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The FTSE 100 has fallen 8% this year! I’m going shopping for shares

Harvey Jones — Thu, 20 Oct 2022 06:04:00 +0000

The FTSE 100 has performed better than most global stock markets this year, but it has still fallen sharply. Trading at just over 6,900, it is down almost 8% in 2022.

This has been a tough year. The global economy had barely started to recover from the pandemic, when Putin invaded Ukraine.

Energy prices have rocketed, while inflation is in double digits. The era of cheap money has hit an abrupt close, as stimulus goes into reverse. All the froth has gone out of stock markets, and house prices may soon start falling.

The FTSE 100 has done okay

The UK is in crisis, after former chancellor Kwasi Kwarteng’s mini-budget undermined the pound and the nation’s pension funds. As far as the FTSE 100 is concerned, the only surprise to me is that it has not fallen further.

I’ve no idea whether we will see another sell-off. I never predict stock market movements, for the simple reason that it is not possible to do so with any consistent degree of success.

Instead, I aim to take advantage of market movements after they have happened. At least there I’m on solid ground. The FTSE 100 has dropped this year, therefore my favourite companies are cheaper. If I buy them today, I’m getting a relative bargain.

Naturally, the lead index could drop again, making them cheaper still. If that happens, I will console myself with the fact that my reinvested dividends will pick up more stock at the lower price.

I will further console myself by investing a little more, at the lower price. That’s how I invest. By feeding any spare money I have into the market, taking advantage of any dips.

There are so many bargain stocks on the FTSE 100 right now, I hardly know where to start. Many individual stocks have fallen much further than the index as a whole. For example, private equity firm Intermediate Capital Group is down 51% over 12 months, and now trades at a bargain 5.5 times earnings. It yields a thumping 7.67%.

I’m amazed by how cheap stocks are

Many other FTSE 100 stocks have a similar profile. Barclays is down 24% in the last turbulent year. It trades at just 3.93 times earnings and yields 4.16%. British Land is down 30%. It’s valued at just 3.38 times earnings and pays income of 6.43%.

I would need to do more research before actually buying them, but their low valuations and high yields are incredibly tempting. There are loads more like them on the FTSE 100. This is a great time to buy dirt-cheap dividend stocks.

The big risk when buying companies is that I may be walking into a value trap. Especially now, as inflation powers upwards and consumers and businesses face the worst cost squeeze in four decades. I expect things to get worse rather than better, but I also remind myself that stock markets typically recover long before the actual economy does.

If I waited for happier times to buy FTSE 100 shares, they would cost me a lot more than they do today, and yield far less.

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Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended British Land Co. 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.

Forget buy-to-let! I like these FTSE 100 landlords that yield 6%

Rupert Hargreaves — Wed, 09 Oct 2019 09:11:03 +0000

Investing in buy-to-let property can be expensive, time-consuming and stressful. That’s without taking into account the extra tax obligations landlords now have to deal with.

With all these headlines, wouldn’t it be easier if you could just click a button and get into the buy-to-let market without having to worry about anything else?

The good news is, is you can do just that with stocks. Today I’m going to highlight two FTSE 100 companies that operate large real estate portfolios and both offer dividend yields of nearly 6%.

London landlord

Landsec (LSE: LAND) is the UK’s largest publicly traded property company. Right now, investors can snap up shares in this business at just a fraction of what they are worth. At the end of March, the firm reported a net asset value per share of 1,339p, compared to the current share price of around 820p, implying the stock is trading at a 39% discount to net asset value.

However, I don’t think this figure is entirely accurate because, in some areas of the market, commercial property values are falling. With more than half of its property portfolio located in London, Landsec is insulated from this trend to some degree, but the firm is still feeling the pressure. In the year to the end of March, the value of its property portfolio declined by nearly 5%.

That being said, I think it is highly unlikely that property values will decline the 39% that the market is currently implying. On that basis, I reckon the stock looks good value at current levels.

As well as the cheap valuation, shares in Landsec also support a dividend yield of 5.8% so investors will be paid to wait for a recovery in market sentiment.

Growth ahead

Shares in British Land (LSE: BLND) are suffering from the same overhang as LandSec.

Investors are avoiding the business due to its exposure to commercial retail property. For its part, British Land is trying to diversify away from this market. It has been selling retail properties and re-investing the proceeds in offices and big projects.

