LONDON -- Shares in Kingfisher  have been unable to track the FTSE 100 higher in recent months, the effect of patchy consumer data in its main-end markets capping investor appetite.

Although the outlook remains cloudy for the multinational retailer, I believe that Kingfisher -- whose stable of retail outlets include B&Q and Screwfix -- remains a choice pick for income investors seeking reliable dividends, while its cost-cutting scheme should help to bolster the balance sheet and drive earnings higher.

Retailer tipped to bounce back following difficult year
The company announced in its full-year results last month that group sales slumped 2.4% in the year ending February 2013, to 10.6 billion pounds. This, in turn, drove adjusted pre-tax profit 11.4% lower, to 781 million pounds. Kingfisher said that a combination of poor weather in the U.K., weak consumer confidence in its key territories, and adverse currency movements all weighed on performance last year.


However, the retailer has still managed to build a solid platform upon which to underpin long-term growth -- Kingfisher's self-help initiative should help to weather further short-term weakness and create a more efficient machine beyond this, while it also eliminated 88 million pounds worth of net debt and emerged the year with 38 million pounds in net cash.

City analysts expect earnings per share (EPS) to bounce back from this year onwards - last year's 11% fall, to 22 pence, is predicted to bounce 7% higher, to 24 pence in 2014, before accelerating 11% the following year, to 27 pence.

Kingfisher currently trades on a P/E rating of 12.2 and 10.9 for 2014 and 2015, respectively, providing a significant discount to a prospective earnings multiple of 18.6 for the wider general retailers sector.

A decent dividend play
On top of the possibility of healthy earnings growth, the retail group also offers investors excellent dividend prospects. Kingfisher has a steady record of building shareholder payments, even in times of sales pressure -- despite last year's double-digit EPS fall, the firm still increased the dividend 7%, to 9.5 pence.

And brokers expect this to rise to 10.1 pence this year, before increasing to 11.1 pence in 2015, carrying yields in excess of the 3.2% FTSE 100 average. A dividend yield of 3.5% for 2014 is predicted to rise to 3.8% the following year.

The firm's ability to keep stakeholder returns rolling can be attributed to its commitment to providing stellar dividend coverage, giving investors peace of mind over future payout levels. Dividend cover of 2.4 times for both of the next two years is comfortably ahead of the generally regarded security benchmark of two times.

Zone in on other sterling stocks
If you already hold shares in Kingfisher, check out this newly updated special report, which highlights a host of other FTSE winners identified by ace fund manager Neil Woodford.

Woodford -- head of U.K. Equities at Invesco Perpetual -- has more than 30 years' experience in the industry, and boasts an exceptional track record when it comes to selecting stock market stars.

The report, compiled by The Motley Fool's crack team of analysts, is totally free, and comes with no further obligation. Click here now to download your copy.

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The article Should You Buy Kingfisher Today? originally appeared on Fool.com.

Royston Wild does not own shares in Kingfisher. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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