Christmas is coming and if I have money left over from my shopping, I’d love to spend it on more bargain dividend stocks for my portfolio.

Dividend stocks aren’t just for Christmas, of course. They’re for life. Any shares I buy today I’d hope to hold to retirement and beyond.

I’m on the hunt for dividend stocks

I’ve enjoyed some success from buying beaten-down FTSE 100 stocks lately, and I can’t get much more beaten than BT Group (LSE: BT.A). Its shares are down 35% over one year, and almost 60% over five years.

Falling earnings and rising debt never make a good combination, and BT has suffered both. It also has a £4bn shortfall on its pension scheme.

Management is looking to slash £500m costs as rising energy bills squeeze margins, with plans to merge its Global Services and Enterprise units. It faces a sea of troubles, yet I would still buy it. That’s because I’m a long-term investor, and can afford to look past today’s challenges. BT shares just look too cheap to ignore, trading at 5.5 times earnings. The dividend yield is a thumping 6.8%, covered 2.8 times by revenues.

When investor sentiment turns, positive, it must at some point next year, BT could rebound. I’d like to be holding its stock when it does. 

I’m applying the same philosophy to my second FTSE 100 dividend stock, Britain’s biggest fund manager Schroders (LSE: SDR). Its share price has been knocked back by this year’s volatility, crashing 25%. Measured over five years, Schroders shares are down 22% so it’s not a one-off.

As markets fell and investors backed off, assets under management (AUM) dipped 2.7% to £752.5bn in the quarter to 30 September. I don’t think that’s too bad, given the turbulence. I’ll be watching closely for the next set of numbers, as the current stock market rally should boost AUM for the quarter to 31 December.

FTSE gives me income

Yet the quarter also saw the gilt market meltdown, which sent assets in its Solutions division crashing more than £20bn to £205bn. Despite the uncertainties, Schroders’ shares are up 10% in a month. Next year could be even better and the stock looks good value at 9.15 times earnings while yielding 5.4%, covered twice.

While I’m in the mood for risk, I’d also consider the UK’s second-biggest grocery chain, Sainsbury’s (LSE: SBRY). Its shares have also suffered a meltdown, falling 20% in the last year, while trading 12% lower over five years.

Again, it’s been climbing in recent months, as investors believe the sell-off has been overdone and fancy a bargain. Sainsbury’s is certainly that, I feel, valued at just 8.8 times earnings.

There are signs that grocery inflation is easing although I’m not putting too much faith in that, as Kantar figures show, it was still a terrifying 14.6% in November. Sainsbury’s can’t easily push those costs onto cash-strapped customers.

Throw in the threat from Aldi and Lidl and things look even tougher. Yet I’d still buy Sainsbury’s for its 5.84% yield, covered 1.9 times by earnings. I’ll reinvest that to buy more stock and with luck, one day shoppers will feel richer and the Sainsbury’s share price will recover. As I said, I can bide my time.

The post I’d buy these 3 dividend stocks before Christmas 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 recommended Schroders (Non-Voting) and Sainsbury’s. 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.

Now may look like a bad time to buy FTSE 100 shares, but I beg to differ. Today’s turmoil offers a brilliant buying opportunity, but with three provisos.

At The Motley Fool, we never like to waste a stock market crash. Or even a dip, like the one the FTSE 100 is suffering at the moment. 

The index of top UK shares has been relatively resilient in 2022. It is down 8.09% year-to-date while the US S&P 500 has crashed 23.49%. Yet the FTSE 100’s relatively smaller drop is still throwing up lots of share buying opportunities for me.

FTSE 100 offers me great value

When an individual stock falls sharply in value, I tread carefully. Usually that’s due to a bad piece of company news, such as a profit warning, reduced dividend, or some other nasty that weighs on its prospects.

When the whole FTSE 100 falls, it’s a different matter, as good companies are sold off with the bad. Investors are fleeing risk right now, as today’s problems aren’t going away soon. Post-Covid supply shortages, war in Ukraine, and (crucially) rising interest rates are combining to destroy investor sentiment.

