BBA Aviation’s (LSE: BBA) one such share I reckon could burst forth. Despite concerns over the health of the US economy, the FTSE 250 company’s share price has remained on the up-and-up, rising 33% in the year to date. I see no reason why the aviation services provider can’t add to these gains, either, when interims are unpacked on August 5.

The stock published a stunning set of results last time out in May, and whilst US economic conditions are expected to have worsened more recently — putting strain on overall air traffic in the country — I’m confident that the massive investment BBA’s made in its broadening and improving its fixed-based operator (FBO) network should deliver yet more splendid sales growth.

A great growth and dividend share

The flying ace can’t exactly be considered a bargain on paper. But I’d argue that its forward P/E ratio of 16.2 times is in fact an indicator of great value, given its ability to thrive in difficult market conditions, not to mention the exceptional long-term earnings opportunities delivered by that aforementioned spending programme as well as booming air traffic volumes.

Indeed, on the latter point, Airbus believes that surging traveller numbers and consequent growth in plane deliveries will cause the aviation services business to more than double in size over the next two decades, from around $150bn per annum today to $330bn by 2037.

Add in a bulky 4.1% corresponding yield and I reckon BBA’s a terrific buy today.

Massive yielder one day?

I’d also happily buy Glenveagh Properties (LSE: GLV) before half-year results of its own are unpackaged on August 23.

Those seeking a slice of the property sector might want to look at some of the major players on the other side of the Irish Sea because, as I mentioned in a recent piece on Cairn Homes, the housing shortage that’s propelling earnings relentlessly higher for British operators is similarly boosting their peers on the Emerald Isle.

This was again evident in Glenveagh’s most recent trading update in early May in which it celebrated the “strong private buyer interest and sales for its starter-home schemes in the spring selling season.” It’s no wonder that City analysts are expecting the Dublin firm to burst into profit in 2019 and for the bottom line to keep surging through 2020.

But this isn’t the only reason to pile into the company today, in my opinion. While investors here may have to wait longer for big dividends than for those over at BBA, predictions that Glenveagh will start rewarding investors from next year means that it sports a jaw-dropping 12.7% forward dividend yield.

At current prices, Glenveagh trades on a high prospective P/E rating of 24.2 times, although I’d argue that the stunning dividend takes the edge off. Like BBA, I’d happily buy the builder ahead of August and hold it for years to come.

The post These dividend stocks may surge in August: is now the time to buy? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. 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.

There’s never been a better time for investors to go hunting for income on Britain’s elite stock index, largely speaking, though Vodafone is unlikely to be the last blue-chip to slash payouts this year. I picked out a retailer and a utilities supplier in recent days that could both be on the precipice of reducing shareholder rewards, and they’re unlikely to be the only Footsie firms to curtail dividends in the coming months.

Flying high

If you fancy grabbing some dividend stocks, but want to avoid the FTSE 100 for the time being, happily there’s no shortage of income heroes to choose from. Indeed, big yielder BBA Aviation (LSE: BBA) is one FTSE 250 share I’m tipping to keep increasing dividends, and most recent financials reinforced my bullishness on the business.

I’ve long lauded the brilliant sales opportunities the company’s M&A-led growth strategy has provided, and in the first four months of 2019 revenues at group level boomed 23.1%. The result revealed the impact that recent acquisitions action, like the purchase of fuel supplier EPIC and component builder Firstmark in 2018, have had on the top line.

Despite the impact of slowing business and general aviation traffic in the US, the vast investment BBA Aviation has made in recent years to bolster its geographic footprint and range of solutions is allowing it to outperform the broader market by some distance (while US aviation activity rose just 0.3% between January and March, revenues at the company’s flagship Signature flight support division increased 1.2% on a like-for-like basis).

It’s no wonder City analysts are expecting earnings, as well as dividends, to keep rising through to the close of next year, meaning investors can enjoy juicy yields of 4.2% and 4.4% for 2019 and 2020, respectively. Chuck its undemanding forward P/E ratio of 15.4 times into the equation and I think BBA is a great stock to pick up today.

Bank on big dividends

Before I let you go, I also want to highlight Bank of Georgia (LSE: BGEO) as another share from the FTSE 250 I expect to keep growing shareholder payouts too.

