We are currently in a unique economic climate and are having trouble reading market movements. The risk of another market collapse on a large scale, panic selling is a real problem. As we move into October, I’m focusing on these two tested, solid FTSE 100 Shares with a history of positive financial performance and shareholder returns.
Retail dividend stock
Tesco (LSE: TSCO) has made a good run in the last six months. Its share price has risen 12% during this period and Moody’s will release its first half (H1) results for 2021-22 on October 20th. I think a favorable outcome could push up its share price in the next few months.
Tesco’s recent revenue growth looks very impressive to me. The net income of the supermarket chain has increased at a rate of 24% in the last five years. This is much higher than the industry average of 8.4%, which shows me an impressive presence in this sector. Analysts predict that the main earnings of the FTSE 100 could increase by 149% in 2021-22. In the first quarter of its current fiscal year alone, sales increased 9.3% compared to pre-epidemic 2019 figures.
Given the razor-thin margins of the supermarket sector, these basics seem very appealing to me. The company yielded a 3.9% dividend yield at 255p on its current share price, well ahead of the FTSE 100 average of 3.4%.
In fact, I think the company has an excellent history of shareholder returns. Tesco’s three-year median payout ratio is 53%. The UK’s largest grocer also announced a special dividend of ৫ 5 billion in February 2021 after selling Asian operations for .. 6 billion.
Although the grocer has the largest market share in the supermarket space, it faces stiff competition from the likes. Sciencebury And Morrisions. Also, the growing popularity of discount retailers like Lidl and Aldi could hurt future revenue. But, I am still confident that a strong financial report in October could significantly boost its share price, which is why I am watching Tesco’s shares closely in October.
FTSE 100 Insurers
I think so Aviva (LSE: AV) The stock looks extremely cheap at the moment. At 401p, Aviva is trading at a 9.1-fold profit-to-earnings (P / E) ratio, pointing to a highly devalued stock. Combined with an impressive 5% dividend yield, it looks like a great FTSE 100 value option to me.
Sustainable economic recovery can greatly benefit the insurance sector. Also, Aviva has been restructuring its business for the past 12 months to focus more on key markets such as the UK, Canada, Ireland and China. The insurer has sold non-core operations in Turkey and France, which could bring in £ 7.5bn. As a result, b 4bn shareholder payments were announced, starting with a buyback of 50 b50 million shares.
Analysts expect Aviva shares to reach 800p by 2024, which could significantly boost its current dividend yield. This is supported by an impressive H1 2021 where it has been shown that operating profit has increased by 17% to £ 725m.
Faces competition from company choices Legal and general And Wise. Also, the volatile economic situation and the risk of market catastrophe can strongly affect the financial sector. However, Aviva still has a place on my FTSE 100 stock list due to its renewed focus on key markets and a strong history of shareholder returns.
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Coronavirus epidemic disrupts markets around the world …
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Suraj Radhakrishnan has no position in any of the mentioned shares. Motley Flower UK is recommended by Morrison, Prudential and Tesco. The opinions expressed in the companies mentioned in this article may differ from those of the authors and therefore the official recommendations we make on our subscription services such as Share Advisors, Hidden Winners and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.