Berkeley (FY22 earnings)

Berkeley (LSE: BKG) is a British property developer and housebuilder. It mainly builds homes and neighbourhoods across London, Birmingham, and the South of England. The company is expected to release its FY22 earnings results for the year ending April 2022 on Wednesday 22 June.

The FTSE earnings preview indicates slight growth, as the housebuilder is expected to have capitalised on higher house prices. Nonetheless, analysts are predicting that if the outlook for FY23 comes in below consensus expectations, Berkeley shares may be in for a tough time.

DS Smith (FY22 earnings)

DS Smith (LSE: SMDS) is a British multinational packaging business. It offers sustainable, plastic-free packaging, integrated recycling services, and sustainable paper products. The firm is expecting to report earnings for the year ending April 2022 on Wednesday 21 June.

Analysts at Jefferies Financial Group recently reduced their EPS estimates for DS Smith. Morgan Stanley, Credit Suisse, and JP Morgan all reduced their price targets as well. So, if DS Smith can beat its earnings estimates and provide a positive outlook, its share price could recover. Otherwise, a further drop in its stock is to be expected.

Safestore (H1 22 update)

Safestore (LSE: SAFE) is the UK’s largest and Europe’s second-largest provider of self-storage. It has over 120 locations in the UK. The FTSE 250 firm is forecasted to report its earnings results for the six-month period ending April 2022, on Tuesday 21 June.

However, Safestore’s first-half earnings results are yet to be officially announced on its earnings calendar. Nonetheless, these are the figures to look out for. Analysts in the UK don’t normally publish earnings previews for six-month periods, so it’s best to compare the firm’s upcoming 2022 first-half numbers to the ones from a year before. The H1 22 figures can also be useful to determine whether it’ll outperform its FY21 numbers, or even beat analysts’ FY22 forecasts.

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John Choong has no position in any of the shares mentioned at the time of writing. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool UK has recommended DS Smith. 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 best shares to buy for income, at least in my view, aren’t those offering the highest payouts. It’s those where dividends are consistently growing that I’d be inclined to invest in. Here are two examples. 

Rising income

Fund manager Liontrust (LSE: LIO) has been hiking dividends by double-digits for years now. It’s done it again today on the back of a great set of full-year numbers. 

Adjusted pre-tax profit jumped 69% to £64.3m over the year to the end of March. On a statutory basis, it more than doubled from £16.5m to £34.9m.

As a sign of its growing popularity, net inflows also jumped 30% to £3.5bn over the period. At the end of March, Liontrust had £30.9bn in assets under management and advice — up 92% on the previous year. Last Friday, this was £33.3bn.    

And those dividends? Today, Liontrust announced it would pay holders a total of 47p per share for the full year. This is up a massive 42% on that returned in 2020 and equates to a trailing yield of 2.8%.

All told, the dividend has now grown an average of 33% per annum since 2017. This is indicative of a very healthy company, in my view. I’d much rather have this than be promised a huge payout by a company that, due to poor trading, never materialises. This is why I think the £1bn-cap could be one of the best shares to buy for income today.

Looking ahead, Lionstrust is hoping to capitalise on the interest in sustainable investment by launching its ESG Trust in July. Importantly, this new vehicle will feature small-cap stocks that most funds shy away from. Assuming this proves a successful strategy, I suspect dividends will continue rising from here.

Another dividend hiker

A second company that’s been consistently raising its dividends is self-storage firm Safestore (LSE: SAFE).

Earlier this month, the company reported a “very strong performance” over the first half of its financial year. As a result, Safestore has predicted that full-year earnings will be “at least at the top end of its previous guidance.” 

All this should be good news for the dividends. Right now, analysts are predicting a 54% jump in the final payout for FY21 (22.9p per share). Based on today’s share price, that becomes a yield of 2.4%.

Again, investors could get a lot more elsewhere. However, these dividends might not be growing at the same clip, if at all. A stagnant income stream isn’t encouraging.

So, taking into account its fairly predictable earnings stream and encouraging store pipeline, I think Safestore is another one of the best shares to buy if I were looking for an increasing income stream.

Never risk-free

Naturally, dividend hikes are based on trading. And by its very nature, trading at any business will fluctuate from year to year. As such, no income stream is too strong to be cut when the going gets tough. This could be the case even for Liontrust and Safestore. Neither are completely immune to macro-economic setbacks.