I last covered the emerging market share when it announced ripping revenues growth in 2018, and I’m pleased to say trading has remained ultra-encouraging since. Last week, the bank declared profit before tax (and excluding one-off termination payments to management) exploded 10.6% between January and March to 122.7m Georgian lari, while its loan book surged by a staggering 14.7% year-on-year at constant currencies.

Bank of Georgia is thriving thanks to the twin drivers of breakneck economic growth in the Eurasian nation’s economy and the low levels of banking product penetration there. And it’s why the number crunchers are expecting earnings to keep swelling over the next couple of years here as well.

Oh, and speaking of those dividends, expectations of bright growth to the end of 2020 results in giant yields of 5.5% and 6.4% for this year and next, respectively. Chuck a low forward P/E ratio of 6 times into the bargain too, and I reckon Bank of Georgia is a terrific income titan to load up on right now.

The post I say avoid the stress of FTSE 100 dividend cuts with these FTSE 250 income stocks appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. 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.

The US business and general aviation market may be crawling rather than rocketing higher, but sales at the flight support services play continue to grow ahead of the broader market. That’s because of the steps it’s taken to improve customer service and build its fixed base operator (FBO) network across the world.

Speaking of which, BBA has shelled out plenty via acquisitions to boost its geographical and operational wingspan, the latest of which in 2018 saw it snap up fuel and fuel-related services provider EPIC to bolster its core Signature FBO division significantly. What’s more, because of its explosive cash generation, the firm’s in great shape to keep investing both organically and through M&A to boost earnings.

Investors assemble

Dividend-seeking bargain hunters should also pay Cineworld Group (LSE: CINE) very close attention today.

As a shareholder of the cinema chain myself, I’ve long celebrated the electrifying impact Hollywood and its packed roster of superhero movies are having on box office takings all over the globe. The appeal of these audiovisual masterpieces was underlined by Imax chief executive Richard Gelfond last week who declared: “With a robust lineup of tentpole films ahead, like the highly-anticipated Avengers: Endgame… we anticipate delivering our strongest box office year ever in 2019.”

Indeed, news that the latest outing for Captain America et al generated $1bn in ticket sales in its opening weekend, the first time such a milestone has ever been achieved, illustrates the immense profits-generating capabilities of such films.

It’s no shock to find City analysts forecasting a 19% earnings rise at Cineworld in 2019 then, a figure that creates a dirt-cheap prospective P/E multiple of 12.5 times. Throw big dividend yields of 4.2% and 4.6% into the bargain and I reckon the FTSE 250 firm is a cracking buy today.

Yields close to 6%

The broader advertising market may be under pressure but this isn’t likely to dent STV Group (LSE: STVG) and its ability to deliver splendid earnings growth, or so say the experts. An 11% bottom-line rise is forecast for 2019.

The broadcaster’s latest trading statement last week certainly gave fresh reason to be optimistic. In it, STV said that total advertising revenues are expected to have risen 1-2% in the first quarter, with a marginal drop in national sales anticipated to have been offset by ripping regional ad sales growth of 20-25% and digital ad growth of 15-20%.

What’s more, a decade’s best viewing performance in 2018 has carried over to the first quarter, the firm said, helped by soaring watching figures on the STV Player platform. It’s why City brokers are predicting a 13% profits rise in 2019, a projection that creates a forward P/E rating of just 8 times. Dividends will also keep climbing through to the end of next year too, resulting in monster yields of 5.6% for 2019 and 5.9% for 2020. I reckon STV is a stock that could help you to make a fortune in the years ahead.

The post 3 value stocks paying BIG dividends that I’d buy today appeared first on The Twelfth Magpie.

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Royston Wild owns shares of Cineworld Group. The Motley Fool UK owns shares of and has recommended BBA Aviation. 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.

Two particular stocks from the FTSE 250 — Softcat (LSE: SCT) and BBA Aviation (LSE: BBA) — saw their share values fall 20% or more in the last month. Unjustifiably so, in my opinion, but on the plus side, they leave investors the opportunity to pick up a bargain.

Special dividends keep on coming

Softcat’s October drop was somewhat perplexing given that it released ultra-positive financials during that time.

The IT infrastructure specialist reported that revenues boomed 30% in the 12 months to July, to £1.08bn, as adjusted operating profit rose 37%, to £70.5m.

