The rise of value retailing has been stratospheric in the UK. Since 2011, discount supermarkets Aldi and Lidl have grown their collective take of the domestic grocery scene almost 10%. Their combined market share currently stands at 14.3%, according to Kantar Worldpanel, and it’s likely to keep growing as shoppers continue to demand more bang for their buck.
It’s a consumer theme which makes B&M European Value Retail (LSE: BME) a top FTSE 100 share to buy right now.
A lack of an online shopping channel might see the business lose out to its competitors as e-commerce takes off. But I think the FTSE 100 firm’s low prices and store expansion programme should still make it a winner with British shoppers and generate terrific profits growth ahead. B&M is looking to add 45 new stores to its estate in the current fiscal year alone, taking the tally to just below 1,150.
8% dividend yields!
The UK housing market is having a mini wobble following the first steps to remove the Stamp Duty holiday. According to Rightmove, average asking prices fell in July as rampant homebuyer demand cooled sharply. Further monthly reversals are something investors in housebuilding shares like Persimmon (LSE: PSN) need to be prepared for. But I still believe this FTSE 100 share and its industry peers remain top buys.
I expect home prices to regain their momentum following this recent dip as the Help to Buy equity loan scheme remains in place, while ultra-low Bank of England interest rates look poised to persevere.
Meanwhile, Britain’s lenders are locked in an intensifying mortgage rate war that’s also boosting homebuyer affordability. I expect demand to continue outpacing homes supply for a long time yet. And so Persimmon should still be able to charge top dollar for its product, generating decent profits for its shareholders.
A couple of other things. At current prices, Persimmon trades on a forward price-to-earnings growth (PEG) ratio of 0.9. A reading below 1 suggests a stock could be undervalued by the market.
The FTSE 100 builder also carries a sector-bashing dividend yield north of 8% for this year. I think this kind of value is hard to ignore.
Another great FTSE 100 dividend stock
Monster dividend yields also make GlaxoSmithKline (LSE: GSK) a FTSE 100 share that’s too good to miss, in my book. City brokers expect the UK healthcare stock to pay another 80p per share annual dividend in 2021. Therefore, the yield here sits at a mighty 5.2%, far higher than the rough-3% average for the broader FTSE 100.
There’s a lot I like about Glaxo. Sure, the business of drugs production can be plagued with trouble that can cause costs to spiral and product launches to be delayed, or abandoned altogether. But this particular pharma play has a terrific record on this front, hence its lofty position on the FTSE 100.
The essential nature of its products gives it excellent earnings visibility, and thus the confidence to pay big dividends to its shareholders. And the company is focussing on fast-growing therapy areas like HIV, oncology and vaccines to really light a fire under profits growth.