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- Retail sector has delivered a resilient performance in the last one year.
- The good run is expected to continue to paradigm shift in consumer behaviour.
- Investors seeking moderate risk and return could consider these stocks.
Investing in a specific basket of securities could lead to a targeted result. Retailers both essential and general have seen mixed results last year due to onslaught of pandemic. Though most of the retail chains have benefitted from the pandemic led lockdowns.
Dividend stocks, which are the preferred choice for investors seeking passive income, are back in demand amid stable market recovery fuelled by the vaccine developments. The world still has a significant number of coronavirus active cases with new mutated variants of the awful virus. Hence, there is a need of ultra- prudent approach while making investment decisions.
Retail sector has been far more resilient in contrast to other sectors and experts believe it could be an ideal starting point for conservative investors. In this article, we would put our lens through 5 retail dividend paying stocks that are expected to do well this year.
(Data Source: Refinitiv)
- Kingfisher Plc (LON: KGF)
European DIY home-improvements company Kingfisher seems to be expanding despite the closure of bricks-and-mortar retail stores in the wake of coronavirus pandemic. Last week, the DIY household goods retailer posted a pretax profit of £756 million for the year 2021. Driven by online sales, Kingfisher’s revenue rose by over 7 per cent year on year to £12.34 billion in 2021 exceeding market projections. The company paid a full-year dividend of 8.25 pence per share for 2021.
The FTSE 100-listed DIY retailer has had an amazing start to the fiscal year 2022 as it recorded 24 per cent surge in sales on a like-for-like basis during the first quarter of 2022. The coronavirus pandemic fuelled the demand for DIY goods and Kingfisher grabbed the opportunity with both hands. B&Q and Screwfix, its popular brands, delivered resilient results amid strong demand for home improvement ideas and products.
- Domino's Pizza Group Plc (LON: DOM)
UK-based pizza retailer Domino's Pizza Group announced opening of additional 200 new stores after a solid performance during the coronavirus pandemic. Trading improved as people treated themselves with takeaway orders during pandemic led lockdown restrictions. The fast-food company strives for achieving £1.6-1.9 billion worth total system sales each year.
The fast-food retailer managed to reduce its net debt by 26 per cent and achieved system sales of £1.3 billion that were up by 10 per cent year-on year during 2020. Dominos announced a total dividend of 9.1 pence per share for the fiscal year 2020. The leading pizza chain is expected to launch a share buyback programme valued up to £45 million, as per a separate announcement.
- Games Workshop Group Plc (LON: GAW)
FTSE 250-listed wargames manufacturer and retailer Games Workshop Group delivered resilient performance during the first half of 2021. The company carried the momentum into the third quarter of 2021 and in line with its policy of distributing ‘truly surplus cash’, the company has announced a fourth dividend payment of 45 pence per share during the fiscal year 2021. Notably, the company declared a total dividend per share of 145 pence during 2020.
Despite the Covid-19 distribution disruption and closures of most of its UK and European retail stores, the wargames manufacturer and retailer witnessed strong cash generation during the current fiscal.
- Tesco Plc (LON: TSCO)
UK-based leading general merchandise Tesco has witnessed growth in sales across channels and product categories throughout the pandemic year. Tesco’s like-to-like revenue in UK was up by 6.7 per cent during the third quarter of 2021. In the Central Europe region, the sales increased by 0.9 per cent on like-for-like basis, driven by resizing of businesses during the period.
Tesco recorded double-digit sales growth of 12.1 per cent in the ROI region, driven by resilient performance from large stores. The company has successfully carried the momentum of Christmas trading into the third quarter of 2021. Tesco is expected to distribute £5 billion to shareholders via special dividend in the approaching months. Due to change in consumer behaviour, Tesco is expected to carry on with the sales momentum and deliver a resilient performance for all its stakeholders.
- WM Morrison Supermarkets Plc (LON: MRW)
UK-based supermarkets owner WM Morrison Supermarkets’ like-for-like (LFL) sales grew by 8.6 per cent, while the total revenue was up by 0.4 per cent. Morrison’s final ordinary dividend stood at 5.11 pence, brought the total full-year dividend to 11.15 pence for 2021, representing a 27.1 per cent jump against the fiscal year 2020. The online sales tripled during the year, while the capacity increased fivefold. Both online and wholesale division remained profitable.
Morrison has responded well through the pandemic that has translated into profit growth and expectations of substantial net debt reduction in 2021. The company had also announced a special dividend of 4 pence share that was paid in January 2021.