And there was plenty for dividend chasers to cheer again as well. As I tipped previously, Softcat was happy to keep shelling out special dividends on account of its bulging bottom line and surging cash flows (which pushed net cash £11.2m higher year-on-year, to £72.8m). It paid a 15.1p per share supplementary reward for last year, up from fiscal 2017’s 13.5p payout.

With the tech titan also raising the ordinary dividend to 8.8p, from 6.1p previously, the total dividend rung in at 23.9p, up 22% year-on-year.

And given the rate at which Softcat is likely to continue winning business, I’m expecting dividends to keep on shooting skywards. Market conditions are still going from strength to strength as companies invest more and more into fast-growing areas like security, digitisation, and the Internet of Things.

And crucially, because the FTSE 250 firm is not reliant on one or two customers to drive its bottom line, Softcat has supreme earnings visibility. To illustrate this fact, the business advised that its top 20 clients contributed ‘only’ two-thirds of total sales last year. Naturally, this puts it in better shape than many to have the confidence to keep raising dividends at an impressive pace.

Softcat currently carries a forward P/E ratio of 21.8 times, representing a significant discount to the company’s historic highs. And given the rate at which sales are still growing, I reckon this makes the company a bargain today.

Flying high

BBA Aviation also had an October to forget, as existing pessimism surrounding the firm following August’s half-year update continued. Back then, the aviation support business declared that a series of one-off costs had pushed pre-tax profit 11% lower from January to June, to $76.2m.

I was more interested in news that revenues jumped 14% in the first half to $1.02bn, a result that affirmed the company’s strategy of supercharging its global FBO network through ambitious acquisitions. With the strong US economy supporting steady growth in the number of business aviation flights, I’m confident that business at BBA should continue to surge.

Right now the flying ace sports a low, low forward P/E ratio of 13.9 times, and a bumper corresponding dividend yield of 4.5%. It’s a brilliant buy for investors seeking bright profits and dividend growth both now and in the years to come, in my opinion.

The post Have £3,000 to invest? Here are 2 FTSE 250 dividend stocks I consider bargains after October’s 20%+ falls appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. 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.

These three top FTSE 250 shares are going from strength to strength. They offer big dividends now and I’m tipping them to continue doing  so. Why not take a look?

A golden choice

It’s a popular conviction in investing circles that having exposure to gold is a good idea. If the world goes to hell in a handcart, at least savers can take comfort in the yellow metal, a much-loved safe-haven commodity for millennia.

One great way to get bullion exposure is to buy shares in FTSE 250 mining Goliath Polymetal International (LSE: POLY).

Firstly, it can be snapped up for next to nothing, the company carrying a forward P/E ratio of just 9.1 times. Secondly, Polymetal carries inflation-smashing dividend yields of 5.4% and 6.9% for 2018 and 2019 respectively. And lastly, City analysts expect earnings growth to click through the gears in the next couple of years (a predicted 4% rise for this year is anticipated to jump to 27% in 2019).

The number crunchers remain resolute over gold prices for the next couple of years at least. Added to the steps the Russian miner is taking to boost production, the profits outlook is looking better and better.

Flying high

BBA Aviation (LSE: BBA) is another company from Britain’s second tier share index that I’m tipping for great things.

I’ve talked before about the transformative acquisitions it has made to bolster its fixed base operation (FBO) network across the world, and I said that it shouldn’t be long before BBA embarks on fresh M&A action. So it has come to pass with the business buying aftermarket service provider Firstmark for $97m earlier this month, a move that boosts the company’s position on the East Coast of the US.

BBA may be expected to endure some little earnings turbulence in the near term, a 6% slip currently being forecast for this year by the City. But it’s expected to come roaring back with a 12% rise in 2019, and I’d bet that its ambitious expansion programme should keep earnings sailing broadly higher in the years ahead.

A forward P/E ratio of 17.1 times may be a little expensive. However, juicy dividend yields of 3.7% and 3.9% for 2018 and 2019 respectively help to take the edge off.

Build a fortune

My final pick for this article is Morgan Sindall Group (LSE: MGNS). Earnings growth is expected to continue through the medium term at least, with rises of 19% for 2018 and 1% for next year currently being anticipated by City boffins. This gives rise to a rock-bottom forward P/E multiple of 9.5 times as well as predictions of further dividend growth. Thus dividend yields sit at a chubby 3.7% and 3.9% for this year and next respectively.