These problems will hit some sectors harder than others. Housebuilders such as Barratt Developments will suffer as rising mortgage rates hit demand. So will asset managers such as Schroders, as markets go haywire. Supermarkets like Sainsbury’s are also suffering, as customers buy less or trade down.

By contrast, luxury goods maker Burberry Group is on safer ground as the wealthy are less affected by the cost-of-living crisis. So is spirits maker Diageo, as its customers need a stiff drink right now.

I’m focusing my attention on companies that have been hit hardest, as their share prices have fallen most. They offer a tempting combo of dirt-cheap valuations and astonishing yields. I’ve just taken a punt on housebuilder Persimmon. I’m worried I may regret this, but found its 19.49% yield and valuation of just 4.81 times earnings too ridiculous to resist.

I’m now caught between buying Tesco for long-term income and growth, or investing in Rolls-Royce shares in the hope they will lead the charge when markets recover.

Three ways I reduce risk

The big risk is that markets could fall further from here, but I’m happy to take that chance for three reasons. First, it’s impossible to buy right at the bottom of the market. Today’s lower prices are good enough for me.

Second, I’m building a balanced portfolio of FTSE 100 stocks on top of that, to turbo-charge my growth. I aim to hold at least a dozen, so if one or two fail to deliver, hopefully the others should more than compensate.

Finally, and most important, I’m only buying shares that I plan to hold for the long term. That means at least 20 years, which should give plenty of time for the FTSE 100 to rebound from its current troubles.

Sometimes I have to steel myself to click the ‘buy’ button but if I wait until after the FTSE 100 has recovered, then the same stocks should cost a lot more than they do today.

The post I don’t care if FTSE 100 shares fall further, I’m buying them today appeared first on The Twelfth Magpie.

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• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended Burberry, Diageo, Schroders (Non-Voting) 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.

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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• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

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.

Current economic uncertainty looks set to drag on, and could be worsened by US political dramas. I think these three FTSE 100 dividend shares will help build my wealth, whatever happens in the turbulent months ahead.

I’d buy top FTSE 100 utility stock and dividend hero National Grid (LSE: NG) at any time. This is the ideal bedrock stock for a balanced portfolio. National Grid manages the wires and pipes that businesses and homes rely on for power, both in the UK and north-east US. Its earnings are regulated, so while they will never shoot the lights out, they should provide a reliable flow of cash to fund the dividend.

I’d buy this top UK dividend share

National Grid currently yields 5.16%, which is more than 50 times current base rate. I think it offers a great way to beat the rotten returns on cash, without taking on too much risk. Don’t expect too much share price growth though. The National Grid share price trades at roughly the same level as five years ago. On the other hand, you shouldn’t expect too much downside either. It isn’t cheap, at 17 times earnings, but looks a good defensive UK dividend share for troubled times.

You can get dividends of 8% or 9% on the FTSE 100 today, but that’s not what I’m after here. I want something solid. So I make no apology in highlighting another defensive utility play, water and wastewater specialist Pennon Group (LSE: PNN).

Pennon’s full-year revenues fell 6% as it completed the sale of its Viridor waste management business, and consumption dropped at its South West Water operations. The estimated £10m dip looks manageable and the business remains “resilient”. 

Solid income from the FTSE 100

The big concern is that water companies may struggle to pay their bills due to the economic downturn, although payment collections have been robust so far. The £4.2bn proceeds from selling Viridor have been used to boost the balance sheet by clearing £900m of debt and top up its pension schemes. Pennon was planning to increase its dividend by at least 4% over inflation to 2025. It’s now cut that to 2%, but it remains a compelling UK dividend share, currently yielding 4.4%.

You might think fund managers should be a risky investment in the wake of a stock market crash, but Schroders has recovered strongly in recent months. It posted an increase in Q3 assets under management last month, lifting the total to £66.8bn.

Right now, you can buy Schroders at a bargain price of 13.52 times earnings. For that, you get an attractive yield of 4.4%. While you may see some share price volatility, depending on how the downturn pans out, this UK dividend share looks a strong buy and hold for me.

