Today I’m going to highlight three of these opportunities, which all support dividend yields of 5% or more.

Booming market

My first pick is brick producer Ibstock (LSE: IBST). The design, manufacture and sale of bricks might not seem like a tremendously exciting business, but it is an essential one.

Ibstock manufactures bricks both here in the UK and in the US. It has been using its size and experience to grab market share and boost earnings over the past five years.

Since 2013, net profit has soared from £9.8m to £76m. In 2015 when the company went public, management started the dividend at 4.4p per share, and it has since risen to 16p. Based on current City projections, the stock offers a forward dividend yield of 5.7% and the distribution to investors will be covered 1.3 times earnings per share.

As long as the world’s population continues to expand, and the demand for housing grows with it, the need for bricks will only grow as well. That’s why I reckon Ibstock will remain a great income stock to buy and hold for the next decade.

Trusted lender

The second buy-and-forget stock that’s on my radar is Close Brothers Group (LSE: CBG).

Close Brothers is a banking and wealth management specialist. Over the past six years, earnings per share have grown at a compound annual rate of 7% as it has carefully invested profits back into its operations to expand in the markets it knows best. This careful expansion is one of the reasons why the financial services group’s return on equity has averaged 16.6% for the past five years (compared to the industry average of 10%).

If management continues on this course of careful, calculated, growth in the firm’s core markets, I reckon the business will continue to grow for many years to come.

These calculated expansion efforts have also allowed the company to up its dividend steadily. Close Brothers’ dividend per share has increased at an average of 6.1% per year since 2014, and the stock currently supports a dividend yield of 5.1%. The payout is covered twice by earnings per share.

Financial champion

My last pick is the hedge fund group Man (LSE: EMG). It is often said hedge fund owners make more money for themselves than for the investors who entrust them with the management of their money, so if you want to make money, one of the best strategies, in my opinion, is to own a hedge fund. You can do just that with Man.

Man earns money from clients with both regular management fees and performance fees, which can be lumpy. Still, despite this fact, net profit has surged from $72m in 2013 to $273m for 2018. City analysts are expecting further growth to $284m by 2019.

As earnings have surged, management has increased cash returns to shareholders, who are the ultimate owners of the business. This year the City believes the firm will pay out a total of $0.09 per share, giving a dividend yield of 4.7% on the current share price. Further growth is projected for 2020. The yield could hit 5.4% next year based on these current projections.

Right now shares in Man are trading at a forward P/E of 11.1.

The post £5k to spend? 3 FTSE 250 dividend stocks yielding 5% I’d buy for my ISA and hold for a decade appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Ibstock. 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.

Close call

Merchant banking group Close Brothers Group (LSE: CBG) is down more than 3% today, while Investec (LSE: INVP) got off fairly lightly, dipping just 1.4%.

Close Brothers reported a “solid start to the year” in its first-quarter statement and said it continues to perform well in current market conditions. Its banking division has been delivering growth and good returns, “reflecting the diversity of our loan portfolio and disciplined approach to lending.”

Oh Brothers

Its loan book increased 1.9% to £7.4bn, driven by strong growth in its commercial asset, invoice and specialist finance areas. Net interest margins are broadly in line with 2018, while impairment charges remain low.

The £2.2bn group’s Winterflood arm has remained resilient, despite more challenging market conditions, while Asset Management “achieved solid net inflows.” However, negative market movements resulted in a slight decline in managed assets, from £10.4bn to £10.2bn, and a decrease in total client assets, from £12.2bn to £11.9 since 31 July.

Bank on it

Management was happy with a solid performance as Close remains “well positioned for the remainder of the financial year”. Its share price is actually up 15% over the past 12 months, which displays some resilience, yet it trades at a bargain valuation of 10.7 times earnings. Investors also get a forecast yield of 4.2%, with cover of 2.2.

One worry is that five consecutive years of earnings per share (EPS) growth look set to flatten in the year to 31 July 2019. Yet my colleague GA Chester reckons he would still buy Close Brothers ahead of Lloyds Banking Group.

Money men

Investec “delivered a sound operational performance” in the six months to 30 September, notwithstanding a challenging operating environment due to “rising US interest rates, the threat of trade wars, concerns over global growth prospects, weak economic growth in South Africa and Brexit-related uncertainty in the UK.”

Given those headwinds, its Asset Management and Wealth & Investment businesses have done well to grow funds under management, supported by strong net flows of £4.8bn. Investec’s Specialist Banking arm saw a substantial reduction in impairments, as well as revenue growth, supported by reasonable levels of client activity.

