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Many speculations are doing the rounds that the Chancellor of the Exchequer Rishi Sunak could introduce some reforms post the second lockdown to boost the UK’s economy. The second lockdown has exerted a substantial amount of pressure on the nation’s ailing economy. Earlier, the International Monetary Fund (IMF) had warned that the UK economy could contract by more than 10 per cent this year due to the coronavirus pandemic and other related issues. The IMF had suggested the government should check for increasing job redundancies and increase public spending. However, the Brexit deadline next month is expected to delay the anticipated reforms.
Whatever reforms are announced post lockdown 2.0, they are expected to revolve around protecting and creating jobs, tax cuts, investment in green energy and supporting the worst-hit sectors.
Let’s glance through the companies which might get some benefits with the post-lockdown reforms. Dividend seeking investors should keep an eye on them.
Also read: 10 hot penny stocks under the investor radar
- Persimmon Plc (LON: PSN)
The FTSE 100-listed housebuilder is expected to benefit if there is an extension of the temporary cut announced in the stamp duty for properties in England and Northern Ireland beyond March 2021. The stamp duty cut was announced in July to provide a boost to the ailing housing sector.
Despite the challenges due to the pandemic, Persimmon is well poised to perform robustly and deliver a good result for 2021. During the Q3 of 2021, average private weekly sales rates per site were up by around 38 per cent in comparison to the same quarter in 2019.
The company had a cash balance of £960 million on 31 October. The company paid an interim dividend of 40 pence per share in September. A further interim dividend of 70 pence per share will be paid in December. In a year’s time, PSN shares have delivered a price return of more than 17 per cent.
- Pennon Group Plc (LON:PNN)
FTSE 100-listed environmental infrastructure company Pennon Group is expected to benefit through green energy investment facilitated by the British government. The company’s net profit surged to £206.30 million in 2020 at a CAGR of 5.22 per cent over the course of four years. Pennon remains in a strong financial position with anticipated cash and committed facilities well over £3 billion as on 30 September.
Pennon Group has received £3.7 billion as net cash proceeds from the sale of Viridor business. The company shall continue to pursue growth opportunities within the UK water industry while returning attractive value to the shareholders. The total dividend stood at 43.77 pence per share in 2020, an increase of 6.6 per cent from last year. In a year’s time, PNN shares have delivered a price return of more than 10 per cent as of 20 November.
Also read: 5 FTSE dividend-paying stocks below 500p to consider for long-term investment
- Diageo Plc (LON: DGE)
FTSE 100-listed alcoholic beverage company Diageo Plc (LON:DGE) is set to benefit if there is an extension in VAT cuts. Chancellor Sunak announced vat cuts and the ‘Eat Out to Help Out’ scheme in July to entice Britons to support the ailing pubs and restaurant businesses.
The company has possessed a strong balance sheet and is strongly positioned with the recovery in consumer demand. The Board of the company had proposed a final dividend per share of 42.47 pence for this fiscal year. This brings the full-year dividend per share to 69.88 pence from 68.60 pence in FY19. Diageo delivered a solid cash flow with net cash from operating activities of £2.3 billion and free cash flow of £1.6 billion.
- Spirax-Sarco Engineering Plc (LON:SPX)
FTSE 100-listed industrial engineering group Spirax-Sarco Engineering is expected to benefit from green energy investment which may get a boost from the British government. The government aims to decarbonise public buildings and cut down on emissions. Notably, heating buildings contribute around 20 per cent to greenhouse gases emissions.
The company specialises in steam systems and other heating solutions and has maintained a strong balance sheet despite the economic fallout due to the pandemic. The company managed to pay its shareholders an interim dividend of 33.5 pence per share. In a year’s time, SPX shares have delivered a price return of more than 34.58 per cent.
- Ferguson Plc (LON: FERG)
Footsie listed plumbing and heating solutions provider Ferguson is expected to ride high on the green energy investment expected from the British government. From March, Ferguson delivered strong and resilient trading. The company continued to gain further market share in the US as the ongoing revenue was up by 2 per cent. The total dividend per share stood at 208.2 cents per share, which is in line with the previous year. In a year’s time, FERG shares have delivered a price return of more than 20 per cent.
