Sunday's free share tips on UK-Analyst.com are from Scarlett Moore of ShareCrazy.com
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Two High Yielders An exclusive tip from Scarlett Moore of Sharecrazy's Premium Service With bank interest rates still at rock bottom and many shares continuing to trade near their all time lows I thought it would be a good time to take a look at some of the highest yielding, quality stocks trading in London. Here are two of my favourites as the free share tips for today.
Buy British American Tobacco at 2,166p Although not the most ethical investment in the world British American Tobacco is a solid performing stock, which had steadily increased its dividend payment since God were a lad. The shares have also been on an uptrend for the past ten years. For those who are not familiar, the firm is a fully integrated tobacco seller, taking care of all parts of the production process from growing the tobacco through to marketing and selling. The company has a presence in over 180 countries and sells over 250 brands, the most popular of which include Lucky Strike, Pall Mall, Dunhill and Kent. Results just released for the six months to 30th June 2010 showed another positive set of figures. Revenues grew by 8% to £7.3 billion in the period as a result of good pricing momentum, favourable exchange rate movements and contributions from the 2009 acquisition of cigarette maker Bentoel. Adjusted operating profits were up by 14% at 2.46 billion pounds, with earnings up 13% at 87.1p. Shareholders were rewarded with an impressive 91% hike in the interim dividend to 33.2p. The firm remained financially secure, with net interest costs covered almost ten times by operating profits. Group volumes for the half were 348 billion cigarettes, in line with 2009 mainly as a result of the acquisition of Bentoel, but offset by market size declines and an increase in illegal trading in some markets. Market share of the group's top 40 territories increased but, excluding the benefits of the Bentoel acquisition, volumes were down 3% on last year as a result of industry volume declines in some markets, mainly Romania, Turkey, Japan and Pakistan. The market is looking for earnings of around 176p for the full year and a total dividend of 114p. On that basis the shares trade on a multiple of 12.3 times and yield 5.26%. For such a strong company which has an excellent track record the shares still look cheap. BUY.
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Buy Tesco at 400.2p Like British American Tobacco, Tesco has a share price chart which shows continuous long-term appreciation. Only people who have lived on the moon (where Tesco will probably have a store one day) will not know what the company does but for the sake of completeness... ...Tesco is the largest supermarket group in the UK by market share and also has a rapidly growing international presence. Starting off life as a grocery stall in the East End of London the firm now has almost 2,500 stores in the UK and also operates in 14 other markets worldwide, including the US, China and Japan. In the year to 27th February 2010 the retail giant posted sales of 62.54 billion pounds, up by 6.8% on the previous year. Pre-tax profits were up by 10.4% at 3.18 billion pounds and the dividend for the year was hiked by 9.1% to 13.05p. Tesco had net debt of 7.9 billion pounds at the period end but net interest payments were comfortably covered - 11 times by operating profits. The company's most recent trading statement was for the 13 weeks to 30th May 2010 and reported that total group sales had risen by 8.2% and by 6.9% excluding petrol. Growth continued to be good in the international operations where sales increased by 11.9% at actual exchange rates, excluding petrol. Sales grew by 15.4% in Asia and by 7.3% in Europe. On a like-for-like basis however sales were said to be steady compared with the previous quarter and was broadly flat overall - slightly negative in Asia and slightly positive in Europe. In the UK sales grew faster than the industry as a whole, including including VAT and petrol being up by 6.5%. Excluding petrol UK like-for-like growth was 1.1%. I believe that the company should continue to do well, with the international expansion continuing to drive growth and the UK providing a solid base. Not to say that there aren't growth opportunities in the UK either, and the company should do well from expected food price inflation. Analysts are looking for earnings of around 33p in the year to February 2011 and a dividend of just over 14p. On a multiple of 12.2 times and a dividend of 3.5% the shares should be snapped up. BUY.
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