At The Motley Fool, we like to ‘buy the dip’ whenever we can. That means picking up shares after the stock market has fallen, to gain exposure at a lower valuation than just a few days earlier.

We see it as the same principle as going shopping in the sales for, say, clothes or tech, or whatever. Who doesn’t like bagging a bargain? Yet many newbie investors looking to buy shares don’t view it like that. Some get nervous when the stock market dips, in case it heralds further trouble ahead.

I’d buy the dip after last week’s setback

Sometimes they will be right. The stock market may dip, then dip again. Nobody knows for sure what it will do next. However, I have learned that if I keep hanging on and on for the next dip, I never buy shares.

At some point, I have to take the plunge. Timing the stock market is impossible. But when I buy the dip, I am taking advantage of a move that has already happened, rather than second guessing where it goes next.

Stock markets suffered a minor setback last week. The US S&P 500 ended the week 5.15% lower. The FTSE 100 closed just 1.56% down on the week, with the FTSE 250 slipping 2.05%. That’s not a crash, just a little dip. Yet it has thrown up opportunities.

Some individual stocks have fallen by larger amounts. For example, InterContinental Hotels Group and Dechra Pharmaceuticals fell by 4.67% and 4.47% respectively on Friday. Neither are high on my shopping list, though. I’ll pass on these but others may be tempted.

I also like to take advantage of extended share price dips. For example, BT Group is down 11.49% over the last month. Fund manager Schroders has fallen 10.41%. In both cases, this is just the latest stage in a long-term share price decline. 

The two stocks look cheap, trading at P/Es of 6.95 and 10.56 times earnings, respectively. I am sorely tempted by BT, but would need to take a closer look at Schroders. I would never buy a stock solely because it is cheaper.

Two falling stocks I would happily buy

Insurer Aviva has experienced a much smaller drop of 4.02% over the last month. I would consider that dip worth buying because the FTSE 100 insurer has been on my watch list for some time.

The recent Anglo American dip really tempts me. The mining giant has fallen 7.82% over the last week, as global recession fears grow. Yet its long-term share price trajectory is positive, as it has grown 106.79% over five years.

The stock looks dirt cheap, trading at just 4.5 times earnings and yielding 8.99% a year. I need to do further research, but this looks like the type of dip I could happily buy.

The post I’d buy the dip in share prices as there are bargains to be had right now appeared first on The Twelfth Magpie.

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Harvey Jones doesn't hold any of the shares mentioned in this article. 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.

Air carriers remain plunged in misery, with EasyJet trading 10% lower than six months ago, and British Airways-owner International Consolidated Airlines Group down 30%. Measured over one year, they are down 57% and 69% respectively.

Until we can start flying again, without fear of sudden lockdowns, these FTSE 100 stocks will struggle.

There are more signs of life in the hotels sector. Foreign and business travel may have collapsed, but the staycation has partly compensated. The InterContinental Hotels Group (LSE: IHG) share price inevitably crashed in March as the world went into lockdown, but the FTSE 100 stock has staged a plucky recovery since. In fact, it is up almost 25% in the last six months. It now trades just 6% lower than this time last year, when we’d never heard of coronavirus.

This FTSE 100 stock can recover

The Holiday Inn and Crown Plaza owner has fared much better than Premier Inn owner Whitbread. Its share price is still down 33% compared to a year ago. A few days ago I called Whitbread a tempting-but-risky buy, trading at just 11.4 earnings. So what about IHG?

The all-important measure of success in the hotels trade, revenue per available room (RevPAR), plunged catastrophically in the lockdown. However, by August IHG was reporting signs of improvement, helped by the fact it has hotel operations in fast-recovering China.

Today, IHG reported improved third-quarter trading, although progress continues to vary by region. RevPAR declined 53%, but that was an improvement on a decline of 75% in the second quarter. Occupancy was also heading in the right direction at 44%, up from 25% in Q2.

CEO Keith Barr said domestic mainstream travel remains resilient, as the rise of the staycation helped offset the fall in business travel. IHG still has a long way to go, with 199 hotels still closed at the end of September, although this is only 3% of its estate.

