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I’ve purchased a number of high-risk, high-maintenance UK shares this yr, and now I’d wish to stability them with a brace of stable FTSE 100 dividend shares. The kind that gained’t price me an excessive amount of time or hassle. Good and straightforward no-brainer buys.
I’m not in search of ultra-high yields, however a stable and sustainable fee of revenue that ought to rise over time. A little bit of share worth progress progress wouldn’t go amiss. I’m hoping to rustle up £2,000 to spend money on January. If I do, I’ll take into account splitting it between these two.
Accounting software program specialist Sage Group (LSE: SGE) suits the invoice properly. I’d all the time seen it as a progress inventory, however information from AJ Bell reveals it’s an unsung dividend hero too.
Sage Group has a really clever dividend coverage
During the last decade, the board has elevated the dividend at a powerful fee 5.7% a yr, in response to AJ Bell. Let’s see what the chart says.
Chart by TradingView
Its dividend potential is simple 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 unreal intelligence revolution, however as we study extra about what AI can and (crucially) can’t do, it appears to be like 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 pricey, 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 international 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 agency DCC (LSE: DCC) provides vitality, healthcare and know-how 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 yr for the previous decade.
This can be a true Dividend Aristocrat, having hiked shareholder payouts yearly for 3 many years. But the shares have fallen 2.34% over the past yr. It’s cheaper than Sage, with a modest P/E of simply 11.98 instances earnings.
DCC has been divesting currently, because it appears to be like to simplify its operations and give attention to the vitality sector.
It hopes to conclude the sale of DCC Healthcare subsequent yr, and can assessment its choices for DCC Know-how 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 danger is that having introduced it, it struggles to comply with by. Even when it does, there’s a hazard that its slim focus will go away 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 after I get that £2k.
