One of the FTSE 100’s best yields

British American Tobacco (LSE: BATS) is currently trading at a 30% discount from an all-time high, which makes it an extremely cheap share in my opinion. The company was crowned as one of the top 10 European dividend aristocrats, with a 7.5% yield. Consumer staples is one of the safest categories in which investors could invest during this uncertain time. Smoking is a habit that is hard to shake even in a pandemic, and so I believe that the need for tobacco will continue for smokers. The tobacco business typically benefits from its high margin of roughly 80%, which will protect its dividend over the long term. This is a deep value stock in my opinion. The interest rate will remain extremely low for the foreseeable future, and so this is a great opportunity for investors to unlock this incredible safe yield.

Best UK shares to buy now?

Moneysupermarket.com (LSE: MONY) is a market-leading price comparison website. It enables consumers to compare prices on a range of products, including energy, car insurance, home insurance, travel insurance, mortgages, credit cards and loans. I believe saving would be a top priority after the pandemic for many individuals. This business is somewhat countercyclical, where a weak economy might lead to more consumers looking to cut costs. And I think its market remains attractive over the long term. The stock is currently trading at a good discount, which presents a great opportunity to buy this cheap share now.

Housing demand surge

Rightmove (LSE: RMV) is the UK’s number one destination for home buyers and sellers, commands a 77% market share with more than 1 million properties advertised on its portal. Recently, the chancellor has announced a temporary holiday on stamp duty on the first £500,000 of all property sales in England and Northern Ireland. I believe there will be a surge in demand of buyers who would like to take advantage of this once-in-a-life-time opportunity. Its shares were quite expensive before the pandemic with high multiples. The stock is currently trading at roughly a 25% discount from its all-time high. I would pick up some cheap shares of this company before it rebounds. The company is the top dog in the sector, and its current share price offers a good entry point for long-term investment today.

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Ellen Leung has no position in any of the shares mentioned. The Motley Fool UK has recommended Moneysupermarket.com and Rightmove. 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.

Reckitt Benckiser

Reckitt Benckiser (LSE: RB) is a producer of health, hygiene and home products. Its cleaning and hygiene brands such as Dettol and Lysol are poised to have continuous demand. Reckitt Benckiser’s first quarter net revenue of £3.5bn was 13.3% higher than the same period last year.

The high demand for its health and hygiene products in the wake of the pandemic will last, I believe, as consumer behaviours are changing to maintain a high level of hygiene. Its product demand should hold despite the potential second outbreak of the coronavirus, and could be a good addition to your portfolio ahead of another market crash.

Just Eat Takeaway

The fear of a second wave of coronavirus (whether in the UK or elsewhere) will prevent us from going to restaurants as much as before. Even when restaurants re-open, footfall will be lower due to social distancing or health concerns. I think this will benefit Just Eat Takeaway.com (LSE: JET) as people will order takeaway instead, as we continue spend the majority of our time at home.

Just Eat is an international business with market penetration around the world. Over 40% of revenue is from outside the UK now, spreading across 13 countries across Europe, Asia, Oceania, and the Americas. With the recent announcement of its acquisition of US-based GrubHub, the resulting synergies and cost savings lay the path to profitability in my opinion. The combined company would gain pricing power and increase market share as being the biggest platform, with an abundance of restaurant choices.

Tritax Big Box

Tritax Big Box (LSE: BBOX) is a real estate investment trust investing in “Big Box” distribution centres. Its customers include large scale retailers such as Amazon, M&S, Tesco, Morrisons and DHL.

As ecommerce and online grocery shopping will likely be the norm going forward, Tritax Big Box is poised to have steady revenue going forward. The company’s customers are institutional-grade tenants on long-term leases (typically at least 12 years in length) with upward-only rent reviews.

Strong tenant demand and limited supply of very large logistics warehouses would provide significant opportunities for the company for years to come. Therefore, Tritax Big Box is a great defensive stock, thanks to its crucial role in the supply chain of major blue-chip companies and the strong ecommerce tailwind.

Market crash 2.0

A market crash sounds very negative to most, but savvy investors would take this as an opportunity of a lifetime to pick up some quality stocks at a discount. As Warren Buffett always says, you should be fearful when others are greedy and be greedy when others are fearful, so now is the opportunity to buy when others are selling off.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Ellen Leung has no position in any of the shares mentioned. The Motley Fool UK has recommended Just Eat Takeaway.com N.V., Tesco, and Tritax Big Box REIT. 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 Aston Martin share price could plummet without proven leadership

The departure of CEO Andy Palmer indicates the long-time failing leadership within the company, in my opinion. Even with the incoming CEO Tobias Moers from Mercedes, I don’t see a quick turnaround for a company that is slowly losing its brand appeal. Major shareholder Investindustrial Advisors Ltd also cut its stake in the company by nearly 5% to 14.99%.

