It goes without saying that pretty much any company operating in the hospitality industry has been knocked for six by the Covid-19 pandemic. With the UK now just-about-fully unlocked and people more desperate than ever for normality to return, is now the time for me to loading up on their shares? Today’s rise in penny stock pub group Marston’s (LSE: MARS) share price would suggest so. 

Marston’s share price: in recovery mode

Pub closures meant that Martson’s first half was pretty much a write-off. The ‘rule of six’ and table ordering held back trading even once it was allowed to welcome people back through its doors in May. 

Positively, things have really started recovering since then, according to today’s trading update. Total sales (drinks and food) between 12 April and 16 May were at 77% of those in 2019 (before the pandemic arrived). From then until 24 July, however, the percentage rose to 92%. 

In fact, sales have been better than the company predicted thanks in part to the postponed Euro 2020 tournament finally being allowed to happen. Investment in outside areas also appears to have paid off.

Speaking today, CEO Ralph Findlay reflected that the pandemic had been “extremely difficult” for the company but that the “pent-up demand and the rapid return of customers” meant he was now “confident” in its future.

Notwithstanding this, he did sound a cautionary note on the Marston’s outlook. Near-term trading would continue to be “uncertain and operationally disrupted“, he said. Future messaging from Boris Johnson will clearly play a big role in how swift the recovery will be.

So, is now the best time to buy?

An abrupt response to the question of whether now is the best time to buy would be a simple ‘no’. The best time to snap up this pub group was when it was on its knees last year. Since July 2020, the Marston’s share price has more than doubled in value — yet more evidence that buying when everyone else is selling has the potential to pay off handsomely. 

Of course, hindsight is always a wonderful thing. I can name all sorts of companies I should have invested in last year but didn’t. So, a better question for me to ask would be: “Can I still make money on this penny stock?‘

I think I can. Based on declining infection rates, it appears we’ve seen the worst of Covid-19. Assuming demand at pubs continues to rise, Marston’s could finally find itself in calmer waters.

That said, there are a few other things to bear in mind. In Marston’s line of work, competition isn’t exactly thin on the ground. Yes, an estate of around 1,500 pubs helps, but if I were looking for a business offering a wide economic moat, this wouldn’t be top of my list. The huge amount of debt on the balance sheet isn’t exactly attractive either.

A cautious buy

No one knows for sure where stocks will go in the near term. However, I suspect we could see more upside from the Marston’s share price over the next few months. The removal of restrictions combined with the perfect beer-drinking weather we’ve seen should mean its next set of numbers will be far better.

All told, I’d now rate this penny stock as a cautious buy for my own portfolio. 

The post The Marston’s share price is rising. Should I buy this penny stock now? appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Marstons. 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.

I’m not so sure. Before explaining why, let’s look at today’s interim results from the company — originally intended for release in mid-May. 

Revenue hit

Of course, a lot of this morning’s numbers won’t really matter all that much since they only reflect trading in the 26 weeks to 28 March – not long after the UK went into lockdown.   

Nevertheless, at £510.5m, revenue was almost 8% down compared to the same period in the previous year. Underlying pre-tax profit was even worse, tumbling almost 72% to just £9.4m. This was despite sales to the end of February being “broadly in line” with the previous year. 

To its credit, the company has done what it can to minimise the impact of the lockdown on its finances. Expenditure has been slashed and 93% of its staff have been furloughed, with the remainder taking a 20% hit to their salaries. It’s also made use of government grants and reliefs where possible. 

Taking all this into account, what are the arguments in favour of taking a stake now?

Glass half full

First, it seems at least some UK drinkers are desperate for pubs to reopen. As a result, the idea that revenues may bounce back seem logical. Whether this happens in practice is something entirely different, of course.

Second, the recently-announced deal to combine its brewing business with Carlsberg UK should allow management more time to focus on its pubs and accommodation. 

It’s also good for its finances. Assuming the deal goes through, Marston’s will have a 40% stake in the new company. It will also receive a cash payment of £273m, which can be used to reduce debt.

