With £4k to invest, I’d consider two companies for a Stocks and Shares ISA. The first is Screwfix and B&Q owner, Kingfisher (LSE: KGF).
With the share price near 269p, I think the valuation looks attractive, and I’m optimistic that the general economy will thrive over the coming few years. If that happens, the retailer may see steady business recovery and growth, although that outcome is not certain.
Steady trading
City analysts expect normalised earnings to rebound by just over 17% in the trading year to January 2026. Meanwhile, they’ve pencilled in a dividend of about 12p a share.
That puts the company on a forward-looking price-to-earnings multiple of just over 11 and a yield of almost 4.5%. Fair value, I’d say, when compared to the FTSE 100 index multiple of about 14 and its yield near 3.3%.
In May, the company issued a first-quarter trading update reporting steady trading and an outlook statement predicting more of the same. That was after such trends continued into the second quarter.
The business looks unlikely to shoot the lights out with revenue and earnings growth, at least in the short term. There’s also a risk that trading may deteriorate if the economy falters or if we are hit with another unexpected economic shock. After all, the retail sector is cyclical, and that shows in Kingfisher’s share price chart and trading record.
However, I’m encouraged by the steady progress the business is making and I like the chunky dividend yield. So I’d dig in with further research now and consider the stock for inclusion in a diversified Stocks and Shares ISA.
But I’m also keen on Coca-Cola bottling and distribution business Coca-Cola HBC (LSE: CCH).
The firm has an impressive record of multi-year earnings and dividend growth, powered by the enduring strength of the Coca-Cola brand.
Consistent growth
The company buys concentrates, bases, and syrups from The Coca-Cola Company for making beverages for sale and distribution under an exclusive agreement. It also sells other sparkling drinks, all across a territory covering 30 countries in Africa, Asia and Europe.
Growth has been steady and that shows in the firm’s trading record and in the share price chart.
We’ll find out more about the strength of current trading with the half-year results report due on 7 August. Meanwhile, City analysts have pencilled in a single-digit percentage uplift in earnings for 2024 and a more than 10% increase next year.
The steady progress looks set to continue. However, one risk that may materialise one day is the company could lose its exclusive right to distribute Coca-Cola products. It’s even possible for the brand to lose its popularity with consumers.
Nevertheless, with the share price near 2,716p, the forward-looking dividend yield is running at about 3.4% for 2025. Meanwhile, the compound annual growth rate of the dividend is just over 10%.
I’d be keen to analyse the business further with the aim of securing that growing income stream for my portfolio by buying a few of the shares.
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Kevin Godbold 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.
