for-difference (CFDs) on over 2,500 financial instruments. Company revenue increased over 64% to $718m between calendar years 2017 and 2021. During this period, profits have also grown over 50%.

In the firm’s preliminary results, for the year to the 31 December 2021, active customers fell 6%. Furthermore, revenue was down 18% year-on-year. This is actually indicative of the unprecedented growth the company enjoyed during the pandemic and on a two-year basis, revenue was still up 103%. 

Furthermore, PLUS500 announced a new share buyback scheme of $55m. In essence, this means the business is repurchasing some of its stock. This is a way for the company to return cash to shareholders. I view this development with some optimism, because it suggests the firm is in a strong financial position. 

Both of these companies display strong growth in their results and could be great additions to my portfolio. With a view to holding for the long term, I am encouraged by the special dividend and share buyback schemes. I will be buying shares in both firms without delay.

The post 2 FTSE 250 stocks I’m buying and holding for the long term appeared first on The Motley Fool UK.

Sweet as sugar

The first one is Tate & Lyle (LSE:TATE). The FTSE 250 food producer currently has a dividend yield of 4.8%. Over the past year, the share price is down 1%.

The company has done well financially, shown in the H1 results released last month. When excluding the discontinued operations, revenue was up 19% and profit before tax was up 20% on the same period last year. 

What appeals to me about the dividend stock is the robustness of performance within the main food and beverage division. Its core ingredients, such as sweeteners, are good base materials for a variety of uses for consumers. Therefore, even if we do see a recession in the UK, I wouldn’t expect demand to fall that much.

In terms of risks, the business is going through a transformation. It’s discontinuing some operations in North and Latin America. I think this could be a good thing in the long term, but a smooth transition with offloading businesses is never easy. This makes it a risk in the immediate term.

An alternative banking dividend stock

When most people look for a dividend stock within the banking space, many choose the FTSE 100 heavyweights. However, there are others that I think sneak under the radar. For example, Investec (LSE:INVP). The Anglo-African bank has a dividend yield of 4.84% and has seen its share price double in the past year.

I think the bank is a recession-hardy option for a couple of reasons. Firstly, it isn’t just concentrated on business in the UK. In the H1 2021 results, the South African arm made adjusted operating profit of £191.9m, contrasting to the UK and other markets at £133.8m. Therefore, if we get a recession in the UK, the business can try to offset this revenue hit from other areas.

Secondly, the banking space has been. able to cope with a pandemic hit. Although it offered short-term pain last year, most banks have bounced back really well. Therefore, I think investors will note this should we see a similar Covid-19-induced crash again.

One point that is worth noting is that I’m not entirely comfortable taking on exposure to South Africa. Although it acts as a good diversifier for revenue, the political and social unrest is something of a concern to me.

Overall though, I’m considering buying the shares of both companies mentioned above. I think the dividend stocks can offer me good income, even if we do see another recession in the UK.

The post 2 recession-hardy dividend stocks I like for 2022 appeared first on The Motley Fool UK.