It doesn’t require a huge stretch of the imagination to see dividends continuing to rise beyond this period either. Steps to improve the quality of earnings have helped margins to detonate at its core Construction and Infrastructure division, up 60 basis points to 1.7% between January and June, and there’s still more upside to be had.

When you consider the excellent revenues opportunities at its Urban Regeneration arm too, I reckon Morgan Sindall is a share that should keep providing excellent sustained earnings and dividend growth long into the future.

The post 3 FTSE 250 dividend stocks to buy and hold for the next 50 years appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. 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.

The analysts believe short-term political uncertainty is putting investors off, although they also go on note as saying this could be a tremendous opportunity for long-term investors.

I agree with Morgan’s view. Yes, the outlook for the UK economy is uncertain, but there are plenty of other companies in the FTSE 250 with an international focus, such as BBA Aviation (LSE: BBA) for example.

British success story

BBA is a great British success story. Founded in 1897 and public since 1964, today the company is one of the largest providers of aviation support services globally. 

This business isn’t glamorous, but it’s essential. The group is separated into two divisions, Flight Support, and Aftermarket Services, which keep planes in the sky and heading in the right direction. And rather than focus on the general aviation market, BBA’s primary business is managing private jets, which I believe gives the company an edge over others in the sector. 

Over the years, BBA has built itself up through a combination of organic growth and bolt-on acquisitions, the latest of which is Firstmark Corp, an aftermarket service provider, for a consideration of $97m.

In my mind, BBA’s niche but essential business gives it great dividend credentials. Organic growth topped up with select acquisitions should support dividend growth. Meanwhile, the essential nature of the business should ensure no sudden drop in income, which is usually why companies are forced to slash distributions.

City analysts have the company paying out $0.14 per share for 2018, rising to $0.15 for 2019. These estimates give a dividend yield of 3.7%, which isn’t that exciting. However, it’s the longevity of the payout that excites me. For the reasons listed above, I believe you can rely on BBA for income for many decades to come.

Steady growth 

Another FTSE 250 income stock that I believe has exciting long-term prospects is Bodycote (LSE: BOY). 

Once again, Bodycote is not a household name, but it’s good at what it does, namely providing thermal processing services in countries around the world. These processes are essential in manufacturing industries such as aerospace and defence, where precision and reliability counts for everything.

Bodycote’s position in the industry has helped the company grow net profit by 52% over the past six years. Analysts are expecting earnings per share (EPS) growth of 13% this year, followed by an increase of 6% next year.

As earnings have grown steadily over the past decade, management has rewarded shareholders with steady dividend growth. Since 2012, the group’s dividend payout has increased at a compound annual growth rate of 7.2%. 

Unfortunately, like BBA, the dividend yield disappoints because shares in Bodycote only yield 2.2% at the time of writing. Nevertheless, it’s the company’s established reputation and steady growth that gets me excited about its prospects. 

It seems management is also optimistic about what the future holds. CEO Stephen Harris recently made his first acquisition of the company’s shares, spending £100,000 to snap up just over 11,000 shares.

Bodycote is a stock to buy today and hold for years, in my opinion.

The post These 2 FTSE 250 dividend stocks could help you quit your job appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. The Motley Fool UK has recommended Bodycote. 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.

I see defence contractor QinetiQ (LSE: QQ) as falling into that category, and I see its unloved share price as providing a nice bargain at the moment — even after it’s enjoyed a bit of a recovery so far this year.

There was a modest uptick Wednesday as markets reacted well to a first-quarter trading update, which said: “Underlying trading for the group was as expected during the first quarter, with no change to expectations for group performance in the current financial year.” 

That might not sound exciting, but with Brexit and trade wars making markets feel nervous, and a number of companies downgrading their guidance, an ‘all’s fine’ update really does seem like good news.

Earnings dip

Forecasts suggest EPS will dip by 12% this year, but I’m not too worried about that as the defence business really is focused on the seriously long term. And I also reckon P/E multiples of around 16 are fair value.

But the big thing for me is QinetiQ’s dividend prospects. My colleague Rupert Hargreaves thinks there’s significant upward potential for the annual cash payments, and I agree. The yield for 2018 came in at a modest 3.1%, and the share price recovery since then has dropped forecast yields to only around 2.5%.

But we’re looking at rises ahead of inflation, with payments very well covered by earnings. And unlike a lot of big dividend payers, QinetiQ has no debt – in fact, there was net cash of £267m on the books at 31 March.