These include the multi-billion pound Canada Water project, which recently received the green light. The £3.3bn project will create more than 3,000 homes and the first new London high street in 100 years as well as more than 1m square feet of office space.

This project could potentially unlock billions of pounds in value for the company, although right now, it does not look as if the market believes it will ever happen.

Shares in the real estate investment trust are dealing at a price to tangible book value of 0.6. I do not believe that this discount takes British Land’s development pipeline into account. On top of the deep discount to net asset value, the stock currently supports a dividend yield of 5.8%.

So, if you are looking to invest in the property industry, I highly recommend checking out this undervalued property giant with its market-beating dividend yield.

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Rupert Hargreaves owns British Land Co and Landsec. The Motley Fool UK has recommended British Land Co and 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.

3 stocks I’d buy ahead of the next market crash

Rupert Hargreaves — Sun, 10 Mar 2019 10:00:55 +0000

I believe the best stocks to protect your portfolio from market declines are those companies with strong balance sheets, durable business models and a long-term focus.

Today, I’m going to outline three companies that I believe meet all of these criteria and could be fantastic buys for your portfolio ahead of the next market crash.

Safety in bricks and mortar

My first pick is British Land (LSE: BLND). Recently, the market has been selling this company as it seems investors are concerned about its exposure to the struggling retail sector. However, despite these concerns, British Land’s management is adamant that firm has what it takes to be able to weather the retail storm — and I agree with them.

Even though the group does have significant exposure to shopping centres and other retail commercial property, management has been divesting weaker properties and reinvesting the proceeds in more sustainable properties, such as the build-to-rent and office markets.

Shareholders buying today can snap up British Land’s £9.3bn property portfolio at a discount of 36% to its net asset value of 939p. At the time of writing, the stock supports a dividend yield of 5.3%.

In my opinion, this valuation, coupled with the market-beating dividend yield, will protect investors from any downside in the next market crash.

Relaxing cruise

As well as British Land, I reckon shares in cruise group Carnival (LSE: CCL) are worth buying ahead of the next market crash.

The cruise industry is booming, and forecasts suggest the market will only get bigger as the world’s population ages. On top of this, the growth of the middle class in Asia is driving up demand across the world for cruise holidays.

Carnival is investing hundreds of millions of dollars in new cruise ships to capitalise on this market growth. As demand for the company’s services continues to grow, City analysts have pencilled in earnings per share growth of 14% over the next two years. Based on these forecasts, shares in the group are trading at a 2020 P/E of 11.3. They also support a highly attractive dividend yield of 3.9%.

No matter what happens in the stock market over the next 12 to 24 months, I think it’s going to have minimal impact on the underlying demand for cruise holidays.

Tech boom

My final stock to buy ahead of the next market crash isn’t strictly an independent company, it’s an investment trust, Scottish Mortgage Investment Trust (LSE: SMT) to be exact.

The main reason why I’m recommending this trust is that its most significant holdings are some of the most transformational businesses active in the world today. For example, Amazon.com makes up 9.8% of the trust’s assets under management.

In my opinion, when the next downturn comes, tech companies that have come to dominate their respective industries over the past decade will be the ones that come out on top as they use market weakness to increase their hold on the markets they already dominate. Scottish Mortage is, in my opinion, the best way to play this trend as it gives you an instantly diversified portfolio of some of the biggest tech companies in the world.

The trust is currently trading at a slight 2.5% premium to net asset value, and it charges an annual management fee of 0.37%. The dividend yield is now 0.63%.

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Rupert Hargreaves owns shares in British Land. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended British Land Co and Carnival. 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.

2 top value FTSE 100 stocks I’m buying right now

Rupert Hargreaves — Sat, 24 Feb 2018 09:30:53 +0000

Property is one of the most defensive assets around. But for most investors, building an extensive, diversified property portfolio isn’t a realistic prospect. And even if you have the time and funds to do so, managing property can be an expensive and time-consuming business. And that’s where real estate investment trusts come in handy.

These property-focused businesses give investors access to a broad array of managed properties at the click of a button, no matter how much you have to invest, and no matter how much experience you have in the market.

British Land (LSE: BLND) and Land Securities (LSE: LAND) are two of the most significant landlords in the UK and, right now, shares in these two trusts are on special offer.

Unloved by the market

Both trade at a deep discount to their net asset value, or the value of the property on their books. Investor concern about the impact Brexit will have on the UK property market is almost entirely responsible for this discount. Indeed, between the beginning and end of June 2016 (the month of the EU referendum), shares in these companies lost 18% and 11%, respectively.