This is why I think it’s important to ensure that my portfolio is appropriately diversified. In practice, this means holding a bunch of stocks from different sectors. Doing this would allow me to kick back and not get flustered with day-to-day market wobbles.

The post The best shares to buy now for rising dividends 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 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.

Today, I’m looking at a rarely-discussed firm that has done seriously well for those that were willing to back it. 

Outperformer

In the last 12 months, shares in self-storage business Safestore (LSE: SAFE) have climbed 40% in value. For comparison, the FTSE 250 index — of which the company is a constituent — is up ‘just’ 15%. 

Can this form continue? Quite possibly. 

This morning, the company revealed an 8.3% rise in total revenue (at constant exchange rates) over the three months from November to January. Like-for-like revenue for the quarter was up 5.9%.

Broken down, trading in the UK was particularly stellar. Aided by new acquisitions and store openings, revenue here was 8.2% higher (to £30.3m) compared to over the same period a year earlier. The firm’s operations in Paris also did well with revenue rising 6.7% to €11.1m.

Based on these numbers, CEO Frederic Vecchioli stated that the company is on course to meet its expectations for the full year. With new locations in Gateshead and Sheffield scheduled to open in the next few months (and another being unveiled in central Paris before the end of 2020), I certainly wouldn’t bet against this happening.

The only issue is that Safestore’s stock now looks expensive, trading as it does on 27 times forecast earnings. This — combined with lack of reaction in early trading — leads me to think that gains might be less impressive going forward.

So, while our penchant for accumulating more and more stuff makes this an area of the market worth following, the relatively low barriers to entry (listed competitors include Big Yellow and Lok ‘n Store) highlights the importance of not paying too much to get exposure. 

One for the watchlist, perhaps?

Bull in a china shop

Another example of a ‘boring’ company that’s been doing all the right things for its shareholders is ceramic tableware supplier Churchill China (LSE: CHH). The Stoke-on-Trent-based firm’s customers range from pub, restaurant and hotel chains to contract caterers to health and education organisations. 

Again, this a company that has outperformed its index. In the last year alone, the valuation has climbed 64%. The FTSE Small-Cap is up 11% in comparison.

January’s trading update for the whole of 2019 was encouraging with the company stating that it had seen decent trading in the UK and its overseas markets. Indeed, things have been going so well that management reported operating performance would likely be “slightly ahead of current market estimates“. 

With decent margins, rising returns on the capital it puts to work, no debt and consistent dividend hikes, Churchill ticks a lot of my boxes when looking for great potential investments. The fact that a decent proportion of its shares are still owned by the Roper family — some of whom serve on the board — also gives me confidence that the business will continue to be managed with its shareholders in mind.   

Like Safestore, however, Churchill’s shares now trade on a lofty valuation (23 times expected earnings). Although short-term movements in the market are pretty much impossible to predict, this at least suggests to me that the share price may need to cool down a bit before moving higher.

The post This growth stock has thrashed the FTSE 250. Is there more to come? 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 Churchill China. 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.

Instead of taking a risk by buying and letting property, I’d rather invest in shares on the stock market. You can still back up your investments with property assets by buying shares in property companies. One of my favourites is Safestore Holdings (LSE: SAFE), which operates as a Real Estate Investment Trust (REIT).

A great track record

The stock’s performance over the past few years has been amazing. Over six years, the share price has risen more than 400% and the dividend is up around 170%. I think those are decent returns for shareholders and it’s been driven by strong operational performance, which shows in the record of generally rising revenue and cash flow over the period.

Safestore is a little different from the average REIT and has a focused business model, billing itself as the UK’s largest self-storage firm. It operates around 117 centres in the UK and 27 in the Paris region. The pace of expansion has been brisk as you can see from the financial record. Meanwhile, there’s more good news in today’s half-year results report covering the period to the 30 April.

Revenue at constant exchange rates rose 5.9% compared to the equivalent period the year before, and adjusted diluted earnings per share went up a little over 7%. The directors signalled confidence in the outlook by moving up the interim dividend by 7.8%.

The firm’s Net Asset Value (NAV) increased by 13.7% to 407p per share, which compares to the current share price around 652p. That’s a higher valuation than the traditional discount to NAV I’d look for with a REIT, but I think Safestore’s storage business justifies a premium above the pure underlying asset value.