Bigger yield

BBA Aviation (LSE: BBA) is another company I rate highly as a long-term dividend stock, and it’s actually offering a bigger dividend yield at the moment with forecast suggesting 3.2% this year and 3.4% next. 

We haven’t seen the same progressive rises as from QinetiQ, and the payment was actually cut slightly in 2016 and held at the same level the following year. But that was in response to an EPS drop of 18% in 2015, the year in which it acquired competitor Landmark, which left that year’s dividend relatively weakly covered.

But after a strong earnings recovery, we’re looking at dividends set to resume their annual rises from this year, with predicted cover back up to around 1.8 times.

Growth ahead?

Fellow Fool write Royston Wild believes that BBA has some significant growth potential ahead of it, including possible future acquisitions, and I reckon that should cement the basis for further steady dividend rises in the coming years.

As a company in pursuit of acquisitions, BBA does carry net debt, which stood at $1,167m at 31 December 2017. But it was down from $1,335m a year previously. That represents a net debt-to-EBITDA ratio of approximately 2.6 times, and I wouldn’t like to see it get much higher than that. But strong free cash flow (of $220.7m in 2017) softens my concerns on that front.

BBA shares have put in a 59% rise over the past five years, but I still see a 2019 P/E valuations of 16.6 as not being too stretching. 

The post 2 FTSE 250 dividend stocks that could help you retire early appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. 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.

While this is positive news for investors in the stock and the index, other investors may have missed out on their gains. For them though, it may not be too late to capitalise on their future prospects. Alongside another stock with growth potential, there seem to be significant investment opportunities still available within the FTSE 100 and FTSE 250.

Solid outlook

While Diageo may not offer the highest earnings growth in the index, the beverages company has a relatively solid business model. Demand for its products is likely to remain robust in a variety of market conditions, and this may mean it offers less risk than some of its FTSE 100 peers.

This may be especially relevant given the volatility in the wider index that occurred in the earlier part of the year. Should economic data prove to be unfavourable, investor sentiment could come under pressure and mean that more stable stocks deliver outperformance.

Growth potential

Of course, Diageo’s bottom line is expected to rise over the next couple of years. It is due to grow by 6% this year and by 8% in the following year. This has the potential to boost investor sentiment in the stock, and while it has a price-to-earnings (P/E) ratio of around 26, its enticing risk/reward ratio means that it could outperform the wider index.

With the company’s dividends forecast to rise by over 6% per annum over the next two years, it could become an increasingly attractive income play. A dividend yield of 2.6% is ahead of inflation and may offer sustainable growth for the long run. As such, despite its recent share price rise, it does not appear to be too late to buy the stock.

Improving outlook

Also making gains in the last month has been global aviation support and aftermarket services provider BBA Aviation (LSE: BBA). The company released a positive trading update on Friday which showed that it has performed in line with expectations in the first four months of 2018. Revenue has risen by 9.7%, with like-for-like (LFL) revenue increasing by 2.9%.

The company has seen strong momentum in its Signature network, with recent investments improving its overall growth outlook. Having completed the refinancing of the company, it now appears to have a solid capital structure through which to deliver improved financial performance over the long run.

With BBA Aviation expected to report a rise in its bottom line of 8% this year and 7% next time, it seems to have a bright future. And with dividends per share expected to rise by 8% per annum over the next two years, it could become a solid income stock due to it having a forward dividend yield of 3.3%.

The post Missed out on FTSE 100 member Diageo’s share price gains? Here’s what to do appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Diageo. The Motley Fool UK owns shares of and has recommended BBA Aviation. The Motley Fool UK has recommended Diageo. 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.

The FTSE 250 business saw revenues jump 10% in 2017, to $2.37bn, as its core Signature division, responsible for more than four-fifths of group underlying operating profit, outperformed the broader market. And the arm has seen business momentum really picking up in recent months, organic revenue growth of 4.4% during July-December outperforming sales expansion of the broader US business and general aviation (or B&GA) segment in which turnover rose by a more modest 4.1%.

Signature is the planet’s biggest fixed base operation (FBO) network for B&GA customers, operating in more than 200 locations spanning the globe and which includes 37 locations in the 50 largest airports in the US. This formidable footprint leaves BBA Aviation in prime position to harness the steady growth in aviation traffic in the years ahead.

