These 3 FTSE 100 dividend champions have crashed around 20% in 12 months. Is it time to load up?
Everybody loves a bargain, and investors are no different. However, whether shopping for shares or shoes, a discounted price doesn’t automatically make a good buy.
Anto angst
Investors in Chilean copper miner Antofagasta (LSE: ANTO) have endured a tricky year, with its stock down 23% in 12 months. The £7.5bn FTSE 100-listed company has been hit by the 20% drop in the copper price this year, and US President’s Donald Trump’s trade war on China.
Some investors may have given up on Antofagasta, whose share price spiked to 1,600p in December 2010, but almost eight years’ later idles at 767p. With doom-mongers predicting a recession in 2019 or 2020, and Chinese demand slowing along with its economy, this would be a brave time to dive into Dr Copper.
REIT said Fred
While Antofagasta’s earnings per share (EPS) are forecast to fall 16% this year, analysts say they may rebound 30% in 2019. That’s mining stocks for you. The income disappoints, with a modest forward yield of 2.8%, albeit with healthy cover of 2.3. It trades at a relatively pricey 16.6 times earnings, so it’s not a huge bargain. I would wait with this one.
Real estate investment trust (REIT) Landsec (LSE: LAND), formerly Land Securities, has also had a tough year. Its stock is down around 20% with the UK construction and property sector hit by Brexit turmoil. It owns a string of shopping centres around the UK, including Bluewater in Kent, Lakeside Thurrock and Gunwharf Quays in Portsmouth, and has been hit by the retail slowdown, while the London office market also stumbled.
Brexit mess
The company swung from a £112m profit before tax to a £251m loss last year, although that was partly due to the cost of refinancing £1.5bn, which reduced its weighted average cost of debt to 2.6%, and lengthened the duration to 13.1 years.
Landsec trades at 14 times earnings – cheap, but not that cheap. The dividend looks juicy, though, with a forecast yield of 5.6%, and cover of 1.2. Five consecutive years of positive EPS growth looks set to continue with a 7% forecast for the year to 31 March 2019, and 2% the year after. If we get a Brexit deal, the economic snap-back could give it a real boost. That’s a big if, though.
Fallen empire
It’s been a desperate year for the world’s biggest advertising company WPP(LSE: WPP), with its share price dropping 26% and Sir Martin Sorrell quitting after more than 32 years at the helm, amid a personal misconduct inquiry. Given that he built the £13bn giant from a small Kent-based maker of wire baskets in 1985, that’s quite some loss, while the group also lost key contracts with big clients, including its oldest and largest with the Ford Motor Company.
So WPP is a company looking to forge a new way in the world, and you can buy at a bargain entry point of just 9.2 times earnings, with a forecast yield of 5.7%, and cover of 1.9. What you don’t get is Sorrell, a one-man driving force whose sprawling empire – 200,000 staff across 120 companies – may now crack and break up, as empires are prone to do.
Like all three of these stocks, it is an opportunity… but a risky one.
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harveyj has no position in any of the shares mentioned. The Motley Fool UK has recommended Landsec. 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.
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