With December just around the corner, many ISA investors have one eye on 2020 and the other on stocks which are set to pay big dividends. One share with the wind in its sails right now is TBC Bank Group (LSE: TBCG) and I expect this to remain the case not just next year but well into the next decade.
The financial giant is riding on the back of the booming Georgian economy and third-quarter results released this month showed net profits surge 18% year-on-year to 126.8 Georgian Lari, while its loan book increasing more than 21% in the period.
In 2020, City analysts expect TBC Bank to record a 12% earnings increase, one which leads to predictions of more meaty dividend growth too and therefore a 6.6% dividend yield.
Although TBC’s share price has dropped 20% in value since the turn of January, I think market makers are missing a trick here. Indeed, with the business trading on a forward P/E ratio of just 4.6 times, I reckon now is a great time for long-term investors to buy shares in the business.
The property play
I certainly wouldn’t encourage share pickers to go dip buying over at Town Centre Securities (LSE: TOWN) though. The property investment play has seen its share price erode 11% since the start of 2019 as retail conditions in the UK have steadily worsened. Recent data also shows there’s still plenty to be worried about as we enter the new year.
Figures this week from the Centre for Retail Research showed just how crumpled consumer spending activity, high business rates and the e-commerce phenomenon are hammering bricks-and-mortar retailers.
This showed high street chains (with 10 or more stores) had closed a whopping 5,834 of their premises so far in 2019, up an eye-popping 77% on the whole of last year.
Bad to worse?
Town Centre Securities has been reducing the number of retail assets on its books but it still has exposure of around 50% to the Retail and Leisure sectors. And naturally, this is still playing havoc with the AIM company’s bottom line — pre-tax profits (on an EPRA basis) fell 8% in the fiscal year to June, to £6.4m, due to fresh numbers of traders either entering administration or filing company voluntary arrangements.
I’m pretty fearful over what Town Centre Securities’s half-year report will throw up in February given that key retail gauges for the large part have worsened considerably since the summer.
Right now the business trades on a forward P/E ratio of 18 times, a reading I feel fails to reflect the high chance of City brokers slashing their earnings forecasts in the lead up to the results and in the aftermath (the current 1% drop forecast for fiscal 2020 certainly looks more than a tad optimistic, in my opinion).
Given the strong possibility of another share price hammering in 2020 then, not even Town Securities’s forward dividend yield of 5.5% — one which smashes the UK mid-cap average of 3.3% to splinters — is enough to tempt me to buy.
Unlike TBC Bank, I reckon this is a share which all ISA investors should avoid like the plague.