9% dividend yield! 2 FTSE 100 shares I think could jump in November
I think these two FTSE 100 stocks could soar in value next month. Here’s why I’d buy them now and aim to hold them for the long haul.
Playing the value game
I need to be extremely careful before buying UK retail shares. The twin threats of a cooling economic recovery and soaring inflation cast a dark shadow over the landscape. Latest YouGov data showed consumer confidence fell to five-month lows in September. B&M European Value Retail (LSE: BME) however, is a share I think could actually thrive as shoppers tighten their purse strings.
In fact, I’m thinking of buying the FTSE 100 firm before interim results are released on 11 November. Strong sales of its General Merchandise and Seasonal categories have resulted in fewer end-of-season markdowns, it said in September. The subsequent boost to margins has therefore led to the business lifting its full-year earnings forecasts.
B&M has a strong recent history of putting in forecast-beating performances. And I think another might be coming down the line as the toughening consumer landscape gives the fast-growing value sector an extra shot in the arm.
Even though significant supply chain issues could emerge I think B&M’s a good buy right now.
Another FTSE 100 share I’d buy in November
News coming out of the housebuilder sector also remains extremely encouraging. A brilliant trading update from Barratt Developments helped share prices across the sector soar earlier this month. I think its FTSE 100 counterpart Persimmon (LSE: PSN) could be the next to release price-boosting financials in the days ahead. Fresh numbers are scheduled for 9 November.
Persimmon’s most recent update in August showed a solid rise in completions, asking prices and margins during the six months to June. Pleasingly, its “robust” first-half performance led to a significant jump in cashmere too, an improvement that gives it extra strength to continue paying out big dividends.
Recent industry news flow shows housing market conditions have remained rock-solid as well. For instance, the latest Halifax house price index report shows UK property values in September rose at their quickest monthly rate for 15 years.
Buyer demand continues to be driven by low interest rates and ongoing government support for first-time buyers. Construction rates aren’t strong enough at present to meet this soaring demand either.
9% dividend yields!
Okay, the likes of Persimmon face a growing threat of surging building products prices to their profits. Asking prices for raw materials and construction equipment is ballooning because of worsening supply chain issues. The problem of product shortages could also derail the housebuilder’s completion targets if production rates slow.
It’s my opinion however that this risk is baked into Persimmon’s current valuation. For 2022, it trades on a price-to-earnings (P/E) ratio bang on the bargain benchmark of 10 times at recent prices.
I believe this ultra-low multiple, combined with the housebuilder’s enormous 9% dividend yield, make it a highly attractive FTSE 100 buy right now.
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Royston Wild owns shares of Barratt Developments. The Motley Fool UK has recommended B&M European Value. 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.