Ongoing expansion, strong demand

The firm’s expansion continued in the period with the acquisition of a site in Peterborough scheduled to open at the end of 2019. On top of that, the company plans further new store openings this year in Paris, London and Birmingham. And extensions to the Bedford and Barking stores should be complete in early 2020.

It seems the firm is experiencing a lot of demand from people who want to lock stuff away. Chief executive Frederic Vecchioli said in the report that since 2016, 38 stores have been added to the estate.

Looking forward, the company expects to be able to continue to “seize” consolidation opportunities and new development sites “that can be turned relatively quickly into new stores.”

I can’t argue with the firm’s progress, and Vecchioli explained in the narrative that the self-storage market “remains resilient to macroeconomic uncertainty.” 

There’s a lot to like about Safestore, but its attractions now reflect in the valuation. The forward-looking dividend yield, for example, stands at about 2.8% or so for the trading year to October 2020.

There’s no obvious bargain here, but the firm is performing well. I’m still interested and would aim to pounce on the shares during dips and down-days. I think the growth potential could be worth it.

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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.

Today, I’m going to look at three profitable, growing companies from the FTSE 250. Each has doubled (or more) in under 10 years and offers a growing dividend. I believe all three are likely to continue growing.

Sales top £1bn for first time

Food-to-go bakery chain Greggs (LSE: GRG) needs no introduction. The firm’s new vegan sausage roll has contributed to an impressive 9.6% increase in like-for-like sales during the first six weeks of 2019. Growth like this helps explain why the Greggs share price has doubled since November 2016.

Thursday’s full-year results suggest that the firm is maintaining its strong record of growth. Total sales rose by 7.2% to £1,029.3m last year, while pre-tax profit climbed 15% to £82.6m.

The shareholder dividend will rise by 10.5% to 35.7p for 2018. With the shares trading at record levels, this payout only gives the stock a 2% dividend yield. This highlights a risk for investors — Greggs looks expensive to me, trading on 23 times 2019 forecast earnings.

Chief executive Roger Whiteside expects the business to continue expanding and I share this view. I think Greggs is a very good business, but the shares look fully priced to me. I’d hold at current levels and look to buy on any future dips.

An unstoppable growth business?

The market for self-storage in the UK’s towns and cities appears to be growing strongly. During the three months to 31 January, FTSE 250 firm Safestore Holdings (LSE: SAFE) said its occupancy increased by 2.2%, despite average prices also rising by 2.2%.

The figures suggest that last year’s strong progress — when underlying sales and profits both rose by about 11% — may continue in 2019. The company now operates in the UK and Paris and is now letting 32% more space than it was three years ago.

The share price has reflected this growth and Safestore stock has doubled since April 2015. The shares now trade on 21 times 2019 forecast earnings, with a 2.9% dividend yield. Although this isn’t cheap, I’d view this as a fair price and rate the stock as a long-term buy.

No dividend cut for 25 years

Bus and train operator Go-Ahead Group (LSE: GOG) has faced challenges in recent years. But the group’s core attraction for investors — strong cash generation — has allowed the group to maintain its dividend despite a drop in profits. Indeed, Go-Ahead’s dividend has not been cut since its flotation in 1994, 25 years ago.

The firm’s shares have doubled over the last 10 years, during which shareholders have received a total dividend of about 880p, or about 43% of the current market-cap.

The secret to the firm’s financial success seems to be that operating public transport can generate attractive returns on capital invested. Go-Ahead Group generated a return on capital employed of 19% last year, well above the 15% threshold I use to screen for highly profitable companies.

Profit forecasts for the current year were upgraded following February’s half-year results and the shares have now climbed by 35% so far in 2019. However, they remain well below 2015 highs of 2,600p+. Trading on 12 times forecast earnings and with a 5% dividend yield, I believe the shares remain good value and continue to deserve a buy rating.

The post 3 FTSE 250 dividend stocks that have doubled and still have room to grow appeared first on The Twelfth Magpie.

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Roland Head owns shares of Go-Ahead Group. 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.

I continue to hold this opinion. The company’s outlook hasn’t improved over the past few weeks, and it now looks very likely that Sainsbury’s proposed takeover of peer ASDA, will not get the green light from regulators without substantial changes.

Blocked deal? 

Earlier this month, the Competition and Markets Authority extended its investigation into the deal citing the “scope and complexity” of the investigation. The authority needs more time to digest and analyse the issues raised by competitors, as well as with the two key companies. 

