Kingfisher is a big-paying dividend share that’s slated to release full-year results on Wednesday, March 20. It’s a FTSE 100-quoted business that should be avoided at all costs, though.
Why? Well as if battling a tough British retail market isn’t enough, a reflection of the impact of European Union withdrawal on consumer confidence, home improvement retailer Kingfisher is suffering because of tough trading conditions in its other core market of France, too.
Like-for-like sales are dropping in the UK and France and it’s difficult to see how the company can turn around its flagging operations any time soon, given that these difficult operating environments look set to endure through 2019 at least. The fact that its ONE Kingfisher sales-enhancing restructuring plan is seemingly still doing more harm than good doesn’t help, either.
I don’t care about its low forward P/E ratio of 9.4 times nor its 4.9% corresponding dividend yield. It’s a share in danger of sinking sharply next week, in my opinion.
Fellow FTSE 100 business Next is also due to update shareholders next week with results of its own — full-year numbers are slated for Thursday, March 21.
Like Kingfisher, though, this is another blue chip you should probably pass up on. The trading environment for clothing retailers isn’t any better at the moment, reflecting the aforementioned strain on shopper appetite and in this case intensifying competition that’s prompting rampant, margin-destroying discounting across all of the UK’s mid-tier clothes sellers.
Next used to have it all its own way in the fast-expanding online shopping arena, its Next Directory division responsible for delivering brilliant profits generation at group level. But as its retail rivals have invested in their own virtual storefronts and caught up it looks as if the days of rampant bottom-line growth at Next are over, and current City forecasts are suggestive of this too.
Despite its low prospective P/E multiple of 11.7 times and its inflation-beating 3.2% forward dividend yield I’m not investing; I believe the risks still outweigh the possible rewards, certainly in the near term.
Empiric Student Property
It’s not all misery and red flags, though. Take Empiric Student Property, for instance, which is all set to release full-year financials on Wednesday, March 20.
The shadow of Brexit may be causing tension over the numbers of students that flock to the UK every year, though I believe these fears are more than baked into Empiric’s low valuation, as indicated by its sub-1 PEG ratio of 0.3 times.
In reality, I expect Britain’s top universities to retain their appeal for people all over the globe however European Union withdrawal is negotiated, and therefore that demand for Empiric’s student accommodation to remain strong. It certainly hasn’t witnessed any drop-off as yet — in fact, it noted in autumn that bookings for the current financial year were “significantly ahead” of the prior academic period.
I’d happily buy this small cap ahead of those upcoming financials, in anticipation of another bubbly set of comments on the condition of the market. And a bulky 5.2% forward dividend yield adds a considerable sweetener.