A FTSE 100 value stock I'd buy and hold forever

The Motley Fool
paper bags_Mondi
paper bags_Mondi

When it comes to adding reliable earnings generators to your shares portfolio, I reckon Mondi(LSE: MNDI) could be one of the best purchases you make over the festive period.

While City analysts are expecting Mondi's long growth to continue for some time yet, the double-digit rises of recent years are likely to remain elusive for a little longer. This reflects a backcloth of rising costs that are putting the bottom line under plenty of pressure.

But Mondi is increasingly getting to grips with the problem by passing these larger input costs onto its customers. The FTSE 100 business can afford to do this as it mirrors the actions being undertaken by many of its competitors.

So a 7% advance is chalked in for 2017, up from 3% last year, and an extra 9% rise is forecast for 2018. Still, earnings growth appears to be heading in the right direction again, and current projections also make Mondi a brilliant value selection.

The firm rocks up on a forward P/E ratio of 14.5 times, comfortably below the widely-considered value benchmark of 15 times.

I would also be tempted by the Footsie giant on account of its mega-expansive dividend policy. Dividends have more than doubled over the past five years and City analysts expect rewards to keep increasing at a mighty rate.

In 2017 Mondi is predicted to lift the dividend to 64.4 euro cents per share from 57 cents last year, and again to 68.7 cents next year. As a consequence, investors can enjoy chunky yields of 3% and 3.2% for these years.

Another great growth stock

Britvic (LSE: BVIC) is another share I'm tipping to deliver splendid shareholder returns long into the future.

While jitters remain over the impact of the upcoming sugar tax in the UK and Ireland in April 2018, the drinks giant is confident that it can pass the impact of this tax successfully onto its customers.

The competitive trading environment means that this may be easier said than done, but investors can take confidence from the fact that only a small proportion of Britvic's product portfolio falls inside the remit of the levy. In fact, the Hertfordshire company may benefit from the upcoming tax as drinkers switch to low- and no-sugar beverages from calorie-heavy products.

Irrespective of any near-term turbulence at its home business, I am convinced Britvic's improving performance on foreign shores makes it a brilliant growth pick for patient investors. In particular I am excited by the huge revenues opportunities on offer in the US and Brazil, with its acquisition of Bela Ischia earlier this year giving it a much-improved foothold in the latter market.

Earnings growth at Britvic is expected to cool to just 1% in the year to September 2018, although I reckon this projection could be subject to upgrades as the company's cost-cutting programme is exceeding expectations, and the firm's commitment to product innovation keeps much-loved products like its Robinsons juices in demand.

I reckon a forward P/E ratio of 15.1 times is brilliant value given Britvic's supreme long-term profits outlook. And a predicted 27p per share dividend, yielding a meaty 3.4%, seals the investment case.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Britvic. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.