The mantra of legendary investors such as Warren Buffett and Peter Lynch is to invest in businesses that you can understand. Personally, I feel more comfortable investing this way, too. Companies like Domino's Pizza Enterprises Ltd. (ASX: DMP) and Retail Food Group Limited (ASX: RFG) fit this category. In simple terms, both companies are in the business of making and selling food in a retail environment. Furthermore, both recently reported fantastic results.

Contestant No. 1: Domino's Pizza

Domino's, of course, specialises in selling pizza and does so with tremendous success. Domino's has provided investors with staggering returns to this point, thanks to its innovative and entrepreneurial CEO, Don Meij. He has transformed Domino's into an international and technological powerhouse of the fast food industry.

Domino's aims to be the largest pizza delivery operator in Japan by the end of this financial year and is on track to achieve its first double-digit margins in Europe. The company plans to open its milestone 1,500th store later this year. Domino's leads the way in ordering, tracking, monitoring and creating your own pizzas through its digital platforms.

Contestant No. 2: Retail Food Group

Retail Food Group operates franchise, retail and wholesale operations in a variety of food areas, including pizza, donuts, baked goods and coffee. It is the franchisor behind Brumby's Bakery, Cafe2u, Crust Gourmet Pizza, Donut King, Michel's Patisserie, Pizza Capers, The Coffee Guy and Gloria Jean's Coffee.

Retail Food Group is also rapidly growing its international business through its recent coffee acquisitions and an agreement with a Chinese company to expand the Gloria Jean's brand in that country. The acquisitions of Gloria Jean's and Di Bella coffee has taken the number of outlets RFG operates to 2,476 across 45 international territories.

Retail Food Group is already the largest wholesale coffee roaster in the country and is set to increase its already significant market share in the growing coffee industry. Whilst coffee looks to be the diamond in the business, Retail Food Group has also managed to achieve organic growth in its non-coffee brands.

Comparing Statistics

Domino's Pizza v Retail Food Group

Price/earnings ratio 53.27 / 23.15

Price/Earnings/Growth ratio 1.88 / 1.04

Return on equity 17.6% / 11.9%

Dividend yield 1.2% (100% fully franked) / 3.4% (100% fully franked)

Dividend reinvestment? No / Yes (2.5% discount)

The winner

Both are great companies with enormous potential and are proving to be well managed. They have increased guidance for their profit outlook this financial year and most analysts have predicted staggering earnings-per-share and dividend-per-share growth for both companies for the next five years.

However, if I were to pick one to invest my money in today, it would have to be Retail Food Group. Aside from the perhaps justifiably high valuation of Domino's Pizza based on past performance, I am more convinced that Retail Food Group can justify its current valuation in the future. Add to this its friendlier dividend yield and option to reinvest and Retail Food Group continues to get my money – and wins the food fight!

The post Food fight! Domino's Pizza Enterprises Ltd. vs. Retail Food Group Limited  appeared first on The Motley Fool Australia.

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Thought investing in property was out of reach? Think again. REITs (real estate investment trusts) provide investors a more affordable way to gain exposure to property assets. REITs generally appeal to investors for their exposure to large-scale property assets particularly commercial, and can provide a consistent, reliable income stream.

A REIT is designed to return to investors the capital growth and rental income generated from the asset. The prevailing favourable low interest rate environment in which REITs currently operate are likely to attract investors looking for income options. There are several large and well performing REIT options on the ASX. One reporting this week was Shopping Centres Australasia Property Group (ASX: SCP).

Shopping centres are often seen as a hub for local suburban and regional communities. This is where SCA Property Group primarily operates throughout Australia and New Zealand. The property group is a spin off from retail giant Woolworths Limited (ASX: WOW), who along with Coles is now a major tenant in the $1.35 billion REIT.

Results

SCA Property Group reported statutory net profit of $98.2 million up 128.4% on the previous corresponding period (PCP). Funds from operations (FFO), a more applicable measure of REIT performance, is reported at $37.8 million up 12.5% on the PCP. Portfolio value stands at $1.8 billion up $158.9 million in the six months since 30 June 2014. This is largely attributed to increases in property valuations and acquisitions.