The post Top stocks for an ISA! I’d buy these 3 solid UK dividend shares to survive the economic downturn 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 Pennon 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.

Dividend stocks should generate a rising income over time, as most companies endeavour to increase their payments year after year. Better still, it’s a passive income, which means you don’t have to do anything to earn it. FTSE 100 dividend stocks like these three could even help you retire early.

Pharmaceutical giant GlaxoSmithKline (LSE: GSK) has been a FTSE 100 dividend hero for years, and remains a top income stock today. While investors have been disappointed by management’s decision to freeze the payout at 80p a share for the last few years, it’s always seemed a sensible move to me. It allows the company to pump more money into its drugs pipeline, to build future revenues.

I’d buy this FTSE 100 dividend stock today

Investors can hardly complain, given the stock currently yields 5.47%. That’s a terrific income, especially with the base interest rate at 0.01%. It’ll look even better if we get negative rates. Cover is reasonable, at 1.5 times earnings.

Better still, the Glaxo share price is relatively cheap right now, trading at 11.62 times earnings. It has been drifting downwards lately, and trades around 12% lower than six months ago. This looks like one of the most compelling FTSE 100 dividend stocks today.

Most FTSE 100 dividend income investors will already have Glaxo on their radar, but some may have overlooked another top stock, fund manager Schroders (LSE: SDR). It currently yields 4.05%, and cover is better here at 1.7 times earnings.

Asset managers are often seen as a geared play on the stock market and, inevitably, the Schroders share price fell in the March crash. It has recovered strongly though and, in contrast to Glaxo, is up 12% in the last six months.

With global central bankers effectively backstopping share prices, the risk is greatly reduced. You can still buy it at a discounted valuation of 13.95 times earnings. Schroders has a great long-term pedigree, and looks like another tempting FTSE 100 dividend stock for those seeking rising passive income.

This rising passive income could be yours

Plumbing and heating products distributor Ferguson (LSE: FERG) is a play on the US economy, as it generates more than 90% of its revenues from the States. However, investors should not overlook its income capabilities as well.

Ferguson suspended its dividend earlier this year but has now restored its payout after trading picked up. Revenues fell by just 0.9% to $21.8bn in the year to 31 July, with pre-tax profit down 4.8% to $1.3bn. These figures look assuring given today’s uncertainties. 

This FTSE 100 dividend stock may only yield 2.6%, but the payout is handsomely covered 2.7 times, giving scope for progression. The Ferguson share price is more expensive, at 20.2 times earnings. Maybe start with Glaxo and Schroders, and keep Ferguson on your watch list.

The post I’d buy these 3 FTSE 100 dividend stocks to generate a rising passive income and retire early appeared first on The Twelfth Magpie.

More reading

• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. 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 family business

Founded in 1804, Schroders has grown to become one of the world’s premier asset managers. According to its latest assets update at the end of September, the group was looking after £450bn for clients around the world. The figure was up around 10% since the beginning of the year.

I believe a key reason why it’s has been able to grow into such a size is its owner-operator culture. The founding family still owns just under 50% of the shares and are represented on the board of directors by Leonie Schroder, a descendant of John Henry Schroder, co-founder of the business.

Research shows public companies that are still majority-owned by their founders tend to outperform over the long term. It seems that with this structure, managers can make long-term decisions safe in the knowledge their investors won’t rebel if they ignore short-term profitability in favour of extended period growth.

This approach seems to be working so far. Since 2013, earnings per share have grown at a compound annual rate of 9.2%, and the group’s dividend to shareholders has increased at a compound annual rate of 14.5%. 

International growth 

The next big challenge for Schroders will be cracking the American market. At present, only 15% of assets under management are run on behalf of clients there. Management wants to change this. Last year, it attracted $3bn of new business from North America, and the group has made some critical changes to the region’s management team in 2019. 

As well as expanding across the Atlantic, Schroders’ joint venture with Lloyds Banking Group, which is set to launch this year, will help increase distribution in the middle of the market across the UK. 

