These dividend shares are set to update the market next week on recent trading. Will their share prices leap or wilt in response?
Bovis Homes Group
Housebuilders continue to thrive in spite of the uncertainty that Brexit’s causing for the broader UK housing market. Why? There simply aren’t enough existing properties entering the market to sate the appetite of first-time buyers. And this, combined with ultra-favourable lending conditions, means that sales of newly-constructed properties continue to chug steadily higher.
Bovis for one illustrated this fertile landscape perfectly when it declared in July that it continued to see “good demand for our new homes across all our operating regions.” Average private sales rate per site per week were up 15% year-on-year in the six months to June, it said, whilst improvements to its geographical spread helped the average asking price of its newbuilds edge up to £342,000 from £334,700 previously.
I’m expecting the FTSE 250 firm to publish more rosy comments on the health of the newbuild market when interim results are unpacked on Tuesday, September 10, and thus expect its share price to sweep higher again (helped by a low forward P/E ratio of 9.3 times).
One last thing: at current prices Bovis sports vast dividend yields of 10.1% for 2019 and 10.3% for 2020. All things considered I reckon it’s an exceptional pick for income chasers.
WM Morrison Supermarkets might also offer up inflation-popping dividend yields — for this fiscal year and next they stand at 3.7% and 4% respectively — but it’s a share I won’t touch with a bargepole.
I’ve discussed the fall of Britain’s traditional ‘Big Four’ supermarkets in depth time and again, and there’s no signs emerging that the likes of Morrisons are on the verge of staging a substantial fightback. Indeed, most recent industry data from Nielsen showed Morrisons’s sales drop 2.4% in the 12 weeks to August 10, making it the worst-performing of the established chains in the period.
By comparison the disruptors Aldi and Lidl saw their own sales rise 9.5% and 12.1% in the period, rises which were underpinned by electric store expansion too.
It’ll be a brave man to expect Morrisons, then, to put in anything other than another chilling trading update when half-year results are released on Thursday, September 12. And for this reason I reckon the FTSE 100 grocery giant should be avoided at all costs.
You’d be much better off using your cash to buy Bovis, in my opinion, or to invest in SThree instead.
Yields here sit at a colossal 5.8% for fiscal 2019 and 6% for the following year. It’s no surprise that City analysts expect earnings growth to slow from the double-digit-percentage rises of recent periods, reflecting the impact of cooling economic conditions in the UK and Continental Europe.
But solid mid-digit expansion is still predicted through this period because of the recruiter’s focus on the contract sub-sector; the higher-growth STEM (science, technology, engineering and mathematics) markets; and its considerable exposure to more robust markets like the US.
SThree’s all set to report third-quarter financials on Friday, September 13. Should trade have remained robust in recent months this could give the small cap’s share price some much-needed zest, assisted by its ultra-low forward P/E ratio of 8.1 times. I reckon it’s another solid buy today.