Two FTSE 100 stocks I’m glad I bought are Sage Group (LSE: SGE) and Howden Joinery Group (LSE: HWDN). Here’s why!
Flying high
Purchasing Sage shares paid off for me, at least to date. This is because I’m up over 60% on paper! Today’s announcement of full-year results for the year ended 30 September 2023 caused the shares to jump 7%. Over a 12-month period, Sage shares are up 39% from 808p to 1,127p.
Digging into today’s results, Sage reported that total revenue increased by 10% compared to last year. In addition to this, operating profit grew by 18% and adjusted earnings jumped by 16%. Earnings per share also increased by 22% and a final dividend payment of 12.75p per share equates to a 5% dividend rise from last year.
Sage’s rise has been phenomenal, in my opinion. It has managed to grow consistently through organic and acquisition-based measures. Its modus operandi of recurring revenue from subscription model software keeps the money rolling in. Plus, a passive income opportunity with a dividend yield of 2% helps my investment case. Of course, I’m conscious dividends are never guaranteed.
From a risk perspective, Sage shares are now at a level where they look a bit expensive for me to consider buying more. I’m happy with my current position and plan to hold on to them. Any subpar trading or software issues could send the shares tumbling.
Finally, Sage is moving with the times. The recent artificial intelligence (AI) boom prompted fears the software that Sage produces could come under threat. However, the business quickly addressed this by confirming it already uses AI tools in its offering. This could help continue the share price and performance growth we’ve seen in recent times.
New addition to the FTSE 100 index
Howden’s shares are also performing well for me to date. As I write, I’m up 15% on paper. The shares currently trade for 694p. Over a 12-month period, they’re up 15% from 604p at this time last year.
Like Sage, there are plenty of bullish aspects I like about Howden’s. To start with, it has an excellent profile and presence in the market. It has grown this steadily and is now a trusted name for DIY enthusiasts, but more importantly, trade customers working on commercial construction projects. This has helped boost performance growth and returns in recent years.
Speaking of returns, Howden shares offer me a dividend yield of 3%, which I can also see growing in the years to come. Furthermore, the shares still look decent value for money on a price-to-earnings ratio of 10. So I may be tempted to buy further shares.
From a risk perspective, I’m conscious that the current macroeconomic instability could cause shorter-term issues. Rising inflation could increase costs, which could take a bite out of profit margins, for example.
As I’m a long-term investor, I think the future looks bright. Howden is primed to benefit from the housing shortage in the UK. Demand is currently outstripping supply and this shortfall needs to be tackled. When that happens, Howden products should be required. This could potentially boost performance and returns.
The post 2 magnificent FTSE 100 stocks I own for returns and growth! appeared first on The Motley Fool UK.
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More reading
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Up 33%! But is the party over for Howden Joinery shares?
I already own this growth stock but here’s why I’d buy more shares!
Sumayya Mansoor has positions in Howden Joinery Group Plc and Sage Group Plc. The Motley Fool UK has recommended Howden Joinery Group Plc and Sage Group Plc. 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.
