A FTSE 100 share that sprung higher from the early days of January, Persimmon (LSE: LON:PSN) has seen investor appetite wane more recently and, on Thursday, it suffered an almighty sucker punch.
The housebuilder took a pasting on widespread media coverage of a frankly terrible property that it sold to a family back in 2017, a home that was described as having around 700 faults, the vast majority of which are still waiting to be remedied.
It’s no wonder why the news sent a chill down the spines of Persimmon shareholders — Bovis Homes (LON:BVS) was forced into profits-crushing production reductions a few years back amid a slew of similarly-negative reports on the condition of some of its own products.
There’s no reason for investors to panic right now, I would argue, as the sort of drastic action that Bovis was forced into adopting remains a distant prospect. Besides, it could be suggested that Persimmon’s rock-bottom forward P/E ratio of 8 times more than bakes in the possibility of it having to undertake similar output reductions.
I believe the builder remains a terrific buy right now, and particularly in the wake of strong financials released in late February. Oh, and that 10.3% forward dividend yield is something pretty special to shout about too.
More double-digit dividend yields Vodafone (LON:VOD) Group’s (LSE: VOD) fading love affair with the investor community has been rather more prolonged, its share price dropping by around a third over the last 12 months amid deteriorating sales across the globe.
Problems in India, and more recently in South Africa, have taken the sheen off of its emerging markets more recently. But organic service revenues growth in its territories of Asia, Africa and the Middle East remains strong — up 4.9% in the three months to December. I believe that strength should continue as rising personal wealth levels in these regions boost data demand.
Europe may be more problematic for Vodafone because of intensifying competition, something which caused organic service sales to fall 1.1% in the last quarter.
I’m convinced that the telecoms titan has what it takes to overcome these problems through the massive investment it’s making to improve the quality and scope of its operations. Earlier this week it confirmed plans to raise €4bn of convertible bonds to fund the acquisition of Liberty Global’s operations across Germany, Hungary, Romania and the Czech Republic.
It’s important to point out that the aforementioned fundraising has assuaged fears that Vodafone may be forced to hack down the annual dividend to realise its investment plans. City analysts expect the firm to pay a reward of 15 euro cents per share again in the year to March 2019, a figure that yields an incredible 9.6%. And I’m expecting dividends to remain at eye-popping levels as the fruits of its colossal capital expenditure across the globe translate into great profits growth from next year onwards.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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