Total portfolio occupancy stands at 98.6% by gross leasable area. Gearing sits at a comfortable level of 35.8% and debt refinancing is completed at a weighted average debt cost of 4.75%. Subsequently, SCA Property Group has raised FY2015 earnings guidance to 12.6 cents per unit and FY2015 distribution guidance to 11.4 cents per unit.

Outlook

The outlook looks positive for SCA Property Group as it aims to optimise centres and increase rent per square metre with specialty stores and quality long-term tenants. The sector is experiencing the tailwinds of increased valuations and lower interest rates on debt. Consumer confidence and retail spending should also get a lift from lower interest rates and fuel prices.

In turn, SCA Property Group will hope to see further reduction in specialty store vacancy rates which are down from around 20% since listing in 2012 to 5.4% currently. Accretive acquisitions of convenience-based shopping centres and value enhancing development opportunities within the existing portfolio are also part of the group's core strategy to deliver sustainable earnings and distribution growth.

In the current chase for yield, REITs are on the radar and SCA Property Group looks like a stable option in this sector with its 5.4% unfranked dividend yield.

The post Looking to REITs for returns?  appeared first on The Motley Fool Australia.

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Collins Foods Ltd (ASX: CKF) owns and operates 169 KFC and 26 Sizzler restaurants in Australia. In addition, the company has 61 franchised Sizzler restaurants around Asia and also owns 50% of Snag Stand.

KFC has been the leading performer of these brands and this should continue, albeit in a competitive market. KFC could be viewed as one of those Warren Buffett 'forever brands'. Not that this carries a guaranteed formula for success, as evidenced by Coca-Cola's struggles, but it certainly provides an edge.

Through its parent company, Yum! Brands, KFC is executing a worldwide trial of stores it dubs the 'small-box project'. The stores are aimed at establishing a footprint in the tighter spaces of a CBD. The first Australian concept store in Parramatta is contemporary in its design with a trendy menu selection aimed at primarily 20- to 30-somethings. A liquor licence application is still being considered by the NSW government to further target this market. While it won't please everyone, if approved, this could provide another competitive advantage for the 'small-box project' stores.

If the concept proves successful, other project stores are likely to be established throughout Australian cities. KFC intends on retaining its family-friendly drive-through suburban restaurants where the space to operate is available. With the success of the brand marketing through the KFC Big Bash competition and plenty of merit behind the 'small-box project', Collins Food could stay one step ahead of its competition.

Late last year, Collins Foods experienced disagreement at board level, particularly regarding the Sizzler strategy. Sizzler has been weighing the company down and led one of its largest shareholders and former non-executive directors to step down. The former director still retains a 16% holding in Collins Foods and the current board will be hoping they can vindicate pursuing the 'Get Refreshed' Sizzler strategy and its foray into Asia.

Nevertheless, Collins Foods has just reached a 52-week high and is still well worth considering with its 4.2% fully franked dividend yield and attractive price-to-earnings ratio of 14 times.

The post Can this new KFC store boost Collins Foods Ltd?  appeared first on The Motley Fool Australia.

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Legendary investor Peter Lynch popularised the term stalwart. Essentially, it defines a large company with steady and dependable growth and returns.

Two such companies — DuluxGroup Limited (ASX: DLX) and IOOF Holdings Limited (ASX: IFL) — have a lifetime of history in Australia, and in the case of IOOF, even longer! IOOF's origins date back to 1846 from the formation of a friendly society in Melbourne while Dulux originated from a paint business established in Sydney in 1918.

Notwithstanding their long, formidable histories, they are relative youngsters in their current form on the ASX. IOOF Holdings listed on the ASX in 2003 and DuluxGroup was listed in 2010 after its demerger from Orica.

IOOF

IOOF Holdings Limited is a $2.67 billion Australian financial services provider and has many reputable arms to its investment machine. IOOF is set to benefit from the tailwinds of Australia's growing superannuation and annuities industry. According to the last chairman's address to shareholders, the Australian compulsory superannuation system now sits around $1.8 trillion in value and Treasury estimates suggest this could increase to $8 trillion in value by the late 2030s.