The thing is, even though the shares registered a double-digit decline in the space of a month, the property underpinning these two companies’ valuations has hardly budged in value. For example, at the end of fiscal 2017, British Land’s net asset value per share was 915p, down slightly from 919p in 2016.

Thus, I believe that these two companies offer fantastic value at current prices with British Land currently trading at a 30% discount to net asset value, while Land Securities is trading at a discount of around 34%.

Not risk-free

That said, I do believe Brexit may have some impact on these companies’ property assets, so I’m not expecting either to trade at its full and net asset value anytime soon.

Nonetheless, the current valuation implies property values are set to fall by 30% from current levels, which I believe is highly unlikely, even in the adverse scenario.

According to several reports, the demand for offices in and around London remains robust with some market analysts noting “unprecedented” levels of demand from tenants. Some reports have even pointed to “supply pressures” in the market for office space over 50,000 square feet. According to the Times, since Brexit, the equivalent of “four Cheesegraters – or 2.4m sq ft – have been leased by the financial services sector in central London.”

These figures indicate to me that the current discounts being attributed to British Land and Land Securities are too harsh. Therefore, I believe they could be some of the best value investments in the FTSE 100 today.

Not only are they trading at a discount to the value of the property on their balance sheets, but they also support market-beating dividend yields, so investors will be paid to wait for any turnaround. Shares in British Land currently support a dividend yield of 4.8% and shares in Land Securities offer a dividend yield of 4.6%.

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Rupert Hargreaves owns shares in British Land Co and Land Securities Group. The Motley Fool UK has recommended British Land Co and Land Securities Group. 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.

These 2 beaten-up FTSE 100 turnaround plays are yielding almost 5%

Harvey Jones — Sun, 22 Oct 2017 08:10:07 +0000

I have been digging through the FTSE 100 for high yielding companies, and these two quickly caught my attention. Both stocks fell sharply over the summer, suggesting they might offer a turnaround opportunity going forward. Both yield nearly 5%, offering an attractive income while you wait.

Give me Land

Property developer British Land Company (LSE: BLND) is down 10% after its shares peaked at 675p in the summer. Over three years, it’ss down 29%. That’s despite reporting a 7.4% rise in underlying profit to £390m during 2016, with a strong leasing and operational performance. However, Brexit still casts shadows over the sector, and the value of its portfolio dropped 1.4%.

In August, HSBC downgraded British Land from “buy” to “hold”, claiming that its valuation is likely to come under pressure for the foreseeable future, due to the ailing UK economic and political situation, a situation that has since worsened. While many FTSE 100 companies now earn the bulk of their revenues overseas, the group’s £13.9bn portfolio of prime London office space and UK retail centres leaves it fully exposed to any domestic downturn. British Land is no longer the attraction it was.

Tricky territory

The group recently launched a £300m share buy back, to take advantage of the fact that it is trading at a large discount to the net asset value (NAV), which currently stands at 915p, against a share price of just 610p. Management said the move is a good use of its money, better than using the cash to buy more property. However, critics point out that a similar scheme in 2007 failed to lift the share price.

Forecast earnings per share growth looks patchy, with City analysts predicting a 4% drop in 2018, and just 1% growth in 2019. Brexit will hurt if more companies do pull out of London and consumers abandon shopping centres. Given this threat, a valuation of 16.7 times earnings looks a little high. A forecast yield of 5.1% does offset that, although cover is only 1.2. Neil Woodford is an enthusiastic buyer (for what that’s worth these days). Personally, I will keep looking for dividend stocks with stronger growth prospects.

United we fall

Water company United Utilities (LSE: UU) is also having a tough time, its share price down 17% in the last six months despite September’s reasonably upbeat trading update. Management reported current trading remained in line with expectations, and stated that its operational performance was “delivering value” for customers, shareholders and the environment.

Earnings are expected to be almost 3% higher than last year, reflecting permitted regulatory revenue changes, with first-half underlying operating profit also expected to rise. However, EPS growth has disappointed lately, being negative in both 2016 and 2017, with a further 3% drop predicted in 2018. City analysts are more optimistic further down the line, expecting an impressive 15% leap in 2019.

