Independent brewing and pub retailing company Marston’s has been transforming its pubs assets by developing franchise style pubs, which focus on food and drinks, while disposing of older drinks-led pubs. These now generate roughly 51% of the company’s profits and give it better control over the retail offer. Investors should appreciate that this is a company which has forecast growth in dividends above inflation and there has been good organic growth in the overall business.

A first quarter update in January revealed that trading remained healthy with record sales in the key run-up to Christmas. In the destination and premium pubs business food sales rose 2.5% and operating margins were up on last year. Furthermore, the group said it plans to open at least 20 further new-build pubs this year.

The continued transformation of the group, combined with rising UK wage levels are positives for investors and, as a result, we recommend Marston’s as a ‘buy’ for medium risk income-seeking investors. Investors should acknowledge that the total reliance on UK consumers does increase the risk, but the fall in the price of oil may feed through to increased consumer spending.