Third, it’s worth highlighting, as Marston’s did today, that its pub estate is mostly freehold and located outside city centres. The fact that nine out of 10 of these pubs have outside space could prove very important as drinkers adapt to the new ‘normal’. 

Last, it’s certainly possible the company could actually grow market share as more competitors go out of business.

Glass half empty

On the other hand, there are some solid reasons for continuing to give Marston’s a wide berth for now. Another round of the coronavirus can’t be ruled out. And while a second lockdown seems unlikely, this would be a nightmare for an already-wounded industry.

Even if a second wave is avoided, the psychological impact of the virus could prove a drag on earnings for a while.

In addition to all this, you have a number of more general issues facing the pub industry. These include rising costs and the fact that an increasing number of us, particularly young people, are choosing to ditch alcohol completely.

The great unknown

As investors, we’re told to be “greedy when others are fearful.” As profitable this strategy has been for investing legend Warren Buffett, I’m not feeling the urge to snap up Marston’s right now. Even if the share price is still roughly 50% below where it was at the start of 2020.

With such an uncertain outlook — and no dividends to tide investors over — this is one for the watchlist at best.

For me, there are far less risky ways of making money in the market. 

The post Is cheap pub stock Marston’s now a screaming buy? appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Marstons. 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.

With this being the case, I’m on the hunt for income stocks that might offer a better place to invest your money in the current interest rate environment. One of the companies I believe could be an attractive addition to your portfolio is pub group Marston’s (LSE: MARS). 

Slow and steady

Marston’s might not have the appeal of a hot tech stock, but over the past few decades (the company went public in 1986) the business has proven it can produce steady, attractive returns for investors.

During the past 10 years, the stock has returned 8% per annum, including dividends, turning every £1,000 invested into £2,160. If you’d deposited the same amount of money in a Cash ISA, your £1,000 investment would be worth just £1,160 today. 

So, what does the future hold for this enterprise? Well, despite Brexit uncertainty, the UK consumer still seems happy to spend money in Marston’s establishments.

According to a trading update today, covering the 42 weeks to 20 July, like-for-like managed and franchised pub sales increased by 0.5%, although growth tailed off in the second half of the reported period due to the tough year-on-year comparison. Last year, the World Cup and an unusually hot summer helped push the group to a record performance. 

Improving free cash flow 

As well as growing the business, management is also focused on strengthening Marston’s balance sheet. In January, the company announced it would “reduce net debt by £200m in the period 2020 to 2023 through reduced capital expenditure, £120m of disposals and a reduction in interest and pension costs.” The new plan is to hit this target in a shorter time frame.

To this effect, Marston’s is putting £70m of capital spending on new pubs on ice, reinvesting the money into existing establishments, which “are generating significantly higher returns.” Management believes this new strategy will “generate an additional £40m to £50m of cash flow over the next three years.“

Lower capital spending and more cash flow is excellent news for shareholders. Marston’s already supports a dividend yield of 6.2%, and with free cash flow set to increase over the next few years, the company will have scope to hike its payout further. A stronger balance sheet is also a bonus. 

The bottom line

It looks to me as if Marston’s is firing on all cylinders and powering ahead and, right now, you can snap up shares in this pub operator for just 8.6 times forward earnings.

This valuation makes the firm one of the cheapest pub companies listed in London right now, and I think it dramatically undervalues the firm. That’s why I’d put my money in Marston’s over a Cash ISA any day. 

The post Forget the Cash ISA! I think this FTSE 250 stock yielding 6.2% is all you need appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

Undoubtedly, market makers are expecting more great news when the FTSE 250 leisure giant unpacks fresh financials on 24 July, their enthusiasm no doubt buoyed by another strong set of results last month. I reckon this is a train that could continue chugging skywards too, given the company’s dirt-cheap valuations.

Back in May, Marstons declared another uptick in revenues for the six months to March, up 5% on an underlying basis and further proving its ability to defy the rising strain on British consumer confidence. This top-line resilience was not the only thing to celebrate, though. Equally impressive was news underlying pre-tax profit nudged 2% higher in spite of higher finance and operating costs including larger wages for its staff.

