The good news is there’s a lot of optimism out there for 2025. Trading and investing platform eToro recently surveyed 10,000 retail investors from 12 countries. Around 59% believe the bull market will continue next year.

Modest UK valuations

Nevertheless, analyst Sam North from eToro said high retail investor sentiment sometimes leads to a market pullback. However, US stocks often perform well when a new President starts.

I reckon American investors tend to be enthusiastic much of the time, which leads to some of the high company valuations often seen across the pond. The survey revealed optimism about some of the popular names such as Tesla, Apple, Amazon, Nvidia and others.

Here in the UK, I’d argue we tend to be more reserved with a stronger focus on valuation. Meanwhile, all the general economic challenges and shocks of the past few years have left many UK companies looking cheaper than their US peers. 

My guess is that general sentiment in the UK may be less optimistic than eToro’s survey suggests. But for investors with a long-term mindset, such a situation can be an opportunity to find decent value in the stock market.

Sometimes it can pay to adopt a bit of a contrarian mindset. When valuations have been beaten down, any positive company or general economic news ahead can ignite share prices. So I reckon there’s a fair chance of a bull market for UK shares through 2025.

I’ve been preparing by working hard on my watchlist and buying shares now for my stocks and shares ISA. For example, I’m attracted to Billington Holdings (LSE: BILN). The company looks like it’s been unloved and out of favour with investors for some time, resulting in a low valuation.

Ahead of expectations

However, in December, the structural steel and construction safety solutions specialist released a positive trading update. The directors upgraded the profit forecast and said the full-year results for 2024 will be ahead of previous expectations.

The announcement moved the share price higher and it’s possible the business may drive further gains ahead for shareholders.

Chief executive Mark Smith said the firm has a “solid” order book and a “very healthy” pipeline of future opportunities that are close to conversion. 

Meanwhile, with the stock in the ballpark of 499p, the forward-looking price-to-earnings (P/E) ratio’s around nine for 2025. I think that valuation looks undemanding when the outlook for the business is so optimistic.

However, although the company has a strong-looking balance sheet it operates in a cyclical sector. So there’s a risk of volatility in the business ahead for long-term shareholders. It’s also a small company with a market capitalisation of just £65m or so, suggesting even more uncertainty.

Nevertheless, I see the stock as well worth investors’ further research and consideration time now as a potential investment for 2025 and beyond.

The post How I’m preparing my ISA for the great stocks and shares bull market of 2025  appeared first on The Twelfth Magpie.

This is no easy feat but it’s possible. And if a Fool like me can dream it, anybody can. To do so, I’d need to harness the magic of compound returns, combined with a large initial investment and monthly contributions to a portfolio of winning stocks.

How?

The average UK investor can expect 7.5% returns with a 5.5% average dividend yield. If I invest an initial £10,000 in this portfolio and add £300 a month, it could reach around £400,000 in 20 years, paying annual dividends above £18,000 a year – almost £50 per day.

Of course, it’s not guaranteed and I could lose money as well as make it. There are also some steps I’d need to take to achieve my goal.

Death and taxes?

First, I’d need to find the most cost-effective way to invest in stocks. Benjamin Franklin once famously stated that “nothing is certain, except death and taxes”. Well, I dispute that claim.

For UK citizens, a Stocks and Shares ISA allows up to £20k a year of investments in all kinds of assets and the capital gains are tax-free. So I’d start by opening one.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Don’t cry, diversify!

So now all I’d need to do is throw all my cash in the highest-paying dividend stock, right?

Wrong. All my money in one basket is a recipe for disaster. If it fails, the dream ends. I’d need to spread my investment over a range of shares in different industries so no single failure would hit me hard.

There isn’t space to name every good stock here are two. 

A defensive construction stock

One small-cap AIM stock that’s been doing well recently is Billington (LSE:BILN), a structural steel and construction specialist based in Barnsley. Revenue is up 53% this past year and it doubled its earnings per share (EPS) and dividends. It pays a handsome 5.6% yield following efficiency improvements that boosted margins.

But the good times won’t necessarily last. The UK steel market is expected to fall 5% this year, reducing Billington’s revenue and pre-tax profit forecasts. Still, future return on equity (ROE) is forecast to be 12.7% in three years – ahead of the 11% industry average. Long-term I think its prospects are good, and dividends will help cover any short-term dips.

A riskier high-yield stock

As an alternative, I’d choose a few large-cap FTSE 100 stocks like Legal & General (LSE:LGEN). An even more powerful and consistent dividend payer, it boasts an 8.2% yield and a strong track record of increasing it. Annual payments are up from 9.3p in 2014 to 20.3p today. Recently, however, EPS has dipped to only 7.4p, resulting in limited dividend coverage. With a payout ratio of 277%, earnings will need to improve if Legal & General hopes to keep paying its high dividend.

Consensus from several analysts expects earnings to increase to £1.7bn by 2026, up from £435m earlier this year. Historically, the company has managed to cover its dividend payments so I’m fairly confident this will continue.

Mixing up some risky value stocks and some reliable growth stocks would help to keep me on an even keel as I navigate the economic tides.

The post An extra £50 every night while sleeping? It’s possible with dividend stocks! appeared first on The Twelfth Magpie.