IOOF last reported its Funds Under Management, Administration Advice and Supervision (FUMAS) at a whopping $142.9 billion, up from $11.8 billion since listing. Peruse the shareholder lists of many public Australian companies and you will also find IOOF listed as a substantial holder. What is appealing about IOOF is that it has an attractive price earnings to growth ratio (PEG) of 1.32, a 15% return on equity and yields a 5.6% fully franked dividend. Throw a rising local bourse into the mix and IOOF should continue to achieve solid earnings and dividend-per-share growth.

DuluxGroup

DuluxGroup Limited is a $2.25 billion company that most of us would associate with paint production. However, DuluxGroup is much more than that with its stable of steadfast brands such as Cabots, Berger, British Paints, Selleys, Yates and B&D garage doors. These brands have entrenched themselves over many years and are gaining further recognition in a booming housing sector.

DuluxGroup will prosper from a growing population and the inevitable urban expansion with several proposed new estates in Victoria alone. However, it is the 62% of earnings derived from home maintenance and improvement where DuluxGroup really cashes in. The popularity of TV shows such as The Block, House Rules, Better Homes and Gardens and Grand Designs continue to spur on budding renovators and this bodes well for the resilient DuluxGroup.

DuluxGroup offers a solid 3.6% fully franked dividend at current prices and an active dividend reinvestment plan with a 2.5% discount. A current return on equity of 37% and earnings per share growth forecast at around 15% for FY2015 should spur on budding investors too.

Do these stocks belong in your portfolio?

These stalwart companies currently trade around the mid-range of their historical price-to-earnings ratios and investors will be attracted to their reliable earnings and shareholder-friendly dividend-per-share growth.

The post 2 solid dividend stocks for the long-term  appeared first on The Motley Fool Australia.

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After a stellar 2014, Transurban Group (ASX: TCL) is set to continue outperforming the market with its toll revenue growth (proportional toll revenue growth in September was reported at 36.7%) and heavy free cash flow increases (up 29% in the last financial year).

Add to this its ability to secure attractive debt refinancing and U.S. revenues set to ramp up with the opening of the I95 express lane in Northern Virginia, and Transurban could be just what investors are looking for —  a safe haven asset with income and capital growth. Now that could be a turn worth taking!

With forecast lower returns on term deposits, subdued economic conditions, falling consumer confidence and murmurs about the future performance of the big banks, investors are struggling to know where to put their hard-earned dollars. Transurban could well be the investment that steers investors through this period of uncertainty. Not only will it benefit from lower rates on its debt and a lower Aussie dollar favouring its U.S. earnings, Transurban is likely to benefit from cheaper petrol prices encouraging the increased usage of motor vehicles.

Transurban is already this country's 'monopoly' toll road operator and has a proven track record as the road infrastructure partner of choice. Governments at the federal and state level and around the world know they need to invest in infrastructure projects to support increases in population and stimulate economic growth.

In this climate of caution, though, investors may not be as easily convinced. Transurban may not pass some of the more traditional fundamental filters given its high price-to-earnings ratio (P/E) of 46 and debt-to-equity ratio of 117%.

However, if we drill down further and look at the price-to-earnings-to-growth ratio (PEG) of 2.22 and interest coverage ratio of 1.58, there's a ray of light at the end of the tunnel. It is common for infrastructure stocks to traditionally trade on high P/E and debt/equity multiples. Take Sydney Airports (ASX: SYD), for example, which trades at a P/E ratio of 50 times and debt/equity ratio of 184%!

What Transurban has that makes it a compelling proposition, aside from its burgeoning cash flows, is its healthy earnings per share growth supporting its equally healthy dividend per share growth. In fact, since the 2009 financial year, its distributions growth has compounded at a rate of 10%, taking the FY2015 distribution to 39 cents a share partially franked. Throw in the ability to opt in to the  dividend reinvestment plan and your investment growth can be compounded even further.

The beauty of Transurban is its ability to keep clipping the ticket on a growing portfolio of roads with increasing traffic numbers, which is why even the legendary Warren Buffett likes to own 'toll bridges'. So jump in and come along for a comfortable ride with Transurban in 2015.

The post Can Transurban Group drive you to riches in 2015?  appeared first on The Motley Fool Australia.

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