Two FTSE 100 Dividend Stocks Worth To Watch: BNZL, ADM

  • Aug 28, 2019 BST
  • Team Kalkine
Two FTSE 100 Dividend Stocks Worth To Watch: BNZL, ADM

Bunzl PLC

Bunzl PLC (BNZL) is a London, United Kingdom-headquartered specialist multinational distribution company, which is engaged in supporting businesses by distributing non-food consumable products to various markets in 31 countries. The group offers customised solutions to B2B customers to help increase efficiency and improve the competitiveness of its customers. The operations of the group are differentiated in four operating segments, namely North America, Continental Europe, UK & Ireland, and Rest of the World.

Recent News

The company declared a half-yearly dividend of 15.5 pence per share, which is payable on 2nd January 2020. The beneficiaries will also have an option to reinvest dividend for cumulative growth under DRP (Dividend reinvestment plan).

Key Financial Highlights (H1 FY 2019, in £m)

Reflecting the benefits of acquisitions and underlying organic growth of 0.8 per cent, revenue of the company rose to £4,528.4 million (2018 H1: £4,343.7 million), up by 4.3 per cent at actual exchange rates and 1.2 per cent at constant exchange rates. On an IAS 16 basis, operating profit was £239.0 million and adjusted operating profit was £302.7 million in H1 FY 2019. On an IAS 17 basis, operating profit was £228.1 million, which indicated an increase of 5.7 per cent at constant exchange rates (up by 8.2 per cent at actual exchange rates), while adjusted operating profit increased to £291.8 million, an increase of 0.3 per cent at constant exchange rates (up by 2.4 per cent at actual exchange rates). On an IAS 16 basis, profit before income tax was £200.5 million and adjusted profit before income tax was £264.2 million. Due to the growth in adjusted operating profit and the reduction in net finance expense, adjusted profit before income tax rose by 0.8 per cent at constant exchange rates (up by 2.7 per cent at actual exchange rates) on an IAS 17 basis to £264.9 million (2018 H1: £257.9 million), while profit before income tax (IAS 17) was reported at £201.2 million (2018 H1: £197.3 million), up by 1.97 per cent at actual exchange rates). On an IAS 17 basis, profit after tax increased by 2.3 per cent at constant exchange rates (up 4.4 per cent at actual exchange rates) to £155.7 million, while adjusted profit after tax was £201.9 million (2018 H1: £196.4 million), up by 0.8 per cent at constant exchange rates (up by 2.8 per cent at actual exchange rates). Keeping in line with the growth in adjusted earnings per share, the interim dividend was increased by 2.0 per cent to 15.5 pence from 15.2 pence in H1 FY2018.

Due to continued slowdown in industrial and construction sectors, especially in hospitality and healthcare, revenue during the period in the UK and Ireland declined, with a significant reduction in the adjusted operating profits. However, despite an increase in the operating costs, operating margin remained resilient, and the company reported good underlying organic revenue growth in continental Europe. As the company generates 88% of the revenue from outside the UK, it is well insulated against potential disruptions after Brexit and stands to gain from a depreciation of the Sterling. According to some market experts, foodservice market in the UK has been driven by increasing numbers of transactions, and Bunzl is poised to benefit from the positive outlook for the foodservice industry in the UK as it provides food packaging, disposable tableware and catering products.

Bunzl PLC Share price performance

On 28 August 2019, at the time of writing (before the market close, at 10:43 AM GMT), Bunzl PLC shares were trading at GBX 2,019.00, down by 0.39 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 2,554.60 /GBX 1,966.50. Stock’s average traded volume for 5 days was 981,164.80; 30 days – 858,395.27 and 90 days – 1,004,451.59. The company’s stock beta as of date was 0.76, which means the stock is less volatile as compared with the benchmark index. At the time of writing, the company’s market capitalisation was recorded at around £6.79 billion.

In the past 3 months, BNZL shares have delivered a negative return of 3.01 per cent. From the beginning of the year to till date, the company’s stock plunged by 14.44 per cent. In the past year, the company’s stock has delivered a negative return of 13 per cent. 