The balance sheet is more solid than many FTSE 100 stocks, with positive cash flow in Q3 boosting total available liquidity to $2.1bn. By issuing new funds and partially repaying 2022 bonds in early October, it increased liquidity further to $2.9bn.

The IHG share price is hard to value

IHG directly owns only a small number of its hotels, with most operating as franchises. That helps ease pressure on the bottom line. It has also cut back on costs, with gross capital expenditure expected to be around $150m in 2020, a saving of $100m on last year.

My worry is that the next lockdown is going to hurt, with so many beds empty today. That isn’t stopping IHG from opening 11,000 rooms in the quarter. Not every FTSE 100 stock is so optimistic.

IHG suspended its dividend earlier this year citing “limited visibility”. In my view, visibility hasn’t improved much. Its share price is almost impossible to value. Its P/E ratio is set to top 138 this year, as earnings per share fall a forecast 87%. It is then expected to retreat to 31.1 times next year, with earnings forecast to rise a bumper 341%.

That all rests on Covid-19, of course. This FTSE 100 stock looks nicely placed to survive the pandemic, but the pace of the recovery could be slow.

The post I think this FTSE 100 stock is due a major comeback. Here’s what I’d do now appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended InterContinental Hotels 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.

InterContinental Hotels Group

InterContinental Hotels Group (LSE: IHG) is a FTSE 100 top performer, up 123% in the past five years. It has absolutely crushed the index, which rose just 13% over the same period.

However, the hotel trade is plugged into the global economy, and can suffer in a slowdown, when personal and business travel demand slumps. The stock is down around 3% today after a Q3 trading update shows a 0.8% drop in the all-important revenue per available room (RevPAR) figure, due to “tougher trading conditions in the US and China, and ongoing unrest in the Hong Kong”.

However, CEO Keith Barr said the group still managed to deliver “a 4.7% increase in net system size despite a strong comparable”, and he expects this to accelerate in the coming quarter, with industry-leading growth over the medium term.

InterContinental Hotels has changed its business model, away from the capital-intensive job of actually owning hotels, franchising them out instead, which should boost profitability and cash conversion, benefiting shareholders.

Today the group said it has received the first franchise applications for its “upper midscale brand” Atwell Suites, and strengthened its loyalty offer through an exclusive partnership with luxury and boutique travel club Mr & Mrs Smith. This end of the market could offer recession-proofing.

My one concern is that even after today’s drop, the £8.3bn group looks a little expensive trading at 19.6 times forward earnings, while the 2.1% forward yield underwhelms, although it does have cover of 2.5. It has posted four consecutive years of double-digit earnings growth, but this may slow slightly with analysts predicting 5% this year and 8% next. It still looks a lot more solid than most stocks on the index right now, though.

Experian

You don’t find many companies much sturdier than data specialists Experian (LSE: EXPN) these days. Its share price is up a thumping 156% measured over five years, and 33% over the last 12 months, destroying the index.

The £21.6bn group’s data helps global businesses gauge lending risk and fight fraud, and it has a strong presence in 40 countries including the UK, US, Brazil, India, Australia and Colombia. Some 80% of its revenues come from business-to-business customers.

It continues to expand globally and win hundreds of thousands of new customers, while Q1 figures showed 7% total revenue growth at constant exchange rates, 4% at actual rates.

The big hurdle when approaching this success story is whether you can stand the current valuation, currently a whopping 30 times forecast earnings, and a PEG of 4.7. As is often the case, you have to pay for success.

The yield is well below the FTSE 100 average of 4.7%, at just 2.1%, although cover of 2.5 gives scope for progression. Operating margins of 24.1% impress, as does a stonking return on capital employed of 766%. Forecast earnings growth looks steady too. Experian looks reassuringly expensive.

The post Forget gold and the Cash ISA. I’d buy these 2 FTSE 100 growth stocks that are thrashing the index appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Experian and InterContinental Hotels 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.

Tesco is one share that’s gushed higher in recent months but is one which I’d be reluctant to splash the cash on today, though. Instead I’d much rather buy the dividend stocks I discuss below.

A better buy

Like Tesco, Barratt Developments (LSE: BDEV) has seen its share price rise by more than a fifth since the start of January, though sentiment towards the homebuilder has moderated since the middle of May.

