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I’ve purchased a couple of high-risk, high-maintenance UK shares this 12 months, and now I’d wish to stability them with a brace of strong FTSE 100 dividend shares. The sort that gained’t value me an excessive amount of time or bother. Good and straightforward no-brainer buys.
I’m not in search of ultra-high yields, however a strong and sustainable price of earnings that ought to rise over time. A little bit of share worth development development wouldn’t go amiss. I’m hoping to rustle up £2,000 to spend money on January. If I do, I’ll think about splitting it between these two.
Accounting software program specialist Sage Group (LSE: SGE) matches the invoice properly. I’d at all times seen it as a development inventory, however knowledge from AJ Bell exhibits it’s an unsung dividend hero too.
Sage Group has a really smart dividend coverage
Over the past decade, the board has elevated the dividend at a formidable price 5.7% a 12 months, in keeping with AJ Bell. Let’s see what the chart says.
Chart by TradingView
Its dividend potential is straightforward to miss, given a trailing yield of simply 1.56%. That’s been eroded by its spectacular share worth efficiency. Sage shares are up 9.97% over 12 months, and 78.57% over 5 years.
Some feared the group’s enterprise mannequin can be clobbered by the factitious intelligence revolution, however as we be taught extra about what AI can and (crucially) can’t do, it seems to be extra prone to be boosted by it.
On 20 November, Sage reported an 11% rise in annualised recurring income to £2.34bn, whereas underlying working revenue surged 21% to £529m. Subscription renewal charges are an enviable 101%.
My massive concern is that the Sage share worth is dear, with a price-to-earnings ratio of 34.47. That’s greater than double the FTSE 100 common of 15.8%. Progress solely has to disappoint barely for the shares to dump.
That’s a priority given the turbulent world economic system, with small to medium-size companies – Sage’s prospects in different phrases – on the entrance line. So it’s not a 100% no-brainer nevertheless it’s jolly shut.
DCC is a dividend tremendous hero
Gross sales and advertising and marketing agency DCC (LSE: DCC) affords vitality, healthcare and expertise options. The trailing dividend yield is 3.6% however its historical past is much more spectacular. It’s elevated shareholder payouts at a median 10.8% a 12 months for the previous decade.
It is a true Dividend Aristocrat, having hiked shareholder payouts yearly for 3 many years. But the shares have fallen 2.34% during the last 12 months. It’s cheaper than Sage, with a modest P/E of simply 11.98 instances earnings.
DCC has been divesting currently, because it seems to be to simplify its operations and concentrate on the vitality sector.
It hopes to conclude the sale of DCC Healthcare subsequent 12 months, and can evaluate its choices for DCC Expertise thereafter.
The group raised £150m after divested its majority stake in liquid fuel enterprise Hong Kong & Macau in July. All this could assist unlock embedded worth, and focus consideration on its profitable vitality sector.
The chance is that having introduced it, it struggles to comply with by means of. Even when it does, there’s a hazard that its slim focus will depart it extra uncovered to unstable vitality costs.
No inventory is a complete no-brainer. However Sage and DCC are as shut as they get and I’ll make investments £1k in every once I get that £2k.
