10 days to go! I think Brexit could help this mega-cheap dividend stock to surge

Is Brexit getting you down? Don’t panic and buy this brilliant dividend stock, argues Royston Wild.

| 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.

I’ve written extensively on why I believe a ‘no-deal’ Brexit remains (among the hardest of leave supporters, that is) the stuff of fantasy.

Exiting the European Union without an agreement would be the meteorite that smashes the political landscape in the UK to smithereens and puts the domestic economy in severe long-term jeopardy, and for this reason I’ve stuck to my guns in recent months and talked down the chance of a disorderly Brexit actually transpiring.

I still believe that leaving the European bloc under a ‘no-deal’ scenario is the least likely outcome, but only marginally so now.

The Westminster stalemate is unlike anything we’ve seen in peacetime and it doesn’t appear set to be resolved any time soon. In fact, the chances of us slipping out without a deal on 11pm on Friday, March 29 have increased in recent days, first through speaker John  Bercow’s decision to stop Meaningful Vote III happening, and increasingly-frosty rhetoric from many of the EU’s other 27 states on the prospect of any sort of Article 50 extension.

A Brexit beneficiary

There’s still a long way to go in the days ahead, but with the situation as cloudy as ever, nothing can be presumed. I think it’s safe to say that either an extension to Article 50 or a disorderly Brexit are the only games in town, though, and thus the uncertainty that’s proving increasingly problematic for the UK economy is set to last for some time yet, whatever happens from here.

For this reason I think that buying up Begbies Traynor Group (LSE: BEG) may be a wise bet. The corporate insolvency specialist is already thriving in this environment and there’s little reason to expect it to change.

Full quarterly financials from the AIM-quoted firm saw it citing Insolvency Service data showing the number of corporate insolvencies soaring to 16,090 in 2018, up 10% year-on-year as uncertainty over Brexit smacked business. To put this into context, this represents one in every 242 companies experiencing severe financial distress. It’s no surprise then that Begbies Traynor said that it has experienced “revenue and profit growth for the year to date.” 

Big dividends

It should also come as hardly a shock that City analysts expect profits growth at the business to go from strength to strength, reflecting these fertile trading conditions as well as the firm’s rich appetite for acquisitions. A 12% earnings rise is predicted for the 12 months to April 2019, a projection that improves to 16% for the following fiscal period.

And these bright projections give plenty of other reason to celebrate. Firstly they make Bergbies Traynor a bargain at current prices, the firm carrying a dirt-cheap forward P/E ratio of 13.4 times. Secondly, they mean that City analysts are anticipating more dividend growth, from the 2.4p per share reward of last year to 2.6p this year and 2.8p in fiscal 2020. Such figures yield a fatty 4.3% and 4.6% and make the business a great income share to buy, in my opinion, and particularly for those who are especially fearful over Brexit.

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 no position in any of the shares mentioned. 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

US Stock

The Nvidia share price falls! Here’s what I think happens next for the S&P 500

Jon Smith reviews the overnight results from Nvidia and explains why this could stall the S&P 500 performance through to…

Read more »

Investing Articles

Down 15% today, is this FTSE 100 share too cheap for me to miss?

JD Sports' share price has tanked after the FTSE 100 share released another profit warning. Is this the opportunity I've…

Read more »

Investing Articles

Up 8% today, is this FTSE 100 growth stock a slam-dunk buy for me?

Halma's share price is soaring thanks to another headline-grabbing trading update. Is the FTSE 100 stock now too good for…

Read more »

Investing Articles

With a P/E ratio of just 10.5 is now a brilliant time to buy a cut-price FTSE 250 tracker?

Harvey Jones says a recent dip in the FTSE 250 leaves the index trading at bargain levels. One stock in…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »