Image Source: Getty Images
The stock market seems to be recovering. And I’ve been selectively buying stocks.
For example, I love soft drink providers Britvic (LSE: BVIC). In July, the company released its third quarter trading summary for the period through June 30. And the headline read: “On track to deliver an annual performance in line with expectations”.
City analysts expect profits to recover by about 36% in the current trading year through September. And they predict an increase next year of nearly 7%. However, Britvic suffered from declining revenues from 2019 to 2021. The pandemic was not good for the company. And there’s a risk that earnings could be lumpy in the future.
However, chief executive Simon Litherland said the year-over-year performance in the quarter “reflects continued resilient demand”. He acknowledged that the uncertain economic environment could: “weighing on consumer confidence”. But he claimed that soda is a… “resilient” category. And he was “confident” Britvic will perform in line with market expectations.
With the stock price close to 849p, the forward-looking dividend yield is approximately 3.7% for the trading year to September 2023. It is possible for any company to miss out on its estimates if trading deteriorates. However, I find the returns attractive and would aim to hold the stock for the long term.
Record order book and profit
I am also attracted to earthworks and geotechnical specialist contractors Keller (LSE: KLR). In early August, the company released a robust set of half-year results and a positive outlook.
Chief executive Michael Speakman said he… “to trust” the company will deliver on full-year and long-term expectations. And his optimism is supported by: “file” profit and a 22% increase in the order book at constant exchange rates.
City analysts are forecasting single-digit percentage increases in shareholder dividends for 2022 and 2023. And with the share price approaching 761p, the forward-looking yield is just above 5%. I think that’s a decent return from a company with a multi-year record of consistent dividend payments. And that record, plus some new contract gains, prompts me to put aside my concerns about any cyclicality in the business.
Strong liquidity and capital
I like the look of investec (LSE: INVP), which provides international banking, investment and wealth management services in South Africa and the UK.
In May, the company posted strong annual results. Chief executive Fani Titi said the adjusted profit came in on “the top” from previous guidance at just over 55p per share. And that was a head start on pre-Covid levels.
Titi thinks Investec has “powerful” liquidity and capital to support growth. And the company is “well positioned” to cope with the uncertain outlook caused by inflation.
City analysts expect a single-digit dividend increase for the current trading year through March 2023. And they predict a 14% increase for the following year. So with the stock price near 450p, the forward looking dividend yield is running above 6%.
Such financial companies can suffer from cyclical gains. But there are no signs of weakness ahead and I’m attracted to that solid yield.