Liquid asset

The biggest attraction that United Utilities has to offer is a forecast yield of 4.7, but again, cover is wafer thin at 1.1. I would also have expected a lower forecast valuation than a pricey-looking 19.5 times earnings. Prospects of a brighter 2019 make it my pick over British Land.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended British Land Co. 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.

Time to buy these undervalued stocks trading at deep discounts?

Rupert Hargreaves — Thu, 06 Jul 2017 08:42:16 +0000

With a central London-focused portfolio, Great Portland Estates (LSE: GPOR) is generally considered to be one of the most secure property companies the UK.

However, looking at the company’s current valuation, you could be forgiven for thinking that the market does not think much of the firm’s prospects. Indeed, at the time of writing, shares in Great Portland are changing hands for a little less than 600p each, compared to the net asset value of around 700p. This indicates that you can get your hands on a portfolio of highly sought-after central London property at a discount of around 15% to market prices.

Business as usual

According to a trading update issued by Great Portland today, it looks as if the underlying business is performing well despite the market’s sentiment towards the firm. For the quarter to 30 June management signed 20 new lettings, generating an annual rent for the business of £6bn. Further, 10 rent reviews were settled during the period for an extra £3.8m per annum. The fact that these reviews resulted in rents being set 62% above previous passing rent levels shows that there is still strength in the London property market.

A total rent roll of £115.9m was recorded for the period, up 5.7% during the quarter with a vacancy rate of 6.5%. As well as these developments, Great Portland announced some new property purchases and development plans designed to improve the yield on the group’s property portfolio. At the end of the period, the company had a conservative loan-to-value debt ratio of 14.1%.

No income

It looks as if it’s business as usual for Great Portland and if you’re looking to buy into the London commercial property boom, the shares look to be a steal at current prices.

The one thing Great Portland does not offer, but many of its peers do, is an attractive dividend yield. At the time of writing the shares support a yield of 1.8%, well below British Land’s (LSE: BLND) current yield of 5.1%.

A better buy?

If you’re looking for a property company with exposure to London, trading at a discount to net assets and that offers a healthy dividend yield, then British Land could be the one. The company owns a selection of properties in London as well as around the rest of the UK.

Concerns about the state of the UK property market, and in particular the commercial real estate market, have sent the real estate investment trust’s shares sliding and they currently trade around 30% below their 2015 peak.

However, after these declines, the shares trade at a discount of around 30% to the group’s net asset value of 915p as reported for the year ended 31 March. This discount makes the shares marginally more attractive than those of Great Portland, as while Great Portland owns a portfolio of prime London property, British Land is both cheap and supports a sector-leading dividend yield.

If you’re looking for a bargain in the property sector, it might be worth taking a further look at British Land.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Is this the best way to invest in UK property dividends?

Rupert Hargreaves — Thu, 26 Jan 2017 12:19:31 +0000

Property is considered by many to be the safest asset class around with the most predictable returns. However, investing in property requires a large capital payment upfront, which many would-be buyers just don’t have. What’s more, managing a property as an investment can be time-consuming and margins are slim.

But there’s another option available: real estate investment trusts.

The REIT option

Real estate investment trusts or REITs are different to normal stocks as they’re essentially property partnerships with 90% of the tax-exempt profit from the REITs’ property rental business having to be distributed to shareholders. This is known as a property income distribution, or PID. PIDs are taxable as property letting income and are taxed at 20% rather than the basic dividend rate. If held in an ISA no tax is paid, so investors receive a profit boost as no tax is paid at either the corporate or individual level.

This beneficial tax treatment is just one of the many advantages REITs have over traditional property. Exposure to sectors that investors wouldn’t otherwise be able to access is another.

Well diversified

Assura (LSE: AGR) offers investors exposure to the highly defensive healthcare property market. With an investment property portfolio of £1.2bn and a loan-to-value ratio of 34%, the company is both well diversified and not dependent on debt. Also, there’s plenty of financial headroom for further growth through bolt-on acquisitions.

At the end of September, the company reported a net asset value of 47.2p per share and hiked its first-half payout by 10% to 1.1p. City analysts expect the company to yield 4.4% this year.

Primary Health Properties (LSE: PHP) is another REIT that invests in modern primary healthcare premises. Over the past five years, the firm’s revenue has more than doubled and management continues to invest in growth.

The company already has 298 assets across the UK and recently acquired two more Scottish facilities for £7.2m. The firm’s net asset value per share is 90.4p and City analysts have pencilled-in a dividend yield of 4.9% for 2017.