Why? Well, the recent bout of Tory in-fighting over Brexit in recent weeks, one which has prompted the resignation of premier Theresa May and one which raises the spectre that an advocate of an economically-disastrous no deal exit will become prime minister, hasn’t helped. As the process to select a new leader continues through June it’s quite possible Barratt’s share price could continue to sink.

That said, I’m sticking to my guns and continuing to say that the newbuild specialists remain great stocks to buy today for long-term investors. The scale of Britain’s homes shortage means that sales and profits keep rising at the likes of Barratt and, given government inaction to solve the crisis, I fully expect it to keep impressing on the trading front long into the future.

The InterContinental champion

Right now, Barratt deals on a forward P/E ratio of 8.1 times and boasts a brilliant 8% dividend yield, numbers which make it a great buy despite the possibility of some share price stress in the next few months at least.

For those concerned about the impact of European Union withdrawal on their shares portfolio, another white-hot income share from the Footsie might be a better pick instead… InterContinental Hotels Group (LSE: IHG).

This mega-cap has seen its share value boom 21% since the start of 2019 and I wouldn’t be surprised to see it end the half with a final surge in June. Firstly, the business reports in US dollars, giving it an extra boost when sterling comes under pressure. Secondly, the UK only represents a small proportion of total profits, making it a popular pick with those seeking to minimise the impact of Brexit on their investment portfolio.

I won’t pretend InterContinental is a share that will make you rich instantaneously as its dividend yield for 2019 sits at a modest 2%, far below the FTSE 100 corresponding average of 4.5%.

However, I reckon the hotel operator is a great income share for patient investors given the rate at which it’s hiking annual dividends. Last year, it hiked the total payout 10% to 114.4 US cents per share, and it’s predicted to lift the reward to 128 cents in the current period too.

Now InterContinental’s forward earnings multiple of 21.1 times doesn’t make it cheap, but I would argue this is a small price to pay to tap into its great earnings record and gigantic hotel development pipeline. I would happily buy it today and hold it for many years to come.

The post These FTSE 100 dividend stocks have surged in H1! Can they finish the job with big gains in June? appeared first on The Twelfth Magpie.

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Royston Wild owns shares of Barratt Developments. The Motley Fool UK has recommended InterContinental Hotels Group and Tesco. 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.

However, there’s still one vital component missing from the Ocado story, and that’s profit. The City is not expecting the firm to report a profit for the next two years, and while investors have celebrated the company’s progress in signing deals, the financial disclosure around these deals from management has been limited.

Cloudy outlook 

There’s no doubt that Ocado has a product that retailers want. The company has inked agreements with some of the biggest retailers in the world to help them build automated warehouses and fulfil customer orders, but signing contracts is one thing, generating cold hard cash is another. It could be years before investors see a return from these agreements. 

Ocado’s lack of profit generation is the main reason why I’d advise selling the shares after their recent run. Until the company starts earning, it’s going to be challenging to place a value on the stock, and it could be a bumpy ride from here to profitability. 

I prefer to invest in shares that are already generating a profit and have a track record of returning funds to shareholders, like InterContinental Hotels Group (LSE: IHG). 

Cash cow 

Owner of Holiday Inn and Kimpton hotels, IHG is in the middle of a growth spurt. At the beginning of the month, the firm announced that it had added 12,000 rooms to its portfolio in the three months to March and had another 24,000 in the pipeline. The firm is mainly focused on growth in Asia. IHG opened 18 hotels and signed another 52 in Greater China during the first quarter, a record rate of signings for the company. 

To complement the growth of its existing brands, IHG bought Six Senses, a group of luxury resorts in February for $300m. Management is planning to add an additional 60 sites to this brand over the next decade, funded with $125m of annual savings from the rest of the business. 

Earnings expansion 

IHG’s growth focus will lead to a 12% increase in earnings per share in 2019 according to City analysts, followed by growth of 8.3% in 2020. This growth will, according to analysts’ estimates, allow for a 15.2% dividend increase in 2019 and 9% in 2020. While this growth will only give a yield of 2.4% for 2019, I should point out that IHG has a history of returning any extra cash to shareholders with special dividends.

