In a recent article I lauded Britvic as a stock I could buy today with the solid belief that it can deliver titanic returns in the decades ahead.
The FTSE 250 is packed with similarly-stunning dividend stocks that could prove highly lucrative in the medium term and long after. But right now I wish to stay close to Britvic and look at AG Barr(LSE: BAG), another big player in soft drinks.
It’s already proven its mettle as a profits grower even in the toughest of trading conditions. Indeed, even as pressure on consumer spending power has grown and fresh challenges like the UK-implemented sugar tax have reared their head, Barr’s bottom line continues to swell.
Latest trading details in September underlined the company’s resilience, as revenues rose 5.5% in the six months to July, to £136.9m, and underlying pre-tax profits improved to the tune of 4%, to £18.2m.
A high Barr
The greatest weapon in Barr’s arsenal is the terrific customer loyalty that its labels like Irn Bru, Rubicon and Strathmore command. And what a weapon these brands have proven to be — Scotland’s beloved Irn Bru has been a favourite with the thirsty since the turn of the 20th century.
And the company has stepped up investment in innovating, expanding and marketing these sales-driving brands to keep them flying off the shelves. Its ‘Street Drinks’ range under the Rubicon umbrella is the latest to hit the market in recent months.
So it’s no surprise, not in my book at least, to see City analysts predicting that the long record of profits growth is set to continue. Rises of 3% and 5% are forecast for the years to January 2019 and 2020 respectively, meaning that its role as a great dividend booster should remain intact.
Last year’s 15.55p per share payout is predicted to rise to 16p in the current period, and again to 17p in fiscal 2020. There are bigger yields out there than Barr’s, which sit at 2.1% and 2.2% for this year and next respectively, but the capacity for prolonged dividend growth stretching many years into the future still makes it a brilliant share to snap up today, I believe.
Check out this ~6% yielder
Telford Homes (LSE: TEF) is another FTSE 250 dividend hero I’d like to bring to your attention.
The spectacular resilience of the housebuilders has been on display for more than a year now — despite the collapse in broad homebuyer appetite these stocks continue to deliver profits growth. Existing homeowners might be staying put but activity amongst first-time buyers remains healthy, helped by a combination of favourable lending conditions and Britain’s homes shortage.
I’m not expecting this supply/demand imbalance to be solved until many years into the future, if at all, and I’m expecting earnings to keep growing at Telford for one.
City analysts agree — they are predicting profits improvements of 2% and 5% in the years to March 2019 and 2020 respectively, for example, and this lays the base for them to expect dividends to keep rising as well.
Last year’s 17p per share payment is predicted to rise to 17.7p this year and to 18.3p in the following period, resulting in staggering 5.7% and 5.9% yields for these respective years. If you’re looking for a rock-solid, big-yielding stock to buy today, Telford is worth serious consideration today, in my opinion.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended AG Barr. 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.