On top of these initiatives, I think the company will also benefit from the growing demand for pension and wealth management services around the world, particularly in North America and China.

An opportunity for investors 

Schroders’ outlook is bright, but the shares don’t come cheap. They’re currently dealing at a forward P/E of 16.1. However, due to a quirk in the company’s capital structure, you can own a share in this business with just 12.2 times forward earnings. 

You see, Schroders has two classes of stocks. They’re virtually the same, apart from the fact one comes with voting rights and the other doesn’t. Schroders PLC Non-VTG (LSE: SDRC) is the second class of shares. This non-voting class of shares isn’t only cheaper but comes with a higher dividend yield as well. They currently support a yield of 4.8% compared to the voting class’s 3.6%.

So that’s why I think Schroders could be an excellent investment if you have just £3,000 to invest today. You could own part of this world-class business for only 12.2 times earnings and pick up that market-beating dividend yield at the same time.

The post Have £3,000 to invest? A FTSE 100 dividend stock I’ve bought and will never sell appeared first on The Twelfth Magpie.

More reading

• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Rupert Hargreaves owns shares in Schroders (Non-Voting). The Motley Fool UK has recommended Schroders (Non-Voting) and Lloyds Banking 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.

I’d be looking for a few key things. First, diversification across different industries (more specifically, industries that are likely to be around for decades to come). Second, geographical diversification. And third, a culture and history of prudent, long-term management.

With these things in mind, the blue-chip stocks I’d buy are Associated British Foods (LSE: ABF), Hikma Pharmaceuticals (LSE: HIK) and Schroders (LSE: SDR). Let me tell you more about these businesses and my thinking.

Industry diversification

ABF’s revenues are split approximately 50/50 between consumer goods (grocery, ingredients, sugar and animal feeds) and consumer services (clothing retail, namely Primark). Healthcare firm Hikma’s revenue comes entirely from pharmaceuticals, but is diversified across three segments (injectables, generics and branded). Schroders is in the financial industry, and the majority of its revenue comes from asset management, but some from private banking and associated wealth management services.

Will there ever come a time when the world no longer needs food or clothes? I can’t see it, and I reckon ABF owns attractive businesses in these areas.

Meanwhile, it’s widely believed ageing populations in the western world and rising wealth in emerging markets will fuel demand for healthcare in the coming decades. I think Hikma’s pharmaceuticals businesses should benefit from this long-term tailwind.

Finally, Schroders, as an asset manager, is essentially a geared play on stock markets, which we know tend to rise over the long run. As such, provided the company is well managed, the stock should outperform a market like the FTSE 100 over a long holding period.

If I had to use my ISA allowance to buy these three companies, I’d put £10,000 in ABF and £5,000 in each of the other two. This would give me an equal 25% exposure to 4 of the 10 broad industry categories. Namely, consumer goods, consumer services, healthcare and financials.

Geographical diversification

As well as being happy with the business diversification, I’d also be happy with the geographical diversification. ABF, Hikma and Schroders all generate international revenues, and I calculate the aggregate exposure as: Europe, Middle East & Africa (37%), UK (27%), Americas (23%) and Asia-Pacific (13%).

Prudent long-term management

Management change at companies is inevitable over time, but I think the cultures and histories of Hikma, ABF and Schroders put them at an advantage in terms of maintaining continuity. They were founded in 1978, 1935 and 1804, respectively, and at all three companies, descendants of the founding families maintain a significant presence both on the shareholder register and in the boardroom.

At such companies, a strong balance sheet and prudent stewardship of the business ensure future security to the family, so longer-term planning takes priority over short-term results. I think this philosophy is well-aligned with the interests of an investor who is looking to buy a stock and never sell it.

Finally, I’m not too worried about near-term earnings multiples and dividend yields. All three stocks are currently trading at discounts to previous highs, and that’s good enough for me for a holding period of forever.

The post 3 FTSE 100 stocks I’d buy in an ISA and hold forever appeared first on The Twelfth Magpie.

