What should you look for in a company to invest in? Well, I would say it should be strongly profitable and growing, with a rising dividend. But finding such businesses is far from easy, in an environment where many firms’ earnings are being crunched. However, here are three companies with just these attributes.
BT
BT (LSE: BT-A) has grown from being solely a giant company providing telephone, to an even bigger IT services, mobile and fixed line telecoms, internet and broadcasting business. In doing so, it has become one of the winners in the shakeout of British media and telecoms firms over the past decade.
BT’s success has meant increasing profits, and a steadily climbing share price. And a quick look at the earnings per share progression shows the pace of this growth.
2013: 23.70p
2014: 24.50p
2015: 26.10p
2016: 31.0p
2017: 33.40p
Yet this company still looks reasonably priced, with a 2016 P/E ratio of 14.32, and a dividend yield of 3.18%. BT combines steady growth at a reasonable price, with a juicy income to boot.
ITV
Adam Crozier’s stewardship of ITV (LSE: ITV) has led to rocketing profits, as this firm has expanded its programming, the number of TV channels it offers, and its global reach. Hits like Downton Abbey and Foyle’s War have many viewers not just in Britain, but around the world.
This has led to earnings per share to push upwards from 8.10p in 2013 to an estimated 19.18p in 2017. The share price languished below 100p in the aftermath of the Credit Crunch, but today it has reached 239p.
And the company still looks like good value at a 2016 P/E of 13.39, with a tempting dividend yield of 3.06%. The tech revolution hasn’t meant the end of television, but it has revolutionised the way it’s delivered. All this makes ITV a clear buy.
Travis Perkins
So we have a telecoms business, and a broadcaster. By complete contrast, Travis Perkins (LSE: TPK) is a building materials and product distribution company. It may not be a household name, but one business it owns is. That’s the Wickes DIY retail chain. But there’s more and Travis Perkins also supplies building materials to firms such as Barratt Developments and Wimpey.
And this is a business that has been growing steadily in recent years, and is set to profit as the housing boom rolls on. That’s why earnings per share are estimated to progress from 105.70p in 2013 to 151.94 in 2017.
So, like BT and ITV, Travis Perkins is a growing company that is likely to do well into the future. And its stock is selling at a 2016 P/E ratio of 13.16, with a dividend yield of 2.82%. Again, the share price has risen considerably already, but I see no reason why it can’t go higher still.
