Two UK shares I’m looking to buy as soon as I have some investable cash are British Land (LSE: BLND) and Greggs (LSE: GRG).
Here’s why!
Income from property
British Land is set up as a real estate investment trust (REIT) which means it makes money from property. REITs must return 90% of profits to shareholders, making them attractive passive income options.
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British Land shares haven’t had the best time recently, and there are risks associated with the firm. A murky economic picture, driven by inflationary pressures and higher interest rates have hurt net asset values (NAVs).
Furthermore, some of British Land’s specific assets, such as retail buildings and office blocks, are under pressure from the e-commerce boom, and the working-from-home movement. These are risks I’ll keep an eye on.
Conversely, I reckon there’s a great opportunity to buy shares now, ahead of potential greener pastures ahead. Firstly, the shares look good value for money to me on a price-to-earnings ratio of just 12. Furthermore, a dividend yield of 6.3% is higher than the FTSE 100 average of 3.8%. However, I’m conscious that dividends are never guaranteed.
Away from these fundamentals, other bullish traits that attract me to the stock include a diverse set of property assets that can protect it during times of volatility, like now. Plus, it possesses a very high occupancy rate, over 96%, at the time of writing.
Furthermore, British Land’s average lease spans over five years, at present, which offers it a good amount of stability. Finally, I can see it has a healthy balance sheet with plenty of cash to stave off continued turbulence.
Sausage rolls
Greggs has made a name, and solid business, out of selling baked treats and has grown to a level perhaps some may not have envisaged.
The shares are up a whopping 65% over a five-year period. This is even though we’ve experienced a fair amount of volatility over the past 12 months or so, and the pandemic is sandwiched into that time frame too.
Despite excellent organic and acquisition-led growth, which has left the business with close to 2,500 retail outlets across the nation, there are risks I’m wary of. The sheer number of locations is a smaller concern of mine, with outlets on high streets, travel hubs, shopping centres, and more. Could over-saturation be an issue moving forward? A bigger risk is the current economic volatility. Inflationary pressures and higher costs could take a bite out of margins.
Moving on to the bull case. Greggs’s value offering, savvy marketing, solid balance sheet, and historical performance to date make the investment case compelling. In fact, recent performance has proven to be excellent. Total sales in 2023 rose by 20%, compared to the previous year.
Finally, the shares offer a dividend yield of 3.5%, which would help me build wealth. If the business can continue growing as it has done in the past, this rate of return could grow too.
This post was originally published on Motley Fool
