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Two FTSE 100 The stocks I’m glad I bought are wise group (LSE: SGE) and Howden Joinery Group (LSE: HWDN). This is why!
Flying high
Buying Sage shares has paid off for me, at least to date. This is because I am up more than 60% on paper! Today’s announcement of annual results for the year ending September 30, 2023 sent the shares up 7%. Over a 12-month period, Sage shares rose 39%, from 808p to 1,127p.
Digging into today’s results, Sage reported that total revenue was up 10% compared to last year. In addition to this, operating profit grew by 18% and adjusted earnings increased by 16%. Earnings per share were also up 22% and a final dividend payment of 12.75 pence per share equates to a 5% dividend increase on last year.
In my opinion, the rise of Sage has been phenomenal. She has managed to grow consistently through organic and acquisition-based measures. Their recurring revenue modus operandi from the subscription model software keeps the money flowing. Additionally, a passive income opportunity with a 2% dividend yield helps my investment case. Of course, I’m aware that dividends are never guaranteed.
From a risk perspective, Sage stock is now at a level where I find it a bit expensive to consider buying more. I am happy with my current position and plan to keep it. Any trading or poor software issues could send the stock tumbling.
Finally, Sage adapts to the times. The recent rise of artificial intelligence (ai) has raised fears that the software Sage produces could be threatened. However, the company quickly addressed this issue by confirming that it already uses artificial intelligence tools in its offering. This could help continue the share price growth and performance we’ve seen of late.
New addition to the FTSE 100 index
Howden stock is also doing well for me to date. As I write, I’m up 15% on paper. The shares are currently trading at 694 pence. Over a 12-month period, they rose 15% from 604p this time last year.
Like Sage, there are many bullish aspects to like about Howden. To start with, it has an excellent profile and presence in the market. It has grown steadily and is now a trusted name for DIY enthusiasts, but more importantly, commercial clients working on commercial construction projects. This has helped drive performance and profitability growth in recent years.
Speaking of profitability, Howden shares offer me a 3% dividend yield, which I can also see growing in the coming years. Additionally, the stock still appears to be a good value with a P/E ratio of 10, so I may be tempted to buy more shares.
From a risk perspective, I am aware that the current macroeconomic instability could cause problems in the short term. Rising inflation could increase costs, which could reduce profit margins, for example.
Since I am a long-term investor, I think the future looks bright. Howden is set to benefit from the UK’s housing shortage. Demand is currently outstripping supply and this shortfall needs to be addressed. When that happens, Howden products should be required. This could potentially boost performance and profitability.