A life of leisure

A quick glance at how Britain’s retailers are faring would suggest it’s becoming harder and harder to pry consumers from their cash. For the leisure sector, however, this couldn’t be further from the truth.

Indeed, recent research from Deloitte showed that “despite a sustained period of political uncertainty following the EU referendum, consumers have shown that their passion for leisure has continued over the last three years with their reported net spend… remaining broadly stable.”

The researcher’s analysis showed 96% of UK consumers spent on leisure in the first quarter of 2019, edging 1% higher from a year earlier. And its rationale behind the rise was interesting, i.e. that changes to our mindsets and our growing tendency to share our experiences on social media et al is supporting sector spending. It certainly explains why leisure operators are thriving while the retail segment finds itself in dire straits.

Great value. Huge dividends!

This idea’s certainly reinforced by Marstons and its ability to keep sales moving higher over the past few years. And Deloitte has some good news for the pub and eateries owner in the months ahead. According to the consultancy, Britons expect their net spending on eating out and drinking in pubs and bars to rise 4% and 3%, respectively, in the current quarter.

Now Marstons isn’t expected to punch any lightning profits growth anytime soon. City analysts are predicting a bottom-line increases of 4% for the current fiscal year alone.

Such predictions do, however, lend themselves to predictions of another 7.5p per share dividend though, and this leaves the firm wielding a jumbo 6.5% dividend yield. Mix a rock-bottom forward P/E ratio of 7.9 times into the equation, and I reckon the share’s a brilliant buy today. 

The post Should you buy – or sell – this 6%+ yielding dividend stock before July? 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 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.

The elephant in the room

Today’s half-year results show continuing steady trading. But, in fairness, the big elephant in the room with this one is the high level of debt, and I’m going to examine that feature of the accounts a little more today.

You can get a quick steer on debt levels with any stock market listed firm by comparing the Enterprise Value (EV) with the Market Capitalisation. According to one popular share research website, Marston’s EV runs at just over £2bn and its market-cap is around £642m. The difference between the two figures (£1,358m) represents gross borrowings minus the cash the company holds. In fact, today’s report from the firm declares that the net debt on 30 March was £1,438m.

That’s a lot of debt. It’s a higher figure than Marston’s entire revenue for last year of £1,140m. However, much of the debt is backed up by bricks & mortar assets on the balance sheet – think of all those pub buildings. Today’s report reveals the figure on the balance sheet for property, plant and equipment stands close to £2,438m and gross debt is around £1,600m. So not everything on the balance sheet is owned by the company’s lenders. The figure for net assets in the report is £899m, which compares to the firm’s market capitalisation of around £642m, which means the Marston’s trades on a reassuring discount to book value.

Weighted to the second half

But that discount won’t help the firm if it can’t pay the interest on the debt. Net cash from operations in the first half of the trading year came in at £66.8m and Marston’s spent £43.8m on interest payments. Dividend payments to shareholders then cost £30.4m, which led to an overspend in the period of £7.4m.

However, it seems Marston’s business could be weighted to the second half of its trading year because, if you look at full-year figures for 2018, the company had around £60m left over after paying its interest on borrowings and after paying shareholder dividends.

Nevertheless, I reckon the figures are quite tight and it wouldn’t take much of a general economic slowdown to turndown profits enough to put the firm in difficulty with its borrowings. Maybe that’s why the valuation looks so low with a historical price-to-earnings multiple of around seven.

But on the other hand, if you divide the enterprise value by last year’s Earnings before Interest and Tax (EBIT) you get a more-realistic valuation multiple of just over 11 – Marston’s isn’t quite as cheap as it looks.

I think debt is an issue here, and I’m pleased to see a focus on debt-reduction in today’s report with the company saying: “The Board is committed to maintaining the dividend at the current level during this period of debt reduction focus.”

Marston’s is trading well and I’m cautiously optimistic about the shares.

The post It could be time for me to buy shares in this 7%+ dividend yielder appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any share 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.