More reading

• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Associated British Foods and Hikma Pharmaceuticals. 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 owner of products such as Ben & Jerry’s ice cream and Dove beauty lines has an impressive track record of earnings growth. I expect this to continue as the business expands its presence in emerging markets.

Emerging markets now make up for more than half of group sales. As the population in these parts the world continues to grow in size and wealth, Unilever’s sales should continue to expand.

On top of this, management has been streamlining the business in recent years to help improve profit margins. The company has also started to return additional cash to investors with share buybacks. Following these efficiency efforts, Unilever’s operating profit margin has risen to around 25%, up from 15% in 2016.

At the time of writing, investors can buy shares in this global consumer goods giant for just 21.6 times forward earnings. I think this multiple is suitable considering the group’s global presence and fat profit margins. The stock also supports a dividend yield of 3.1%.

Leading management team

Another FTSE 100 income champion that is on my radar is Next (LSE: NXT). There are only a couple of retail businesses I think are well-positioned to weather the current carnage on the high street and Next is one of them. It’s not the firm’s products that excite me, it’s the management.

During the past five years, the board has successfully executed a plan to transition the business away from its high street stores towards e-commerce, and this is paying off. Next’s most recent trading update showed a 12.6% increase in online sales during the first half of 2019, while in-store purchases declined by 5.5%. Total group sales increased by 3.7%, thanks to that strong performance from its digital-based business.

Going forward, the retailer is spending an additional £300m to boost online capacity and is opening up its facilities to other brands. As these investments progress, I’m convinced Next’s earnings will only grow further. At the time of writing, investors can buy shares in this leading retail concern for just 13 times forward earnings. It also supports a dividend yield of 2.9%.

Family business

My final FTSE 100 pick for a Stocks and Shares ISA is wealth management group Schroders (LSE: SDR). Once again, this is an investment in a high-quality management team.

Schroders’ management has always taken a long term view with the business and isn’t afraid to spend money today in the hopes of boosting revenues in the future.

Efforts to future-proof the business have helped it grow earnings per share at a compound annual rate of 9% for the past five. And as earnings have grown, so has the dividend.

Over the past six years, the company’s dividend per share has increased at a compound annual rate of 15%, and the stock currently supports a dividend yield of 4%. After recent declines, the stock is trading at a forward P/E a 14.7 which, in my opinion, is a steal considering the quality of the management and Schroders’ growth track record.

The post 3 FTSE 100 stocks I’d buy with £10k in a Stocks and Shares ISA right now appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns shares in Unilever, Next and Schroders. The Motley Fool UK owns shares of and has recommended Unilever. 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.

Ashmore Group

Share price sentiment matters if you are investing in asset management companies such as emerging markets specialist Ashmore Group (LSE:ASHM), as they have direct exposure to stock market fortunes. The FTSE 250 group enjoyed a great start to 2019 as global markets started the year brightly. The Ashmore share price is still up more than 30% measured over 12 months, and despite a sharp dip in recent weeks, as the US-China trade war knocked sentiment.

The stock is up around 1.5% this morning as Ashmore posted a 24% rise in assets under management to $91.8bn, welcome news after July’s figures showed Q4 assets grew less than expected. Growth was driven by broad-based net inflows of $10.7bn while a positive investment performance contributed $6.9bn. Adjusted net revenues grew 11%, driven by a 17% increase in net management fees, while profit before tax jumped 15% year-on-year to £219.9m.

CEO Mark Coombs said the emerging markets backdrop “remains relatively healthy, with economic indicators such as GDP growth and inflation continuing to trend favourably,” despite the “confrontational” US trade policy.

Ashmore looks well-positioned to benefit, although some investors may be wary of asset managers generally right now, given current uncertainties. Today, management held the final dividend at 12.1p, as it looks to re-establish cover at 1.5 times statutory earnings, which leaves the forecast yield at a solid 3.7%.