On top of the Covid-19 crisis, the company was already suffering from the effect of the US-China trade war, with demand slumping from wealthy Chinese customers in 2019. The global automotive industry has undergone a tough year.

Murky earnings outlook

Aston Martin last month posted a big first-quarter loss after sales dropped by almost a third due to the impact of the coronavirus outbreak. The company has been experiencing a negative net profit in the last two years. With the ongoing impact of coronavirus and no end in sight, I would not bet on a near-term revenue increase, let alone earnings.

Additionally, a healthy balance sheet is more important than ever in this uncertain time. Aston Martin’s debt level has increased by double digits year-over-year, which is very concerning. The cash-strapped company had to raise £536m to increase liquidity to fund its short-term working capital needs. The funding comes from Canadian billionaire Lawrence Stroll, who took a 25% stake in the company. Meanwhile, it is also raising proceeds of £317 million by issuing new shares. This will dilute existing shareholder value, which isn’t exactly great.

My verdict

The stock might look very cheap on the surface to some. But when looking closely at its limited revenue growth with slumping global sales, especially in China, I don’t see the company having a very bright future ahead.

It is clear that Aston Martin had problems before the Covid-19 crisis, and that’s why its share price was hit so hard amid the pandemic-related sell-off. I think it is fair to say car manufacturers like Aston Martin will take a lot longer to recover, if it recovers at all. Therefore, I will stay away from the stock.

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Ellen Leung has no position in 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.

But with the recent pandemic, sales fell 3% to £2.6bn after it was forced to close the majority of its stores in mainland China in February. There were significant declines in store visitors that remained open and operated with reduced hours.

Burberry stock is currently trading at £14 at the time of this writing. This is 40% below its all-time high in January this year.

Burberry Group: going back to the fundamentals

The debt-to-equity ratio has also increased from 4.5% to 28% at the end of 2019. The good news is that it has £929 million in cash, which is well above its debt level. Burberry Group has cancelled its final dividend payment this year to shore up cash as sales plunged 27% in its fourth quarter. And there will be significant pressure on the luxury consumer for months ahead.

There are some metrics we can look at to assess whether Burberry can resume its dividend payments in the future. If you are an income investor and want to buy Burberry Group for its dividend, you should always find out whether its dividend is reliable and sustainable. There is no point in buying a stock if its dividend is regularly being cut or is not reliable. Therefore, we should always check whether the company’s earning is growing since dividends are typically paid from company’s earnings. Burberry has had a steady growth of 3.4% earnings per share in the past five years on average, which is in line with the industry norm.

The payout ratio

We should also pay attention to the payout ratios, which indicates how much dividends are being paid out from its earnings. Burberry Group paid out 49% of its profit as dividends last year. This is a medium payout level that leaves enough capital to reinvest back into the business for future growth. It also leaves room for future increases of dividends payout.

Growing dividend

One other important metric to look at is its historical dividend growth rate. Burberry Group has delivered an average of 13% increase annually in its dividend in the past ten years. This is a good indication of potential future dividend growth as we can see while earnings are growing, the company is rewarding its shareholders accordingly.

Buy the dip

Has Burberry Group got what it takes to resume its dividend payments? Earnings per share have been growing moderately in the past five years, and Burberry’s payout ratio was less than half its earnings. This suggests the company is investing in growth. Burberry is an iconic and internationally recognised brand with loyal customers especially in Asia. Burberry Group’s revenue and profit margin will suffer in the short term. But when the pandemic is over and retail operations are back to normal, I believe it will reinstate its dividends.

Now presents the opportunity to buy retail shares while the company is still trading at a good discount from its all-time high. Retailers will benefit from pent-up demand after months of lockdown and shoppers will be excited to return to stores as long as there are appropriate social distancing measures and hygiene practices in place. Furthermore, over 40% of Burberry Group’s revenue generates from Asia-Pacific region. Recent news indicates that China’s economic recovery is showing signs of improvement, which is great news for the company and shareholders.

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Ellen Leung has no position in any of the shares mentioned. . The Motley Fool UK has recommended Burberry. 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.