The company has been consistent in paying dividends to investors. In the recent years, the company’s maximum dividend yield has been of 2.79 per cent (FY12), while its minimum dividend yield has been of 1.99 per cent (FY16). The mean annual dividend yield was around 2.19 per cent in the past seven years.

Admiral Group PLC

Admiral Group PLC (ADM) is a Cardiff, United Kingdom-headquarters company that offers motor insurance and household insurance. It offers insurance products for car, multi-car, home, van and travel. It also offers personal loans, short-term insurance policies, car finance and price comparison services. It has operations in the UK, Canada, Mexico, Italy, Spain, Turkey, France, India, and the US. Its price comparison websites are confused.com; compare.com; Rastreator.com. The group has differentiated its operations in four operating segments, namely, UK Insurance, International Car Insurance, Comparison and Others.

Financial Highlights (H1 FY 2019, £m)

In the H1 FY19, Customer numbers were up by 8% at 6.74 million (30 June 2018: 6.23 million), and turnover was up by 6% to GBP 1.76 billion (H1 2018: GBP 1.66 billion), indicating continued growth. UK insurance customer numbers reached 5.32 million during the reported period (30 June 2018: 5.07 million) and recorded modest growth in turnover to GBP 1.34 billion (H1 2018: GBP 1.32 billion), while international car insurance customers grew by 21% year over year to 1.36 million customers. Net insurance premium revenue grew to GBP 349.2 million from GBP 323.7 million in H1 2018, helping to post group net revenue of GBP 647.1 million, against GBP 598.1 million in the prior year. Even as total expenses increased to GBP 422.7 million, operating profit rose to GBP 224.4 million from GBP 216.3 million in the corresponding period last year. Statutory profit before tax grew by 4% to GBP 218.2 million (H1 2018: GBP 210.7 million), and group share of pre-tax profits was GBP 220.2 million (H1 2018: GBP 211.7 million), reporting an increase of 4%. Profit after tax was GBP 181.2 million and resulted in earnings per share of 63 pence, reflecting an increase of 2% from the year-ago period. UK Household result improved in the first half to report a profit of GBP 4.2 million (H1 2018: loss of GBP 1.9 million) and losses in International Insurance businesses amounted to GBP 2.7 million (GBP 0.6 million loss in H1 2018). Driven by growth in European profits and other price comparison sites, Comparison result improved by GBP 3.9 million to GBP 7.4 million. The company declared a special dividend of 21.2 pence per share in addition to a normal dividend of 41.8 pence per share, which totalled to interim dividend of 63.0 pence per share. The interim dividend was higher by 5% over the year and represented a pay-out ratio of 100% of earnings per share.

The insurance group was harder hit than rivals by changes to the rules which governs how much claimants who are seriously injured in car accidents should receive, known as Ogden rate. The group had to recognise a GBP 33 million hit and warned that the total impact could be as much as GBP 60 million. Also, growth in UK customer numbers was lower, and claims costs rose by 5 per cent in a year. This reflected a more complex nature of car repairs, rising labour costs and expensive car parts. Moreover, the competitive position of the group had been impacted due to the increase in prices. Also, the US business continued to struggle, leading to increased pressure on the domestic business to offset it.

Share price performance

On 28 August 2019, at the time of writing (before the market close, at 3.40 pm GMT), Admiral Group PLC shares were trading at GBX 2,151.00, down by 0.64 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 2,300.00 /GBX 1,886.38. Stock’s average traded volume for 5 days was 768,119.40; 30 days – 712,844.83 and 90 days – 706,463.07. The company’s stock beta as on date was 0.49, which means the company was less volatile as compared with the benchmark index. At the time of writing, the company’s market capitalisation was recorded at £6.26 billion.

In the past 3 months, ADM shares have delivered a positive return of 5.66 per cent. From the beginning of the year to till date, the company’s stock surged by 5.76 per cent. In the past year, the company’s stock has delivered a positive return of 5.15 per cent. 

The company has been consistent in paying dividends to investors. In the recent years, the company’s maximum dividend yield has been of 4.42 per cent (FY18), while its minimum dividend yield has been of 2.97 per cent (FY16). The mean annual dividend yield was around 3.93 per cent in the past seven years.

Comparative chart of Bunzl PLC and Admiral Group PLC with FTSE 100

(Source: Thomson Reuters)

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