Here are three such dividend-paying penny stocks that I’m planning to buy in the weeks ahead. While their dividends aren’t guaranteed, I’m reassured by how well-covered each prospective payout appears.

Riding the wave of global trade

Near the top of my buy list right now is leading international shipbroker Braemar (LSE: BMS).

A shipbroker acts as a specialist intermediary between shipowners and charterers that need to transport cargo. And Braemar operates across all time zones and major shipping hubs, including Shanghai, Singapore, Mumbai, and Sao Paulo.

As well as chartering though, the firm provides expert advice in investment and risk management. So its offerings are well diversified, making its income less cyclical.

In a trading update back in March, the company announced it had achieved record revenue and profitability for the financial year ended 28 February. The shipbroker expects underlying profit of at least £20m from revenue of £150m.  

That would put the stock on a bargain price-to-earnings (P/E) multiple of about six. The shares offer a dividend yield of 4.1%. The payout is healthily covered three times by anticipated earnings.

One risk worth considering is that the shipping sector will need decarbonising, which will cost billions. But Braemar also runs a carbon offsetting brokerage service, so looks very well positioned.

Solid foundations

Another penny stock offering solid income prospects is Billington Holdings (LSE: BILN). This is one of the UK’s leading structural steelwork specialists.

The company has successfully targeted higher-growth areas to supply steel to. These range from movie studios (such as Shepperton Studios) to data centres, e-commerce warehouses, and renewable energy projects.

Now, obviously there is weakness in the construction industry at the moment. But management just announced that current trading remains in line with market expectations.

As a result, brokers are still anticipating a 30% jump in sales to reach £115m this year. Meanwhile, profits are pegged to rise to £8m, underpinning a dividend per share of 20p (from 15.5p last year).

Importantly, this payout is expected to be covered 2.5 times by earnings. This is in line with the responsible dividend coverage the firm has provided in recent years.

The forward dividend yield stands at 5%.

The pawn industry

Finally, I’m highlighting Ramsdens Holdings (LSE: RFX). This is a North Yorkshire-based pawnbroker with a significant foreign currency exchange operation.

The company has 158 stores across the UK (excluding two franchised stores) and plans to open another six in the second half of this year. It also has a growing online presence.

In its interim results for the six months to 31 March, gross revenue increased by 33% year on year, reaching £39m. Meanwhile, profit before tax soared by 68% to £3.7m.

Given this strong performance, the interim dividend was boosted 22% to 3.3p per share. The stock yields 3.5% and the payout is covered 2.3 times by historic earnings. The forward P/E of 11 seems great value.

A looming recession could threaten the growth of the jewellery selling side. But due to the unfortunate cost-of-living crisis, I see overall business remaining robust.

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Over five years, the share price is ‘only’ up 43.5%, as there was a setback during the pandemic. But barring a cancellation in 2019, there have also been cash dividends along the way. So this has largely been a very solid investment in recent times.

Bu what about the future? Well, I think there could further gains ahead. Here’s why.

Made of steel

Founded 76 years ago, Barnsley-based Billington is today one of the UK’s leading structural steel and construction solutions specialists.

The £51m-capitalised group turns raw steel into finished products, from simple structures to the most complex, which are then used by top contractors across the UK. Specialist lines of business include protective coatings, hoardings, safety barriers, and steel staircases.

Understandably, Covid impacted the company’s revenue and profits. There were project delays and supply chain issues, as well as cost pressures exacerbated by the conflict in Ukraine.

But the company has deftly navigated these issues, as seen in its FY22 results (year ending 31 December). Revenue rose 4.7% year on year to £86.6m, while profits soared more than fourfold from £1.3m to £5.8m. And its operating margin climbed to 6.8%, which is higher than previous years.

This flowed through to a fivefold increase in the dividend, which was raised from 3p to 15.5p. It was the highest declared dividend in the company’s history.

Management said: “We anticipate a further improvement in performance during 2023. Beyond the current year the market is more unpredictable. However, Billington has emerged from the pandemic as a stronger and more efficient business, which continues to be supported by a healthy balance sheet“.

Bright future

CEO Mark Smith is targeting more complex projects such as large warehouses, data centres, and stadiums. It’s also supplying steel to the booming UK film and TV studios industry.

According to consultancy firm Knight Frank, this sector will need an additional 6m square feet of production space by 2026 to meet rising demand from the likes of Netflix and Amazon.

As a result, the company has a strong order book for 2023, and is seeing opportunities in high-growth areas like renewable energy infrastructure and ‘gigafactories’ for electric vehicle batteries.

Of course, steel prices can be volatile, potentially impacting the firm’s profits, though the company does stockpile if necessary and employs various price hedging strategies.

And despite the cloudy economic forecast for the UK economy, brokers still expect a 30% increase in sales this year. Plus, they see profits soaring to between £7m and £8m. As for the dividend, there’s a massive hike to 20p penciled in.

Good value

The stock has a forward-looking price-to-earnings (P/E) ratio of eight, which screams value to me. It also carries a forward dividend yield of 4.9%, with the potential payout well covered 2.5 times by earnings.

Overall then, this is a well-run business supplying many high-growth sectors of the UK economy. The shares look cheap and the dividend promises a decent income stream.

If I had cash to invest this month, I’d buy Billington shares.

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