As I pointed out the last time I covered IHG, the firm has issued 799p in special dividends alone during the past three years. In 2018, special and regular dividends from the company amounted to 291.7p per share for a total yield of 6.1% (assuming investors acquired the stock at the beginning of 2018).

Compared to Ocado’s lack of profitability, I think it’s impossible to ignore these mouth-watering cash returns. That’s why I’d dump the Ocado share price and buy IHG instead today. 

The post Here’s why I’d sell the Ocado share price and buy this FTSE 100 dividend stock for life appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended InterContinental Hotels 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.

In the last three years alone, this company has issued special dividends worth 799p, excluding the regular distribution, which last year amounted to 87.7p. In total, the firm distributed 291.7p per share to investors in 2018 for a total yield of 6.1%.

Going back to the beginning of 2009, shares in IHG have produced a total return for investors of 23.6% per annum, turning every £1,000 invested a decade ago into £9,300. And I think there is an excellent chance that the company will continue to reward its investors with special dividends for the foreseeable future.

Asset light

Over the past few years, IHG has transformed its business by selling owned properties to franchisees. The results of these efforts is that the company has become highly cash generative, as it no longer needs to spend hundreds of millions of dollars every year opening, renovating and maintaining properties. Free cash flow has exploded as a result. Last year it generated free cash flow from operations of $508m, most of which was returned to investors.

According to its latest trading update, last year the company saw the highest level of “signings“, deals signed to open new rooms, in a decade with the number of agreements up 18% year-on-year. This bodes well for IHG’s future growth and dividend potential. Revenue per room increased 2.5% in 2018, and total group gross revenue rose 6.6% off the back of a 4.8% increase in the number of franchised and owned rooms across the business.

Analysts believe IHG’s earnings per share will increase 13% in 2019 and 7.7% in 2020, which, in my opinion, means investors are more than likely to see further substantial special dividends in the years ahead.

Turn around complete

Supermarket retailer Morrisons (LSE: MRW) has recently taken a leaf out of IHG’s book by announcing a special dividend following a robust trading performance in 2018. The group’s underlying profit before tax rose 8.6% in 2019, prompting management to declare a final dividend of 4.75p and a special dividend of 4p, which takes the total dividend to 12.6p — up 25% year-on-year. Including the special and regular dividend, I calculate investors buying the shares today will pocket a dividend yield of 5.5%.

Morrisons has a history of paying out special dividends alongside regular distributions when the going is good, and I expect plenty more from the group over the next few years.

Efforts by management to reduce debt has left it with a relatively clean balance sheet (net debt to equity of 22% at the end of 2018) and last year, the company generated £265m in free cash flow from operations, all of which was returned to investors.

Improving profit margins and the continued rollout of its wholesale supply deal, which is expected to produce revenues of nearly £1bn per annum for the retailer, should help Morrisons achieve earnings growth of 34% during the next two years according to the City. A similar increase in free cash flow could, in my opinion, mean further special dividends for investors are on the horizon.

All in all, now the company’s recovery is complete I think it is worth buying shares in Morrisons for its income potential.

The post £2k to invest? I would buy these 2 FTSE 100 stocks that love issuing special dividends appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended InterContinental Hotels 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.

A quick glance at IHG’s 2018 release may show little to celebrate, though, with profits missing expectations and diving 26% year-on-year to $485m. This wince-worthy drop was down to a whopping $108m rise in exceptional costs related to restructuring costs, as well as a $112m charge related to a pension fund settlement, the firm said.

Largely speaking, though, the market was prepared to look past this (admittedly considerable) black mass and concentrate on other good parts of the release, of which there were many. And I’m not just talking about the hotelier’s decision to hike the full-year dividend 10% to 114.4 US cents per share.

Expansion plans paying off

IHG is a stock I’ve been long lauding because of its energetic expansion drive across the entire planet, and today’s release underlined the fruits of this programme. Revenues at the business soared 6% to $4.34bn, helped by the addition of 56,000 new rooms, taking the total global estate to some 837,000 rooms (up 5% from 2017 levels).

Chief executive Keith Barr celebrated the “excellent progress” the business had made in 2018, and commented that “the investments we have made have had a significant impact, allowing us to further evolve our established brands, move quickly to strengthen our portfolio both organically and by acquisition, and create real momentum in our business.”