Emerging markets have been the best performers of 2019, with China up 30% and Russia 24% year-to-date, so there is a chance it could struggle when the investment cycle favours other regions. The Ashmore share price does look a little expensive today, trading at a forecast valuation of 19.1 times earnings, although earnings are forecast to rise a healthy 25% next year.

Whether you think it’s a buy at today’s price will partly depend on where you see global stock markets moving next.

Schroders

FTSE 100 asset and wealth manager Schroders (LSE: SDR) has had a bumpier time of it, the share price down 5% over the last year and trading just 14% higher than five years ago.

In contrast to Ashmore, Schroders has been suffering net outflows, recently reporting that clients withdrew £1.2bn in the first half of the year, as the risk-off environment hit its intermediary division particularly hard. Pre-tax profits fell 14.28% to £340.4m in the six months to 30 June, although analysts expected worse, and despite the issues, record high assets under management of £444.4bn and a “strong” pipeline of new inflows bode well.

Schroders covers a far broader range of markets, both developing and emerging, but unlike Ashmore, that leaves it directly exposed to any slowdown in the US, Brexit-addled UK and Europe. However, if you think recent negativity has been overdone, you might be tempted to jump in at today’s reasonable forward valuation of exactly 14 times earnings.

The forecast dividend is a healthy 4%, with cover of 1.7, and it has a decent record of raising the payout every year.

The post Got £2,000 to invest? I’d consider popping these 2 growth and income stocks into an ISA 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 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.

One of the reasons why I think this business is such a good investment is it’s one of the few companies in the FTSE 100 still majority-owned by its founding family. Schroder family’s investment vehicles own just under 50% of the company’s voting shares

The family’s interests are represented on the company’s board by Leonie Schroder, appointed after the death of her father in February, becoming the fifth generation to sit on the board since Schroders was founded in 1804.

Growing business

Over the past 215 years, Schroders has grown from a small family business into one of the world’s largest asset managers with £424bn of investors’ funds under management and administration (FuMA) at the end of 2018.

In my opinion, this wouldn’t have been possible without the Schroder families input. The majority ownership of the business means management can concentrate on growing the company for the long term, rather than chasing short-term profit targets.

Thanks to its wider perspective, growth has accelerated over the past six years as investments in areas such as customer service have paid off. Net profit is up 43% since 2013 and management has increased the per share dividend payout by around 100%. City analysts are expecting further growth in the years ahead with net profit expected to grow approximately 20% between now and 2020.

The one negative I see here is the stock’s valuation. Shares in Schroders are currently dealing at a forward P/E of 15. However, considering the asset manager’s historical growth, substantial brand value and family ownership, I think this is a price worth paying for what I believe is one of the best-managed companies in the FTSE 100 today. At current levels, the stock supports a yield of 3.8% as well.

Business transition

Another City stalwart with a storied history that could be an exciting addition to your portfolio today is Charles Stanley (LSE: CAY).

The business is currently in the middle of a substantial overhaul, moving away from low-margin execution-only share dealing and growing out the firm’s discretionary management services, which have higher profit margins.

So far, the results of this strategy have been mixed. All evidence points to the fact that discretionary FuMA are growing, but outflows from other lines of business are offsetting some of the improvement and restructuring costs are weighing on profits.

Indeed, at the end of March, the company reported discretionary FuMA of £13.1bn, up 6.5% year-on-year, although overall FuMA increased just 1.3% to £24.1bn. This trend has continued, according to the firm’s latest trading update for the three months to the end of June 2019. At the end of the second quarter, FuMA totalled £24.4bn, up 1.2%. Investment performance of £0.9bn offset net outflows of £0.6bn.

Charles Stanley expects to incur £9.5m of restructuring costs over the next two to three years, which will weigh on profit growth this year. Analysts are expecting profits to remain flat at 16.2p per share, putting the stock on a forward P/E of 17 at the time of writing.

This could be a bit pricy for some investors. But if the firm’s restructuring does start to yield results, it could be a price worth paying.

The post £1K to invest? I’d buy this FTSE 100 income and growth champion today appeared first on The Twelfth Magpie.

More reading

• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

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.