Founder-led growth

JD Wetherspoon (LSE: JDW) is a fantastic example of this thesis in action. Over the past decade, this founder-led pub group has outperformed the FTSE 250 by around 4% per annum including dividends, and over the past five years, it has outperformed somewhere in the region of 6% per annum.

I think a great deal of this performance can be attributed to chairman and founder Tim Martin’s attention to detail.

Martin spends most of his time travelling around the country, eating and drinking in the company’s establishments. He’s not afraid to point out any problems if they exist and will help each pub manager deal with any issues they may have. It is rare for a chairman to adopt such a hands-on approach, but it is clearly working. The firm’s reported earnings per share have grown at a compound annual rate of 11.5% since 2013. 

And it doesn’t look as if it is going to stop growing anytime soon. A trading update published today tells us that sales for the 13 weeks to the end of April 2019 increased 7.6% on a like-for-like basis and total sales increased by 8.4%. Following this robust performance, Martin believes the company is on track to meet expectations for the current financial year. Unfortunately, the City has pencilled in a decline in earnings per share of 7.8% for the full year as higher costs bite, but growth is projected to return in 2020. 

Based on analysts’ current figures, the stock is trading at a 2020 P/E of 17.3, which is a little on the high side, although considering the historical growth, I’m willing to pay a premium to get my hands on the shares. That’s why I’m a buyer of the stock today. 

Undervalued income?

If that one is too pricy for you, then I highly recommend taking a look at shares in its peer Marston’s (LSE: MARS). At the time of writing, shares in this pub and dining group are trading at a forward P/E of just 7.1, which is significantly below the sector average of 16. At the same time, the stock supports a dividend yield of 7.5% and is trading at a price to tangible book ratio of less than one, implying that it would be worth more if it were sold and broken apart than it is in its current form.

The question is, why are investors giving this business such a wide berth? 

Well, it looks to me as if Marston’s is suffering from the same pressures as its peer. Rising staffing and input costs are expected to weigh on earnings this year. Analysts have pencilled in a decline in earnings per share of 8.2% following a drop of 8.4% last year. Two years of contracting profits is disappointing, but the group is expected to return to growth in 2020, the deeply discounted valuation also provides a margin of safety in my opinion. So, if you are looking for value stocks, Marston’s might be worth your research time.

The post I’m a buyer of this FTSE 250 stock that’s doubled the index’s return appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

Whilst these FTSE 100 housebuilders have enjoyed a rip-roaring start to 2019, Persimmon’s share price has failed to produce similar fireworks. It’s long overdue for a northwards surge, in my opinion, and I believe fresh trading numbers due on Wednesday could provide the catalyst for such a move.

The company certainly impressed in February when it announced completion numbers up by 406 homes to 16,449 in 2018, which along with a marginal rise in average selling prices, pushed revenues 4% higher to £3.74bn. Combined with a significant improvement in margins, the builder’s pre-tax profits soared 13% to £1.09bn.

Industry data on the housing market has remained pretty robust since then, and so there’s plenty of reason to expect another great update.

As for dividends, the City forecasts another 235p per share reward in 2019 and that yields a show-stopping 10.4%. This, combined with a low forward P/E ratio of 8 times, makes Persimmon a terrific buy today, I think.

Pay master

Preliminary results due from PayPoint (LSE: PAY) on May 24 could prompt fresh waves of buyer interest here as well.

The FTSE 250 firm’s already gained 16% in value so far in April, taking it through the £10 per share marker for the first time since last June. Investors are excited by the rate at which demand for PayPoint’s retail systems is surging, the tech titan having upgraded its adoption target for the PayPoint One terminal to 12,700 sites by the close of the fiscal year to March 2019.

This was up 300 sites from its prior goal and I’m expecting the business to have drawn up another ambitious target for the current year. Make no mistake: the broad range of operations that PayPoint’s cutting-edge products allow is transforming the way retailers do business, and I’m expecting the company to paint another sunny trading picture when it updates the market next month.

Right now the company carries a forward P/E ratio of 14.9 times and a jaw-dropping 8.5% dividend yield. All things considered I think it’s a great buy right now.