If the deal isn’t approved, it’s difficult to see what the future holds for Sainsbury’s. It’s more than likely the company will continue to chug along at its current pace, which implies another year or more of lacklustre growth. At the same time, its domestic competitors, notably Tesco at Morrisons, are roaring ahead, grabbing market share from floundering Sainsbury’s. 

With such an uncertain outlook, I don’t think it’s worth paying the current price of 13.8 times forward earnings for the retailer’s shares.

Slow and steady income 

Sainsbury’s is not for me, but one company I’m interested in is Safestore Holdings (LSE: SAFE). 

Safestore’s growth is exploding thanks to the UK’s insatiable demand for storing stuff. The company can’t build properties fast enough. It has 119 wholly-owned stores across the UK and 27 in Paris. On top of this, the group has three new sites in the UK under development and two new locations in the French capital, which are on schedule to open in 2019 and 2020.

Customers are filling up these storage facilities almost as fast as the group can build them. According to Safestore’s first quarter trading update for the three months to the end of January, the company increased its maximum lettable area by 1.6% year-on-year, and its closing occupancy rose 2.2% to 72.2%. 

These numbers indicate customers are opening new accounts with the group at a faster rate than it can build out new storage facilities. 

On a like-for-like basis, occupancy rose 3.2% to 37.5%, and the average storage rate increased by 2.4% to £26.44. Overall, like-for-like revenue expanded 6.4% year-on-year during the first fiscal quarter of its 2019 financial year. 

More of the same

With over two decades of operating history behind it, I’m confident that Safestore is pursuing the right growth strategy and, as the group continue to expand, shareholders should be well rewarded. 

The company has already increased its dividend by 160% over the past six years and analysts are expecting further growth of 13% for 2019, which gives a dividend yield of 3%. 

Another attractive quality about this business is earnings should be relatively immune to any economic disruption that comes as a result of Brexit. The company could even see an increase in demand for its services if things get really bad, because homeowners who have to sell their homes, and shop owners who are forced out of business, might need somewhere to store their possessions while the economy recovers. 

Considering all of the above, I think Safestore is an excellent income stock to include in your portfolio today.

The post Forget the Sainsbury’s share price, I’d buy this FTSE 250 income stock appeared first on The Twelfth Magpie.

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

Predictable earnings 

Self-storage firm Safestore (LSE: SAFE) has been a stonking investment for those who’ve bought and held on over the last few years. Our growing need for places to house our possessions has seen the shares climb 285% in value since September 2013. 

There could be more to come. Highlights from the mid-cap’s Q3 update earlier this month included a 10.3% rise in group revenue and 5.6% rise in like-for-like revenue, both at constant exchange rates. Performance in the UK and in Paris was described as “strong” with Alligator — the company’s 12-store recent acquisition — trading in line with expectations. 

And Brexit? CEO Frederic Vecchioli certainly doesn’t appear concerned, having stated that the company’s business model should allow it to “withstand any macroeconomic uncertainty that may arise over the coming months“.

On almost 20 times earnings, Safestore isn’t cheap, but this may still be a reasonable price to pay based on its growth strategy and all-round stability. It’s also not as expensive as main rival Big Yellow. 

The company is forecast to return 17.1p per share in the next financial year (beginning November), which translates to a decent 3.2% yield at the current share price.

Robust model

When it comes to searching for robust business models, waste manager Biffa (LSE: BIFF) also fits the bill nicely. 

This month’s update from the firm was appropriately predictable. Trading in the first half of the financial year (six months to 28 September) had been in line with management expectations, with its Industrial & Commercial division continuing to generate “good organic and acquisitive revenue growth“. 

Elsewhere, trading at its Resource Recovery & Treatment and Energy Divisions was adequate, although the bin-collecting Municipal division continues to be impacted “by cost inflation and local government spending cuts“.

Trading on 13 times forecast earnings, Biffa still looks fair value in my opinion. There’s a 2.7% dividend yield for this year with an 8% hike to the total payout predicted for 2019/20, all easily covered by profits. 

German strength

The last pick would be Sirius Real Estate (LSE: SRE) which operates business parks in Germany. That might not be enough quicken your pulse, but it’s fair to say that recent trading has been anything but dull. 

