If you have some money, say £2,000, that you want to put to use in your investment portfolio then I suggest taking a deeper look at these two FTSE 100 shares because they have strong dividend yields and they’re actively positioning themselves for growth in the future.
Playing cat and mouse
British Land (LSE: BLND) is being tarnished because of the woes of the high street. It’s having to challenge the rise of CVAs being used by retailers to cut rents to landlords such as itself in a game of cat and mouse. Blink, and more successful retailers like Next will also ask for discounted rents and there could be a downward spiral that will hurt shareholders.
But it’s worth being clear that unlike property peer Intu, British Land is not all about retail. It’s a part of its property portfolio, but the group has more strings to its bow. It has a 23m sq ft of assets and the company is not sitting on its hands. While looking to refine what it does in retail, it’s expanding its focus on mixed-use places and is building a residential business.
So what investors get from this real estate investment trust (REIT) is a yield of around 5.6% and with the share price only slightly up overall this year the shares are trading on a P/E of around 15. Looked at through the lens of other companies’ values, the British Land P/E is low compared to, say, that of IWG where the P/E is about 35.
When it comes to the share price, it’s holding up, unlike Intu (despite the latter being the subject of private equity interest). This could indicate that British Land is seen as better equipped to survive the current troubles plaguing the retail industry and I’d have to agree with that view.
Packing a punch
Shares in paper and packaging specialist Mondi (LSE: MNDI) are only up a little this year as well. However, I believe there are reasons to put your money into the company and I think its long-term prospects are strong.
I think this because in its latest half-year results (the six months to 30 June), revenue rose 1%, underlying operating profit by 8% and group return on capital employed (ROCE) rose from 21.3% to 23.2%. Financially, the company is doing well and all its divisions are contributing to its success.
In its fibre packaging division, Mondi noted it benefitted from higher average selling prices, but that there were also higher costs. Paper and consumer packaging also managed to increase their EBITDA. The group is also focusing on sustainable packaging and simplifying its corporate structure, which will cut costs and boost profits.
It has been investing for growth, as shown by the modernisation of its Štĕtí mill, started in Q4 2018, and I think investors picking up the shares now on a yield of near 4% and with a P/E under 10 are set to benefit from this, so I’d rate the shares a buy.
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Andy Ross has no position in any of the shares mentioned. The Motley Fool UK has recommended British Land Co. 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.
Motley Fool UK 2019