IHG’s appetite for M&A was underlined again last week when it announced the $300m purchase of Six Senses which operates 16 hotels, spas and resorts all over the globe. The move boosts the company’s position in the luxury end of the market and, with a pipeline of 18 management contracts and more than 50 additional deals currently under active discussion, there’s plenty of room to grow.

Dividends set to keep rising

Last year, IHG witnessed comparable revenues per available room (or RevPAR) grow across all of its regions to illustrate the strength of its markets and thus vindicate the rationale of its expansion strategy. In the Americas these rose 1.9%; in the aggregated region comprising Europe, Middle East, Asia and Africa these rose 2.9%; but its Greater China territory stole the show with comparable RevPAR leaping 6.9% year-on-year.

It’s not a shock then that City analysts are expecting IHG to recover from 2018’s profits drop and to post a 7% earnings rise this year. This leads to predictions that dividends will rise again too, to 101.7p per share to be exact (and resulting in a decent 2.2% yield). Given the company’s strong revenues momentum as well as its robust balance sheet, though, I reckon this payout forecast will be upgraded as the year progresses. And thanks to its bright long-term profits outlook, I’m confident that dividends will keep rising for many more years to come.

The post Have £2,000 to invest? Here’s a FTSE 100 dividend growth stock I’d buy today appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended InterContinental Hotels 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.

Even though the FTSE 100 is full of blue-chip stocks that could help you grow your wealth, I’ve chosen these two in particular because of their international diversification, growth track record and commitment to returning cash to investors. 

Vital business 

The London Stock Exchange (LSE: LSE) is one of the most critical financial companies, not just in the UK, but also in Europe. The group is best known for operating the UK’s leading stock market, but is also the majority owner of LCH Clearnet, which provides clearing services for traders across Europe. Last year, the company cleared more than $1.1trn of complex derivative trades, that makes it the biggest clearing house in Europe. 

As the global economy has grown, so has the trading volume on the company’s owned and operated exchanges and platforms. Earnings have surged as a result. Net profit has more than doubled over the past six years, and earnings per share have jumped from 66p in 2012 to 173p for 2017. Analysts are expecting further growth in 2019. The City has pencilled in an earnings figure of 195p for 2019. 

This projection puts the stock on a forward P/E of 24, which is slightly more than I’d usually want to pay for any stock. However, considering the group’s dominance of Europe’s financial markets, I think this is a price worth paying for a business that will likely remain one of Europe’s leading financial institutions for many decades to come. 

Global leader

Large blue-chip companies that dominate markets are, in my mind, the best stocks to buy for a starter portfolio. That’s why I’m recommending InterContinental Hotels Group (LSE: IHG) as my second stock to buy with £5k. 

As my colleague Roland Head recently pointed out, one of the most attractive qualities of this leading hotel group is its profitability. After selling and leasing back a large percentage of its hotel portfolio, the company’s return on capital employed —  a measure of profit for capital invested in the business — is just under 40%. That makes it one of the most profitable companies (on this metric) in London today. 

Most of the excess profit the group generates is returned to investors. This shareholder-friendly business model is really attractive in my view, and that’s why I think the stock would suit any portfolio. 

Shares in the hotelier currently support a regular dividend yield of 2% although, historically, management has always topped up the regular payout with special dividends.  Including these capital returns, the stock has produced a total return of 25% per annum over the past decade. I think it’s unlikely IHG will repeat this performance over the next decade, but I’m confident investors will be well rewarded for investing today. 

Shares in the company are dealing at a forward P/E of 18, which looks a bit pricy at first glance, but it’s in line with the group’s five-year average.

The post £5k to invest? Here are two FTSE 100 stocks I’d snap up today appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended InterContinental Hotels 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.

This steady earnings growth has translated into impressive returns for investors. Over the past decade, the stock has produced a total return of 23% per annum.

Built for growth 

Halma’s business model lends itself to growth. The company is actually a group of businesses that make products for hazard detection and life protection. Demand for these products is relatively steady so Halma’s main avenue for growth is acquisitions. The firm has proven itself to be exceptionally capable at buying smaller players and integrating them into the larger group. 