Earlier this month, the company announced news of three new lettings to a German sports car manufacturer, a division of the Berlin government and a global humanitarian charity (Care International). A “significant renewal” by existing tenant Daimler AG (owner of Mercedes-Benz) is also on the cards, with the latter looking to secure 40,000 sqm of space for an extra five years.

On a forecast price-to-earnings ratio (P/E) of a little under 18 for the current year, Sirius is — like Safestore — a little expensive. That said, this moves down to 15 in 2019/20 should analyst estimates on growth prove correct. Having now entered into exclusivity to buy another €60m of assets (following the €40m already spent), I wouldn’t bet against profits continuing to rise.

A chunky 5% dividend yield at the current share price is the icing on the cake.  

The post 3 stocks that could be perfect for retirees 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 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 self-storage solutions provider’s share price is an exciting 340% or so higher than it was six years ago and the dividend is up around 180% over that time. Operational progress and a valuation re-rating drove the stock’s progress, which hasn’t been boring at all, and today’s interim results suggest that growth remains on track.

Good results

Revenue at constant exchange rates increased 9.7% compared to the equivalent period a year ago, while like-for-like revenue moved 4.6% higher, suggesting the firm’s offering is attracting more business from established sites as well as expanding into new ones. Adjusted diluted earnings per share — stripped of property value gains and losses — shot up more than 21%, while adjusted net asset value per share increased a little under 14%. The directors topped off this impressive financial performance by pushing up the interim dividend by 21.4%, demonstrating their confidence in the outlook.

People just love to store their stuff and Safestore today reported “the strongest occupancy performance in the last five years” with like-for-like occupancy increases of 5.2% in the UK operation and 6% in Paris.

As well as organic growth, the company has a vibrant acquisition programme aimed at taking advantage of a tailwind from a self-storage market the firm describes as “a young and expanding industry.”  I reckon we’ll see a lot more growth from Safestore in the years to come and think the stock is well worth your further research time now.

Solid performance

Maybe Safestore could sit well in a portfolio alongside FTSE 100 premium alcoholic drinks supplier Diageo (LSE: DGE). The stock is around 70% higher than it was six years ago and over that time the dividend has advanced around 51%. Not as stunning as Safestore’s performance over the period but not bad for a goliath with a market capitalisation of £68bn at today’s share price around 2,727p.

The company has been long prized by investors for the defensive characteristics of its underlying business. Operational cash flow over the past six years has been robust, easily supporting earnings and rising steadily year after year. My Foolish colleague Harvey Jones reported on another strong set of results with the firm’s interim report back in January, and I’m expecting another robust financial statement with the full-year results due on 26 July.

To me, Diageo really is one of those stocks that you can buy now and tuck away with reasonable confidence that your investment will have grown in value 10 or 20 years from now, particularly if you reinvest dividends along the way. As such, I reckon the firm makes an ideal potential retirement investment for those with a long-term investment horizon in mind. It’s well worth consideration alongside Safestore Holdings, in my view.

The post This FTSE 250 stock could fly along with the Diageo share price 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 recommended Diageo. 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 Pendragon (LSE: PDG) may be packing the sort of yields to embarrass much of the broader London market, I for one wouldn’t touch the business with a bargepole right now.

With new car sales falling off a cliff I think that investing in the vehicle retailer is extremely risky business, and conditions do not look likely to improve any time soon as the economic and political malaise engulfing the UK continues. What’s more, ongoing uncertainty over the future of the diesel engine is likely to keep the market under pressure as well.

Latest data from the Society of Motor Manufacturers and Traders showed registrations for new vehicles in Britain plummet 15.7% year-on-year in March, to 474,069 units. This also marked the 12th monthly drop on the spin and takes the total decline in new car sales for the first quarter to 12.4%.

The difficulties in the new automobile market have encouraged Pendragon to harden its resolve in the used car segment, and the company has targeted a doubling of annual revenues from pre-owned vehicles by 2021.

Still, the used car market will surely not prove immune to the broader pressure on consumers’ spending power either — these vehicles still remain ‘big ticket’ items for most people, after all.

Car crash

Current City forecasts do not reflect this severe toughening in market conditions, in my opinion, with analysts tipping the company to bounce from the rare 15% profits slide last year with a 7% advance in 2018.

I believe this estimate could be chopped down in the months ahead given the pace at which car sales data is deteriorating. And next year’s predicted 10% earnings improvement could come under serious scrutiny too. And as a consequence I would ignore Pendragon’s ultra-low forward P/E ratio of 8.3 times and stay away.

