Today I'll be taking a closer look at multinational insurance giant Aviva, defence specialist BAE Systems, and car parts retailer Halfords. Could investing in any of these companies help you retire early?
Best of both
Shares in Aviva(LSE: AV), the UK's largest insurance company, have underperformed over the last 12 months and are now trading at an 18% discount to just a year ago. The company performed poorly in 2015 with earnings falling a whopping 53%, but 2016 should be very different with the City expecting the FTSE 100 firm to turn things around. Market consensus expects earnings to double to £1.89bn this year, with a more modest 8% improvement to £2.05bn pencilled-in for 2017, leaving the shares in bargain territory at just eight times forecast earnings for the year to December 2017.
Furthermore, management is expected to increase dividend payouts to 23.55p per share this year and 26.44p next year, giving prospective yields of 5.4% and 6%, respectively. For me, Aviva offers both solid dividend income AND significant capital growth potential for investors looking for exposure to the insurance sector.
Defence and aerospace group BAE Systems(LSE: BA) has secured two contracts worth $61.7m to handle the maintenance and repair of two ships for the US Navy. Work on the USS Farragut destroyer based at Jacksonville, Florida should be finished by January 2017, with maintenance on landing ship USS Fort McHenry expected to be complete the following May. The new contracts could eventually be worth a total of $68.6m if all options are exercised.
BAE's shares are a firm favourite with income investors, with the blue chip defence giant having an excellent track record of rising dividends stretching back many years. This year should be no different with dividends forecast to rise to 21.69p per share and further increases to 22.42p predicted for 2017, giving healthy yields of 4.4% and 4.6%, respectively. Income investors looking for progressive dividends should certainly take note.
The UK's leading retailer of car parts, bikes and accessories, Halfords(LSE: HFD), announced its full-year results recently for the 12 months to 1 April. The company reported a fall in pre-tax profits to £79.8m, compared to £83.8m a year earlier, on slightly lower revenues of £1.02bn. The fall in profit was attributed to exceptional costs, and the fact that the prior year had benefitted from an extra week. In fact, revenue excluding that extra week increased due to growth in the autocentres division.
The Redditch-based retailer has rewarded its shareholders in recent years with rising dividends and this year was no different with management increasing the full-year payout to 17p per share. City analysts are expecting this policy to continue with payouts of 17.32p and 17.96p predicted for this year and next, meaning above-average yields of 4.2% and 4.4% until 2018 at the very least.
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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.