Buying at a discount

Another benefit of using REITs to invest in property is the ability to buy REIT units at a deep discount to the value of the property owned by the firm.

For example, at the time of writing British Land (LSE: LAND) is trading at 586p, down 20% over the past 12 months. However, over the same period, the value of the company’s underlying property portfolio has hardly budged. At the end of November, the company reported its net asset value per share was 891p, a full 52% above the current price.

As one of the UK’s premier property companies, this discount to net asset value seems unwarranted. City analysts believe British Land will yield 5% this year.

The bottom line

All in all, investing in REITs is a much better alternative to investing in property directly. REITs offer more diversification, have tax advantages if held in an ISA, can be bought at a discount to net asset value and managements does all the hard work for you.

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Rupert Hargreaves 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.

Should you sell Land Securities Group plc on British Land plc’s results?

Harvey Jones — Thu, 19 Jan 2017 12:11:53 +0000

Why don’t markets react in the way that companies want them to? That’s the question management at British Land (LSE: BLND) will be asking after today’s positive set of results triggered a 2.75% drop in the share price. The downbeat market response may signal a turning point in the commercial property market.

Oh give me Land

British Land’s Q3 results looked decent enough with the company reporting 314,000 sq ft of retail lettings and renewals, 8.7% ahead of estimated recovery value, plus a further 189,000 sq ft under offer. Retailer sales for the quarter were up 0.6% year-on-year, outperforming the benchmark by 200 basis points, and although footfall slipped 0.6% it still outperformed the benchmark by 220 basis points.

Chief executive Chris Grigg talked up “a positive quarter“, saying that it reflects the strong positioning of the company’s portfolio. British Land has also made further disposals of non-core assets and residential units ahead of valuation. However, markets appear to have picked up on his single note of caution, with Grigg stating that: “We remain mindful of potential headwinds going forward.”

A very British boom

Just about everybody is mindful of potential headwinds as Prime Minister Theresa May prepares to pull the trigger on what looks like a hard Brexit. The big question is how long the UK economy can keep booming and leading the G7 growth table, driven by the weak pound and credit-fuelled consumer boom. Wage growth is improving, up slightly from 2.6% to 2.8%, making workers richer in real terms, even with consumer price inflation at 1.6%. That may change if inflation hits 3% this year, as many analysts predict.

The economy looks strong, yet investors are shunning British Land. Perhaps that’s down to its toppy valuation, now on a pricey forecast of 17.3 times earnings. Forecast earnings per share growth looks patchy, including a predicted 2% drop in the year to 31 March 2018, to be followed by a 3% pick-up. However, the dividend is forecast to yield an attractive 4.7%, if thinly covered 1.3 times.

The REIT stuff

British Land’s share price is down 13% over the past 12 months, and up just 30% over five years. Fellow real estate investment trust (REIT) Land Securities Group (LSE: LAND) has put on a better show, falling 5% over the last year but rising 58% over five years. The result is that it trades at almost 21 times earnings, while yielding less at 3.4%, covered 1.3 times.

Last year Land Securities reported “hesitant” demand for office space in London in the wake of the Brexit vote, coupled with a warning of weaker rental values. Things may come to a head once Article 50 is triggered, especially with every step of the negotiations set to be greeted with a blaze of scaremongering headlines. Land Securities is insulated by what management describes as its “high quality, well-let portfolio“, and EPS forecasts look promising, with 4% growth to 31 March 2018, followed by 7%.

Despite that, I think the dour market reception to British Land’s results suggests Land Securities will have a tough job convincing investors that it’s ready to hit the ground running.

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Harvey Jones 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.

Low interest rates getting you down? These three dividend champions can help

Rupert Hargreaves — Thu, 22 Sep 2016 10:31:06 +0000

It didn’t take long for high street banks to follow the Bank of England’s rate cut last month and cut the interest rates offered to savers. Only a few months ago it was relatively easy to find a savings or current account that paid 3% per annum or more in interest. Now it seems as if banks are engaged in a race to the bottom with most high street lenders having cut savings rates to below 1%.

As the war on saving intensifies, investors and savers should seek safety in high-quality dividend stocks. It’s now relatively easy to find a dividend champion with a yield more than the average savings rate. Here are three ideas.

Discount property

British Land (LSE: BLND) is one of the UK’s largest real estate investment trusts. Not only is the company a great dividend investment, but it’s also an excellent way to play the property market for those investors who don’t have the capital or inclination to buy physical property.