I also wouldn’t be surprised to see monster dividend projections also fall short of current estimates. Forecasters are expecting the full year payout to remain stable at 1.55p per share through to the close of 2019, resulting in a gigantic 5.3% yield.

But with Pendragon battling an uncertain earnings outlook and a ballooning net debt pile, which jumped to £32.4m last year from £12.1m previously, I reckon investors should be braced for disappointment.

Box it up

I believe those hunting for bright dividend stocks would be much better selling out of Pendragon today and splashing the cash on Safestore Holdings (LSE: SAFE).

The FTSE 250 self-storage giant has seen dividends balloon by triple-digit percentages over the past five years. And although another painful earnings drop is forecast for the year to October 2018 — by 29%, and the third on the spin if realised — thanks to its strong cash flows, City analysts expect shareholder rewards to keep rising. Free cash flow leapt 19% last year to £50.3m.

Last year’s dividend of 14p per share is predicted to rise to 15.9p this year. And this figure yields a chunky 2.9%. The good news doesn’t stop here, however, and an anticipated 7% earnings rise in fiscal 2019 underpins expectations of a 17p reward. As a result the yield steps to an even better 3.1%.

Safestore might be expensive, the firm dealing on a forward P/E ratio of 20.7 times. I reckon the company’s robust position in an expanding market merits this premium, though.

The post Why I’d sell this 5% yielder to buy this FTSE 250 income stock 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 Pendragon. 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 self storage company announced that group revenues leapt 10.4% during the three months to January, to £35.1m, while on a like-for-like basis sales improved 5.5%.

Concerns have been doing the rounds for some months now, with Britons’ spending power under increasing strain, that demand for Safestore’s rooms would suffer an inevitable decline. But this scenario has so far failed to materialise — in its home market, like-for-like occupancy actually improved 2.8% year-on-year to 69.8%.

With occupancy in Paris also having improved by 3.1% in the period, to 78.5%, group like-for-like occupancy was up 2.8% at 71.5%.

Bright earnings outlook

While Safestore Holdings is expected to endure another heavy earnings decline in the year to September 2018 — a 29% drop is currently predicted by City analysts — I believe the storage expert is well worth consideration on the back of its perky long-term profits prospects.

Not only has the FTSE 250 play proved adept at thriving in a challenging environment, but its bright store pipeline gives me confidence that it can continue growing revenues at a healthy rate (it has four new sites in the offing in London, one in Birmingham and another in Paris).

What’s more, Safestore also made a point today of highlighting its “strong and flexible balance sheet [which] allows us to continue to consider value accretive investments as and when they arise.” The business has already snapped up UK rivals Alligator Self Storage and Space Maker over the past couple of years.

Safestore is expected to get earnings rolling again with a 6% rise in fiscal 2019. It may be expensive on paper, the company sporting a forward P/E ratio of 18.9 times, but this is not an encumbrance given the possibility of forecast upgrades in the months ahead.

Dividends surging

Aside from Safestore’s fast-improving earnings story, the Hertfordshire firm’s progressive dividend policy gives another reason for share pickers to take a look (it has raised dividends at a compound growth rate of 19.5% over the past five years).

Last year’s dividend of 14p per share is expected to rise to 16.1p this year, and again to 17.1p in fiscal 2019. Such predictions yield a chunky 3.2% and 3.4% respectively.

Another income hero

Those on the lookout for delicious dividend growth had also better give Greggs (LSE: GRG) some close attention.

With the baker pledging to speed up store openings, earnings growth is expected to click through the gears in the years ahead, meaning that last year’s predicted 1% bottom-line improvement is anticipated to speed up to 7% in 2018 and again to 10% next year.

And as a consequence dividend expansion is expected to step up a notch. The predicted 32.4p per share reward for 2017 is expected to rise to 36.2p in 2018 and to 40.9p in 2019, resulting in handy yields of 2.8% and 3.1% respectively.

Now Greggs might be expensive. But a prospective earnings multiple of 19.4 times is hardly outrageous given its proven ability of keep the tills ticking over – like-for-like sales have risen for an impressive 17 quarters on the spin now despite operating in a highly-competitive marketplace. I reckon the sausage roll star is a great pick for income and growth hunters alike.

The post 2 FTSE 250 dividend stocks I’d buy with £2,000 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 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.