As higher energy prices bite and inflation continues to rise, it can be difficult to put money aside every month for investment purposes. Nevertheless, I’ve found two UK shares that could provide me with growth over the long term.
With a regular investment in mind, here’s how I’m going to deploy £100 per month.
The first business I’m looking at is National Express (LSE:NEX). The shares are currently trading at 193p. In what has been a difficult period for the travel industry, the coach firm reported that group revenue rose over 33%, to £1.32bn, for the six months to 30 June.
Additionally, operating profit grew nearly 300% during this time to £90.5m. What this tells me is that demand appears to be recovering within this sector, to the benefit of the company.
What’s more, the business is starting to focus again on growth and expansion. It secured 16 new contracts, mainly in North America, that could bring in revenue in excess of £150m annually.
This is part of the firm’s £2.1bn investment into expanding operations in the UK and North America.
However, there is the threat posed by inflation. This may increase costs and, ultimately, lead to shrinking profit margins. Further pandemic variants, should they arise, could also dent demand for travel.
Despite this, the business has operating cash flow of £179m. This tells me that it should be able to survive any short-term issues that come to fruition.
Secondly, I’m interested in Howden Joinery (LSE:HWDN). In 2021, the houseware-fitting services firm paid a dividend of 19.5p per share. That’s equivalent to a dividend yield of 0.79% at the current share price of 567p.
While this may seem small, it’s good to know that I could derive income from my monthly investment. I’m aware, though, that dividend policies can be subject to change.
The business reported improved results for the six months to 12 June, with group revenue up 16.3%. In addition, pre-tax profit grew 21.6%, coming in at £145m. Another indication of Howden’s financial strength is its cash balance of nearly £250m.
However, the price of raw materials is continuing to climb on account of a tighter market and supply disruptions. This may lead to smaller profit margins.
On the other hand, the firm declared an interim dividend of 4.7p per share. This is a 9.3% increase year on year, and gives me continued confidence that income from this investment could be consistent.
Overall, both of these companies have performed well in challenging environments. To that end, I think they could be good homes for put my money on a regular basis. I’ll therefore add the shares of each business every month with £100.
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Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended Howden Joinery Group. 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.