Sunday share tips: Close Brothers, Yew Grove
By Alexander Bueso
Date: Sunday 19 Apr 2020
(Sharecast News) - Close Brothers has several things going for in comparison to its peers, but it too faces challenges and with so much uncertainty around they are best kept at "arm's length", The Sunday Times's Emma Dunkley says.
In the newspaper's 'Inside the City' column, the tipster highlights analysts quibbles with management's recent decision to suspend the firm's interim payout.
After all, it was "well-capitalised, well-funded and sufficiently liquid to withstand a significant economic shock."
The specialist lender, which was founded in 1878, also had a different business mix than its much larger brethren with their focus on mortgages.
But its profits fell over the most recent six-month stretch for which figures were avilable, its car finance arm might be exposed to a plunge in economic activity and its chief, Preben Prebensen was set to step down in September and Close Brothers had yet to name a successor.
"The shares are down from ?16 at the start of the year to ?10.40, valuing the lender at ?1.5bn. With so much uncertainty, and no dividends, Close should be kept at arm's length. Hold."
Yew Grove has the ability to continue providing investors with a steady stream of dividends, the Mail on Sunday's Midas column said.
Founded in 2014, the Irish commercial property property firm filled the gap in the market for high-quality tenants searching for premises outside of Dublin.
Just over a quarter of its tenants are government bodies, with the bulk of the remainder being large-sized enterprises centred on medical technology, pharmaceuticals and healthcare.
Significantly, every tenant paid on time and in full during the latest quarter and Yew Grove expects that over 95% will do so again for the three months to June and over the rest of the year.
Plans to double the company's portfolio will most probably be pushed back due to the Covid-19 pandemic "but the direction of travel remains the same," Midas said.
Indeed, the crisis may even throw up some bargains and the dividend will rise as the company and its profits grow.
"Yew Grove was founded primarily to provide investors with steady income, in the form of generous dividends.
"In today's markets, that focus is more attractive than ever. At 88 cents, the shares make for a solid, long-term investment."
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