For example, today the business announced the acquisition of Business Marketers Group Inc, trading as Rath Communications, for $42.4m or £32.6m. Rath fits perfectly into Halma’s stable of businesses. It provides emergency communication systems for Areas of Refuge (buildings designed to hold occupants during a fire or emergency when evacuation is not possible) in the US.

I’m generally cautious about recommending companies that pursue a buy-and-build strategy, because it is easy for businesses to become caught up in the excitement of acquisitions, stray from their core competencies and borrow too much money. This is a recipe for disaster. However, Halma seems to be executing the strategy with precision. It is only buying health and safety-related companies, and net debt is relatively low at only 21% of shareholder equity.

With this being the case, I think it can continue to report double-digit earnings growth for the foreseeable future and in my opinion, is a perfect growth investment for any portfolio.

Special income 

Halma looks to me to be a fantastic growth investment but I would buy InterContinental Hotels (LSE: IHG) for income. 

It has a history of returning all of its excess funds from operations to investors. The latest capital return is a $500m special dividend that will be paid out to investors at the end of January. These cash returns mean investors have seen a total return of 22.7% per annum from the stock over the past decade.

Can this continue? I think it is highly likely that it can. City analysts are expecting the company to report a slight increase in earnings per share over the next two years, which will increase the amount of capital the business has to distribute to investors. Dividend growth of 16% is predicted for 2018 and 12% for 2019. This will leave the stock yielding 2.5%, although that excludes any special dividends that might be distributed in the meantime. 

Historically, the group has generated between $400m and $500m in free cash flow every year before the payment of dividends. And as long as the business continues to throw off all of this excess capital (barring a severe economic recession I see no reason why it can’t) investors should be able to continue to reap the rewards.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Halma and InterContinental Hotels 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.

Given that Brexit could potentially have a negative impact on UK economic growth, I think it’s important, from a risk-management point of view, that investors diversify their portfolios and own a number of stocks that are not overly exposed to the UK economy. With that in mind, here’s a look at two FTSE 100 dividend stocks that I believe could be worth considering as part of a diversified portfolio, with Brexit uncertainty remaining elevated.

A global hotel group

InterContinental Hotels (LSE: IHG) is an international hotel company that owns an impressive portfolio of hotel brands including InterContinental, Holiday Inn and Crowne Plaza. The group owns over 5,500 hotels across 100 different countries, so a Brexit-related economic downturn here in the UK is unlikely to be a significant problem for the company.

What I like about InterContinental Hotels is that the company should benefit from a number of powerful demographic trends in the years ahead. For example, Baby Boomers (those born between 1946 and 1964) are heading into retirement in droves (around 10,000 per day in the US alone) and this demographic generally likes to travel. This should provide tailwinds to the tourism industry. Then there’s the rise of wealth across the world’s emerging markets to consider. This should also be a boost for hotels over time. Finally, technology has made the process of booking a hotel so much easier (and cheaper) and this should be another growth driver for the industry.

IHG shares pulled back in the second half of 2018, and at the current share price, they trade on a forward-looking P/E of 16.8 and offer a prospective dividend yield of 2.4%. I think that’s a reasonable price to pay for this international company.

A global oil giant

Another FTSE 100 dividend stock that I think could provide an element of protection from Brexit is oil major BP (LSE: BP). As an energy company that has operations in 70 countries around the world, a Brexit downturn is unlikely to make much of an impact on the group’s fortunes.

One thing that really appeals to me about BP is its huge dividend yield. With the total dividend payment for FY2018 likely to be just over 40 cents per share, investors buying now can pick up a yield of around 6.1%, which is hard to ignore when you consider the dismal interest rates on offer from savings accounts here in the UK at present.

BP’s share price has fallen recently on the back of a decline in the price of oil. Essentially, lower oil prices translate to lower profits for the group. However, BP’s break-even oil price – the price needed to cover capital expenditure and dividends – is way below the current oil price, so I don’t think investors need to be concerned about near-term dividend sustainability. With the stock trading on a forward P/E of 11.6 and offering a yield of over 6%, I think it’s worth a closer look.

The post Brexit: I think these FTSE 100 dividend stocks could provide protection appeared first on The Twelfth Magpie.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended InterContinental Hotels 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.