The stock market recovery appears to be happening. And I’ve been buying stocks selectively.
Resilient demand
For example, I’m keen on soft drinks provider Britvic (LSE: BVIC). In July, the company posted its third-quarter trading statement covering the period to 30 June. And the headline read: “On track to deliver a full-year performance in line with expectations”.
City analysts expect earnings to rebound by around 36% in the current trading year to September. And they predict an uplift the following year of almost 7%. However, Britvic suffered declining earnings from 2019 to 2021. The pandemic wasn’t kind to the business. And there’s some risk earnings could be lumpy in the future.
However, chief executive Simon Litherland said the year-on-year performance in the quarter “reflects continued resilient demand”. He acknowledged the uncertain economic environment could “weigh on consumer confidence”. But he asserted that soft drinks is a “resilient” category. And he was “confident” Britvic will perform in line with market expectations.
With the share price near 849p, the forward-looking dividend yield is around 3.7% for the trading year to September 2023. It’s possible for any business to miss its estimates if trading deteriorates. However, I find the yield attractive and would aim to hold the stock for the long haul.
Record order book and profits
I’m also drawn to groundworks and geotechnical specialist contractor Keller (LSE: KLR). At the beginning of August, the company released a robust set of half-year numbers and a positive outlook statement.
Chief executive Michael Speakman said he has “confidence” the business will deliver on expectations for the full year and in the long term. And his optimism is underpinned by “record” profits and a 22% uplift in the order book on a constant currency basis.
City analysts predict single-digit percentage increases in the shareholder dividend for 2022 and 2023. And with the share price near 761p, the forward-looking yield is just above 5%. I reckon that’s a decent yield from a business with a multi-year record of consistent dividend payments. And that record, plus a number of new contract wins, is prompting me to set aside my concerns about any cyclicality in the business.
Strong liquidity and capital
I like the look of Investec (LSE: INVP), which provides international banking, investment and wealth management services in South Africa and the UK.
In May, the company delivered a strong set of full-year results. Chief executive Fani Titi said adjusted earnings came in at “the top end” of previous guidance at just above 55p per share. And that was ahead of pre-Covid levels.
Titi reckons Investec has “strong” liquidity and capital to support growth. And the business is “well positioned” to handle the uncertain outlook caused by inflation.Â
City analysts expect a single-digit rise in the dividend for the current trading year to March 2023. And they predict a 14% rise the following year. So with the share price near 450p, the forward-looking dividend yield is running above 6%.
Financial companies like this can suffer from cyclicality of earnings. But there are no sign of weakness ahead and I’m attracted to that chunky yield.