FTSE 350 stocks worth investing in

Published Tue, 13 Oct 2015 23:00 CET by TopYields.nl


In recent years, UK-listed small- and mid-caps have outperformed large caps. Many international players, such as SABMiller and Unilever, have been hurt by exposure to emerging markets, while smaller, more locally-focused businesses have thrived capitalizing on the UK economic recovery. While UK companies are not the sole source of dividends globally, a well-diversified portfolio of FTSE 350 stocks can provide dividend investors with a sustainable income. From 2010 to 2015, the FTSE 350 index, a combination of FTSE 100 and FTSE 250 large- and mid cap stocks listed on the London Stock Exchange, has risen 37.4% compared to the 30.8% returns of the FTSE 100 over the same period.
The article discusses three FTSE 350 stocks that trade in the financial sector. All three companies are financially strong and demonstrate consistency and growth in their dividend payments. In addition, their average payout ratio of 44.1% and average dividend yield 3.07%, are both considered good indicators, suggesting a safe bet for dividend investors.

Amec Foster Wheeler, Ashmore Group and Phoenix Group Holdings YTD Stock Performance Graph
Amec Foster Wheeler (LSE: AMFW) is a London-based consultancy company providing engineering and project management services to energy companies internationally. Focusing on oil and gas, mining, clean energy and infrastructure markets, Amec Foster Wheeler is a firm with financial strength and dividend growth 97.3% from 2007 to 2014 (£7.5 to £14.8). Amec Foster Wheeler’s payout ratio of 42% is close to 50%, which is generally considered perfectly safe for dividend investors as it suggests that the company pays 50% of its retained earnings to shareholders and invests 50% in business expansion. Analyst consensus estimates a dividend per share (DPS) of £43.30 for 2015 and a DPS of £43.73 for 2016. Earnings per share (EPS) growth is expected to reach 114.8% through 2017 (current EPS is £35.10).
Ashmore Group (LSE: ASHM) is an asset management company, headquartered in London, UK, that engages in fixed income investments, offering investors a wide range of strategies to participate in the emerging markets. In FY 2015 results, Ashmore’s total liabilities were down by 31.6% (£123.40 million from £180.40 million in FY 2014). This is further sustained by Ashmore’s low D/E ratio of only 0.16 and its payout ratio of 62.65%, above the average 2015 investment services industry payout ratio of 49.43%. Ashmore’s dividend growth from 2007 to 2015 is 80.6% (£6.7 to £12.1), suggesting strong operating and financial performance, which is further sustained by the company’s 5-year operating margin of 67.51%. Forecasts estimate a DPS of £16.74 for 2016 and a DPS of £16.95 for 2017. Although the EPS is expected to average at £16.78 through 2017, down by 13.3% from the current EPS of £19.34, Ashmore is a financially strong company, ideal for dividend investors who seek investment opportunities listed on the LSE.

Name Price (GBX) 52 wk low 52 wk high 52 wk low % 52 wk high % Market Cap (£ b) P/E D/E Payout Ratio
Amec Foster 811 686 1120 18% -28% 3.23 12.86 1.11 42%
Ashmore 283 237 335 23% -13% 2.07 15.04 0.16 63%
Phoenix 824 693 935 19% -12% 1.86 11.58 3.35 28%

Phoenix Group Holdings (LSE: PHNX) is a specialist closed life and pension fund company located in London, UK. Through its segments, Phoenix manages life insurance funds and provides a full range of life insurance coverage. In September 2015, Constellation Healthcare (LSE: CHT), a healthcare services organisation providing outsourced revenue cycle management, practice management and group purchasing services to the physician market in the United States, acquired Phoenix for $14m with 75% of the amount in cash and 25% of the amount in shares to be issued for £1.44 each. Currently, Phoenix closed life funds are worth approximately £52 billion, owned by nearly 5 million policyholders. The company has a D/E ratio over 3, which is not strange for an insurance company. Also, its payout ratio is in line with the 2015 life insurance industry of 25.03%. In FY 2014 results, the company’s current liabilities were down by 34.4% (£10.9 million from £16.75 million in FY 2014), suggesting that Phoenix is not facing any debt management problem.


Stock name Dividend Yield
Phoenix Group Holdings 6.04
Ashmore Group 4.62
Amec Foster Wheeler 4.54