Pints powerhouse

My final selection for this piece, Marston’s (LSE: MARS), is set to release half-year results on May 15. It’s true that the tough economic environment is crimping our disposable incomes but I’m tipping the pub operator to churn out another set of lovely numbers.

The small-cap has proven its resilience in tough conditions time and again, and in its most recent update advised that like-for-like turnover at its pubs rose 1.4% sales in the 16 weeks to January 19, a period which included record Christmas trading when comparable sales shot 5.7% higher.

Marston’s has vowed to keep dividends around recent levels of 7.5p per share and this creates an enormous 7.3% yield for the 12 months to September 2019. City brokers are predicting steady earnings growth through this period to support this estimate, and with the business also embarking on asset sales, I believe it’s in good shape to meet this theoretical payment.

Throw a mega-low forward P/E ratio of 7.4 times into the bargain and I reckon Marston’s is a splendid share to load up on.

The post 3 cheap dividend stocks with 7%-plus yields to buy before May appeared first on The Twelfth Magpie.

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Royston Wild owns shares of Barratt Developments and Taylor Wimpey. The Motley Fool UK owns shares of PayPoint. 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.

For a start, at the time of writing, shares in both of these companies look undervalued. Indeed, shares in Greene King are currently dealing at a forward P/E of just 10.5 and shares in Marstons are changing hands for only 7.2 times forward earnings. On top of these attractive valuations, both stocks support market-beating dividend yields. Greene King yields 5%, and Marstons 7.4% at the time of writing. 

These low valuations suggest the market isn’t as optimistic about the future for these two companies as I am. So I’m going to outline why I believe these two pubcos could be attractive acquisitions for your ISA portfolio. 

Growing concerns 

The most commonly cited reason as to why these are bad investments is the number of pubs closing across the UK. According to official figures, more than 25% of UK pubs have closed since 2001 and, currently, they’re closing at a rate of 18 a week as people avoid going out to eat and drink. 

Falling sales, coupled with rising costs are creating the perfect storm for pub owners. However, despite the trends affecting the broader pub industry, both Greene King and Marstons seem to be navigating the hostile environment quite successfully. 

For example, at the beginning of January, Greene King reported its most prosperous Christmas Day sales ever of £7.7m across the group. Overall, like-for-like sales for the 36 weeks to 6 January 2019 increased 3.2% and sales over the two-week Christmas and New Year period jumped 10.9% year-on-year. 

As well as growing sales, the company is also being proactive in reorganising its pub estate, selling off underperforming buildings and opening new ones, only in the areas where it sees the most opportunity for growth. For the 2019 financial year, the business plans to close 100-110 pubs, but only open nine. Management is also targeting up to £20m of cost savings for the year. 

Marstons reported a similarly positive trading performance over the Christmas period. At the end of January, the company told its investors that for the 16 weeks to 19 March, group like-for-like sales ticked higher by 1.4%, with a 5.7% jump over the Christmas fortnight. 

Beating the market 

These positive trading updates seem to indicate Marstons and Greene King are doing just fine, despite what the headlines might suggest. 

Of course, there’s always the risk that in the event of a bad Brexit, consumer spending could collapse, which would have a significant impact on these two brands. However, the current level of valuation for both businesses suggest to me that there’s already plenty of bad news baked into the share prices. 

To put it another way, I think these two firms offer attractive dividend yields with limited downside risk making them the perfect income investments for a Stocks and Shares ISA.

The post Two cheap income stocks yielding 5% I’d buy for an ISA appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

According to the BBC, The Campaign for Real Ale (CAMRA) said there were 476 pub closures in Britain in the first six months of 2018. Pub industry figures show the rate of closures at 18 per week. CAMRA reckons the high cost of drinking out means more people are drinking at home, and pub businesses are struggling under a “triple whammy” of high beer duty, rapidly rising business rates, and high value-added tax (VAT). On top of that, 16-24 year-olds are less likely to drink than any other age group. So why would you want to invest in a firm such as Marston’s (LSE: MARS), which describes itself as a leading pub operator and independent brewer?

