2 growth dividend giants I’d buy with £2,000 today

Want to make a fortune from dividend investing? Then take a look at the dividend growth giants Royston Wild reveals here.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

For those seeking strong dividend growth now and in the future, it is difficult to look past Marshalls (LSE: MSLH), in my opinion.

The business, which manufactures paving as well as an assortment of other landscaping products, reported on Wednesday that revenues crept 8% higher in 2017 to £430.2m, or 6% on a like-for-like basis (excluding the contribution of water management specialist CPM). This result pushed pre-tax profit to £52.1m, up 13% year-on-year.

And to the pleasure of income seekers Marshalls elected to give its progressive dividend policy a further dose of rocket fuel, hiking the full-year ordinary payout to 10.2p per share from 8.7p a year earlier.

On top of this, the FTSE 250 firm also paid a 4p per share supplementary dividend, up from 3p in 2016.

Commenting on the results, chief executive Martyn Coffey said: “Good progress has been made in the year executing the 2020 Strategy, notably the acquisition of CPM, and the ongoing self help programme to drive organic growth is progressing wellThe underlying drivers have remained positive in our main end markets and our sales and order intake have been strong in the first 2 months of 2018.

Looking good

Marshalls has a strong record of grinding out earnings rises year after year, and while there is clearly some danger to future expansion as Brexit-related concerns look set to persist, its ability to continue outperforming the market should allow it to keep growing in the medium term at least.

Besides, the West Yorkshire firm’s strong position in the expanding transport infrastructure and housebuilding segments provides earnings with a little more protection.

City analysts are expecting profits to rise 12% in 2018 and by an additional 7% next year, prompting expectations of further dividend growth too.

An ordinary dividend of 12.3p per share is forecast for this year and 13.1p for 2019, resulting in chunky yields of 2.7% and 2.9% respectively. And I wouldn’t rule out extra special dividends being shelled out either under Marshalls’s so-called 2020 Strategy.

It may be expensive, the business sporting a forward P/E ratio of 18.9 times. But in my opinion its super track record merits such a premium, as does the brilliant revenues potential created by the vast investment it is making in acquisitions as well as product development.

Reassuringly expensive

Domino’s Pizza (LSE: DOM) is another share whose brilliant growth and dividend prospects deserve serious attention.

In 2018 City analysts are expecting the takeaway giant to see just a 1% earnings rise, down from the double-digit percentage rises of recent years as consumer spending power dips. But Domino’s is expected to pick up the pace again from next year for which a 9% advance is predicted, underpinned by the company’s ambitious expansion programme.

What the FTSE 250 firm lacks in near-term growth appeal it makes up for in terms of dividends, however. Last year’s 9p per share payment is expected to rise to 9.7p in the current period and again to 10.4p in 2018. Consequently investors can gobble up handy yields of 2.9% and 3.2% for this year and next, respectively.

Domino’s trades on a forward earnings multiple of 20.3 times, but its robust position in the takeaway market makes it worthy of an expensive rating in my opinion.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Domino's Pizza. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

After it crashed 25%, should I buy this former stock market darling in my Stocks and Shares ISA?

Harvey Jones has a big hole in his Stocks and Shares ISA that he is keen to fill. Should he…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How’s the dividend forecast looking for Legal & General shares in 2025 and beyond?

As a shareholder, I like to keep track of the potential dividend returns I could make from my Legal &…

Read more »

artificial intelligence investing algorithms
Investing Articles

Could buying this stock with a $7bn market cap be like investing in Nvidia in 2010?

Where might the next Nvidia-type stock be lurking in today's market? Our writer takes a look at one candidate with…

Read more »

Investing Articles

Is GSK a bargain now the share price is near 1,333p?

Biopharma company GSK looks like a decent stock to consider for the long term, so is today's lower share price…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could December be a great month to buy UK shares?

Christopher Ruane sees some possible reasons to look for shares to buy in December -- but he'll be using the…

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

Sticking to FTSE shares, I’d still aim for a £1,000 monthly passive income like this!

By investing in blue-chip FTSE shares with proven business models, our writer hopes he can build sizeable passive income streams…

Read more »

Growth Shares

BT shares? I think there are much better UK stocks for the long term

Over the long term, many UK stocks have performed much better than BT. Here’s a look at two companies that…

Read more »

British Pennies on a Pound Note
Investing Articles

After a 540% rise, could this penny share keep going?

This penny share has seen mixed fortunes in recent years. Our writer looks ahead to some potentially exciting developments in…

Read more »