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I feel now’s an excellent time to purchase FTSE 100 revenue shares, as so many look low-cost right this moment. At this time, I’m concentrating on corporations which have proven they’re eager to reward loyal shareholders by rising their dividends yr after yr.
Gross sales and advertising and marketing agency DCC (LSE: DCC) might not spring out as a FTSE 100 dividend hero, with a trailing yield of simply 3.53%. Nonetheless, it’s a real Dividend Aristocrat, having hiked shareholder payouts for every of the final 19 years.
Dividend heroes
AJ Bell just lately calculated that DCC had hiked its dividend by a median of 10.8% yearly for the final decade. Now could possibly be time for me to purchase into this revenue stream. The DCC share worth fell 4.42% final week, lowering its valuation to only 11.9 occasions earnings. Over one yr, it’s up a stable 18.08%.
DCC is a tough firm to classify because it affords advertising and marketing companies to world companies and can also be one of many largest bottled fuel suppliers on this planet. Some will see this as helpful diversification. Others as a distraction.
Retirement increase
Revenues recovered sharply after the pandemic, boosted by the vitality shock, however have slowed as fuel costs ease, as this chart exhibits.
Chart by TradingView
But on the identical time, the inventory has been getting dramatically cheaper, as measured by its price-to-book ratio. Take a look at this chart.
Chart by TradingView
Final month, JPMorgan Cazenove went ‘overweight’ on the inventory and set a 6,700p worth goal. That’s nearly 25% greater than right this moment’s 5,405p. It stated DCC ought to profit from the rising European photo voltaic set up market and rising gross sales in its healthcare section. I’ll purchase it when I’ve the money.
I’d prefer to match it with FTSE 100 distribution and outsourcing group Bunzl (LSE: BNZL). It’s additionally a Dividend Aristocrat whose low 2.21% yield masks the truth that it has hiked payouts for twenty-four consecutive years.
The shares have placed on present currently, rising 12.9% over one yr and 48.05% over 5.
Final month, Bunzl stated first-half revenues fell 3% to 4%, largely as a consequence of change price swings, however would decide up within the second half. This chart exhibits a slowdown, however the long-term image is encouraging, for my part.
Chart by TradingView
The board forecasts sturdy margin development this yr, boosted by its relentless acquisition drive (it’s spent £600m this yr and counting).
Its two current purchases, Brazilian medical system distributor RCL Implantes and Canadian hygiene merchandise specialist Clear Spot, point out Bunzl’s world attain and vary.
Bunzl is reasonable by its requirements, buying and selling at 16.12 occasions earnings. The value-to-book ratio has been sliding too, as this chart exhibits.
Chart by TradingView
I feel now seems like time so as to add Bunzl to my retirement portfolio too. I’ll reinvest all my dividends right this moment and begin drawing them as revenue in some unspecified time in the future after I retire.