Out of favour

I think that’s a question that many investors have been asking themselves in recent years because, at the recent share price of 103p, the forward price-to-earnings ratio is just over seven for the trading year to September 2019, and the forward dividend yield sits a little over 7%. Marston’s looks cheap but, in fairness, earnings and the dividend have been stagnant for the past few years, so perhaps it should be.

Yet, there are signs that the business is showing resilience and flickering into life. Today’s full-year figures reveal that underlying revenue grew 15% year-on-year, profit before tax rose 4%, and earnings per share declined 2%. The directors held the total dividend for the year at last year’s level. Meanwhile, around 43% of underlying operating profit came from the firm’s Destination and Premium arm, which includes upmarket pubs, food service, and accommodation. The ‘wet-led’ Taverns division delivered 41% of operating profit, and 16% came from Brewing.

Underlying business performing well

Despite the difficult backdrop in the industry, the company declared it had achieved five consecutive years of like-for-like pub sales growth, and even opened 14 pub-restaurants and seven lodges during the period. There was also “strong growth” in Brewing, with total volume up 47% during the year, due mainly to a previous acquisition. The company said in the report it has “clear plans” to grow in the current trading year, which includes the establishment of 10 pub-restaurants and bars, and five lodges. The company also expects to acquire 15 pubs from Aprirose, and invest in a canning line in its Brewing division and a new distribution centre in Thurrock.

I think the growth in the Brewing division looks promising and it could expand to offset some of the more cyclical risks in the rest of the business. But all divisions seem to be doing quite well at the moment. Meanwhile, the company declared a net asset value of £1.51 per share, which arose because of the valuation of its property estate, and because of a £10m reduction in the pension funding deficit, down to £40m. I think the asset figure sits well against the share price and could be supportive. Suddenly, Marston’s looks in pretty good shape and maybe the shares are selling too cheap. Perhaps it’s time to take a chance with that fat dividend.

The post Why I think today’s news suddenly makes this 7%-yielder look too cheap appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any of the 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.

While Barclays (LSE: BARC) may not appear to be a strong income stock owing to its low dividend last year, a rise in shareholder payouts is expected in the next couple of years. As a result, it may be worth buying alongside another income share which reported robust performance on Wednesday.

Resilient performance

The company in question is pub operator Marston’s (LSE: MARS). The company’s trading update for the financial year to 29 September 2018 highlighted its strong performance despite weak consumer confidence. Turnover increased by 15% to over £1.1bn, while total pub sales increased by 3.2%. Like-for-like (LFL) sales growth was 0.6%, and it was up by 1.6% in the last 10 weeks.

The company anticipates that it will report underlying profit before tax of around £104m, which is up on the previous year’s figure of £100.1m. It was a strong year for its Taverns and Beer businesses, with its balanced portfolio helping to maximise the trading opportunities presented by the World Cup and good summer weather.

Looking ahead, Marston’s expects to see further progress from its dining pubs in the 2019 financial year. It is forecast to grow its net profit by around 4%, which could help to support its 7.7% dividend yield. Since dividends are covered almost twice by profit, its income investing potential appears to be appealing.

Dividend growth

As mentioned, Barclays is expected to report a rise in dividends over the next couple of years. The restructuring which has taken place under its current CEO seems to have created a stronger business which is better able to distribute capital to shareholders.

As a result of this, the company’s dividends per share are forecast to rise at an annualised rate of 63% in the next two financial years. This puts the company’s shares on a forward dividend yield of around 4.6%. And, since dividends are due to be covered 2.9 times by profit in 2019, there seems to be scope for them to move higher at a faster pace than profit growth over the medium term.

Of course, the banking sector continues to face risks. Brexit and the potential for a full-scale trade war could hold back investor sentiment to some degree. But with Barclays forecast to post a rise in earnings of 12% next year, its financial outlook seems to be improving. Alongside the operational performance which is being delivered under its current strategy, this could make the stock appealing for the long run. Over time, it could become an increasingly enticing dividend share which helps investors to overcome the threat of higher inflation.

The post Forget a cash ISA! Barclays is a FTSE 100 dividend stock that could grow your savings much faster appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Barclays. The Motley Fool UK has recommended Barclays. 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.