What’s more, BBA Aviation has teased the market with hints that additional M&A action could be on the cards through the cultivation of more small bolt-on purchases. The company certainly has the financial firepower to pursue such earnings-boosting action — it secured a four-year extension to an existing $650m loan earlier this month which had been due to mature in March 2019.

Lifting off

BBA Aviation has seen earnings grow by double-digit percentages of late as the 2015 acquisition of rival Landmark has borne fruit. And it is expected to keep this run going with an extra 10% improvement in 2018. A more modest 7% rise is forecast for next year, although this is not to be scoffed at.

What’s more, the flying ace’s bright earnings outlook is expected to keep pushing dividends higher too, meaning investors can enjoy an added bonus of juicy 3.3% and 3.5% yields for this year and next respectively.

A forward P/E ratio of 16.9 times may be slightly toppy on paper, falling outside the widely-regarded value terrain of 15 times or below. However, I would consider this a reasonable price given BBA Aviation’s exceptional position in a market with terrific structural growth opportunities.

A breath of fresh air

Porvair (LSE: PRV) is another share with exceptional long-term revenues opportunities. The filtration specialist saw revenues reach an annual record of £116.4m in the 12 months to November 2017, its ability to source and integrate acquisition targets again continuing to help drive the top line.

Its approach to M&A  gives it a leading position in a number of growing niches which carry exceptional barriers to entry, and helped by its formidable cash generation Porvair is showing no signs of slowing down yet. Indeed, it snapped up filter cartridge giant Keystone just last month to bolster its sales opportunities in the gigantic US market.       

Now Porvair boasts a long record of unbroken profits growth, the bottom line having swelled by double-digit percentages in more recent years. And City brokers expect this proud history to keep running, rises of 3% and 5% being forecast for fiscal 2018 and 2019 respectively.

The small-cap may deal on an elevated prospective P/E ratio of 24.2 times. But I believe Porvair’s expertise in many specialist markets across the globe makes it worthy of a premium rating.

The post 2 growth stocks I’d hold for the next 20 years appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. The Motley Fool UK owns shares of Porvair. 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.

The company noted that the “challenging environment in shipping” has resulted in “transactions being pushed back within the financial segment” compounding weakness in other areas of the business. As well as this, the firm has “suffered from lower freight rates within the tanker market and a fall in the value of the US Dollar.” All of these factors have combined to form the perfect storm for Clarkson. Management now expects profits for the first half and the full year to be “materially below those of last year.“

Re-rating of the shares 

Up until today, the City had been expecting Clarkson to report earnings growth for the full year of 17.3%, following an increase of 14% last year. 

With this double-digit growth rate expected, the market was placing a high valuation on the shares of 22 times forward earnings. However, now management has warned that income is set to fall, it’s clear the stock deserves a lower valuation, which explains today’s decline. 

Falling earnings could also jeopardise Clarkson’s dividend growth. Analysts had been predicting payout growth of 11% for this year, followed by growth of 8% for 2019. Depending on how severe the earnings decline is, management might be forced to put further dividend expansion on ice. 

With this being the case, I would avoid Clarkson in favour of BBA Aviation (LSE: BBA). 

Booming industry 

BBA is benefitting from the rising demand for air travel and related services around the world. If the company hits City targets for growth this year, over the past six years the enterprise will have grown net profit by 160%, thanks to a combination of both organic and bolt-on growth. 

It seems management is confident of hitting this target. At the beginning of March, alongside full-year 2017 numbers, interim CEO Wayne Edmunds declared “the board remains confident of good growth in 2018 with a good pipeline of further investment opportunities.“

In other words, it looks as if BBA has a much brighter outlook than Clarkson and this is good news for dividend investors. City analysts are expecting BBA to announce a full-year 2018 dividend payout of $0.14 per share, giving a prospective dividend yield of 3.2% at current prices. The distribution will be covered an estimated 1.8 times by earnings per share, leaving management plenty of headroom for further payout increases in the years ahead. 

What’s more, as the outlook for the aviation industry is much more positive, and in my view, more stable than that of the shipping industry, BBA is, in my opinion, a much better long-term investment than Clarkson as it should be able to continue to grow earnings at a steady rate for many years to come. Clarkson meanwhile will always struggle in the unpredictable, cyclical shipping industry, which is not a good backdrop for dividend growth.

The post One FTSE 250 dividend-growth stock I’d buy and one I’d sell after today’s news appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. 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.