Real estate investment trusts have fallen out of favour with investors this year. Year-to-date shares in the trust have fallen by 19% excluding dividends, although after these declines the shares are trading significantly below British Land’s net asset value. At the end of 2015, the firm reported a net asset value of 919p per share. The shares currently support a dividend yield of 4.8%.

Long-term clarity

Legal & General (LSE: LGEN) is a dividend champion that has nearly 200 years of history behind it. According to City forecasts, shares in Legal & General will support a dividend yield of 6.9% this year and a quick back-of-the-envelope calculation shows that the payout is covered 1.4 times by earnings per share. Since the financial crisis, the company has adopted a dividend policy of only increasing the payout by as much as it can afford and due to the nature of Legal’s business, it’s easy for management to forecast how much the group can pay.

The revenue from managing pensions and savings accounts can produce a steady, predictable stream of income for many years. Therefore, the predictability of Legal & General’s business means that management can set the level of the firm’s dividend with a degree of certainty that the payout is sustainable at that level.

Infrastructure investment

Infrastructure group Carillion (LSE: CLLN) doesn’t seem like the perfect dividend stock at first glance but this pick is a play on increasing spending on infrastructure in the UK. It’s widely expected that Theresa May’s new government will approve and schedule a wave of new infrastructure projects to boost the UK’s economy during the next few years. These projects will be a boon for companies like Carillion.

Shares in Carillion already support a dividend yield of 7.1%, and the payout is covered twice by earnings per share. The shares trade at a forward P/E of 7.4. So it would appear that Carillion is both an income and growth-at-a-reasonable-price stock.

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There has never been a better time to buy ITV plc, British Land Co plc and Carillion plc

Prabhat Sakya — Tue, 30 Aug 2016 06:00:11 +0000

Are you on the lookout for share price bargains? The fallout from the Brexit vote has largely passed and the weak pound means that the stock market has been on the up, so I think it’s a good time to buy cheap shares.

Here are three of my current top picks, taken from both the FTSE 100 and FTSE 250.

ITV

Broadcaster ITV (LSE:ITV) is one of Britain’s leading TV companies. It delivers content through a range of platforms including free-to-air and pay-TV and online. And it has been growing earnings at a steady clip.

Turnover of this £8bn firm has risen from £2.3bn in 2013 to £2.9bn in 2015 and earnings per share have gone from 8.1p to 12.3p.

The company’s strategy has been to broaden its range of programming, taking its output around the world. It has increased online, pay and interactive revenue from £23m to £107m from 2009 to 2016. There has been strong growth in ITV Studios, with an increase in revenue from £496m in 2015 to £651m in 2016. The share of revenue from international has increased from 39% in 2009 to 50% in 2016. This has been instrumental in ITV’s long-term growth.

What’s more, if the company can maintain this strategy, then I suspect growth will continue into the future. After a recent pullback, the P/E ratio is just 13 and a dividend yield of 2.5%, which means the firm is remarkable value.

British Land Co

British Land Co (LSE:BLAND) is a real estate investment trust. It invests in offices and the retail sector. Retail developments include Meadowhall, Ealing Broadway and Glasgow Fort. Its portfolio comprises assets with lease lengths and different ages including those that are newly developed and those scheduled for development.

Retail growth has been increasing steadily since the turn of the century, pushing up the company’s business.

Developments in the pipeline include Canada Water, which is one of London’s largest regeneration opportunities.

After a recent pullback the shares look cheap, at a P/E ratio of 9.7 and a dividend yield of 4.2%. The dividend is appealing to high-yield investors, and is well covered by profits.

The property market continues to do well, and turnover has been increasing from £384m in 2014 and £590m in 2016.

Carillion

Carillion (LSE:CLLN) is an infrastructure company that builds roads, railway stations and sports stadia. It built the Grand Mosque in Oman and the Yas Hotel. It has seen impressive growth, with turnover going from £3.3bn in 2013 to £3.95bn, and earnings jumping from 23p in 2013 to 28p in 2015.

The P/E ratio is 10.4, and the dividend yield is 6.5%, after a recent pullback. This makes the firm impressive value, both as a value and a high-yield play. Yet what seems like a high yield is well covered by profits.

A total order book of £17.4bn means also that earnings are guaranteed for several years to come. And the company is expanding in both the UK and the Middle East.

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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has recommended ITV. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.