Profits up

Investec posted a 14.2% rise in operating profit to £359.3m, up 17.6% on a currency neutral basis (excluding the negative impact of the rand’s depreciation). However, its share price is just 15% higher than five years ago.

The group is now facing a drop-off in EPS growth after five years of growth, with a forecast 1% fall in the year to 31 March 2019, but then rebounding 7% the year after. However, a forecast yield of 5.2%, with cover of 2.1, looks tempting. Especially with the stock trading at a low forward valuation of just 9.3 times earnings. Rupert Hargreaves would buy and hold it for a decade. If you’re tired of the big bad banks, here are a couple of potential goodies.

The post Are these 2 stocks the best way to play a pre-Christmas stock market rally? appeared first on The Twelfth Magpie.

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harveyj has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking 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.

Given Woodford’s reputation, do I think private investors would benefit from following the fund manager and loading up on the stock for the huge yield?

Be careful of high yields

I’m not so sure. I’m always wary of a stock’s yield when it is higher than around 6%-7%. When a yield is up near 9%, you have to ask yourself why it is so elevated. In other words, why is the share price so low that it has pushed the yield up so high?

In Barratt’s case, investors are no doubt concerned about the state of the UK housing market, and this has pushed the P/E ratio down and the yield up. Even though we have a shortage of affordable housing in the UK, Brexit uncertainty, rising interest rates, increasing construction costs and high levels of consumer debt are all threats to demand growth. A recent profit warning from peer Crest Nicholson won’t have helped sentiment towards the stock.

A downturn in the UK’s housing market could have disastrous implications for Barratt’s dividend. Looking at the group’s dividend history, the group paid no dividend at all between 2008 and 2012 after the Global Financial Crisis (GFC) hit the UK housing market hard. Investors should note that the stock’s forecast dividend coverage ratio of 1.6 times is not that high. 

There’s no sign that a dividend cut at Barratt is on the cards in the near future. Recently, the group raised its payout by 5% for the most recent financial year. However, there is an element of risk to the dividend going forward, in my view, especially with Brexit unknowns. As such, I’m happy to ignore Barratt’s high yield for now and focus on other, more dependable, dividend stocks.

Better dividend stock?

One I’d be more likely to buy right now is FTSE 250-listed merchant bank Close Brothers Group (LSE: CBG). The reason I say this is that the group has an excellent dividend growth track record and managed to hold its dividend steady during the GFC as other banks such as Lloyds and RBS were slashing their payouts left, right and centre. And since the GFC passed, the bank has notched up eight consecutive dividend increases, registering dividend growth of 62%, which is an excellent achievement.

CBG’s dividend yield certainly isn’t as high as Barratt’s. With analysts expecting a payout of 65.8p per share for the year ending 31 July 2019, the prospective yield is ‘only’ 4.5%. However, when you consider the company’s diversified business model, its dividend growth history, and also the level of dividend coverage (which is very solid at a forecast 2.1 times), there’s a lot of appeal in that yield in today’s low-interest-rate environment, in my opinion.

The last time I covered Close Brothers back in late September, the shares were up around 1,600p. However, after the recent market sell-off, they’re back at 1,465p which puts the stock on a forward P/E of 10.5. I think that’s a fair price to pay for a slice of this high-quality, dividend-paying bank.

The post Neil Woodford’s second-largest holding yields nearly 9%. But is this FTSE 100 stock a ‘buy’? appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in Lloyds Banking Group. The Motley Fool UK has recommended Lloyds Banking 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.

What’s gone wrong? One potential concern is that the new EU GDPR data protection regulations are expected to cut junk mail volumes, accelerating the decline of the group’s letters business. This may well be true, but it’s only extending a trend that has been in place for several years.

Royal Mail’s management already knows its got to adapt to a parcel-led future. And new chief executive Rico Back is an expert in this area, having previously headed up the group’s GLS European parcels business.

I think we need to ask if this 500-year-old FTSE 250 business can possibly be worth 26% less than it was two months’ ago. I’m not convinced. In my view, this postal sell-off has probably gone too far.

Too cheap to ignore?

At £4.9bn, Royal Mail’s valuation now looks very tempting to me. The group had around £2bn of property, plant and equipment on its balance sheet at the end of March, and almost no debt.

Alongside this, it generated underlying free cash flow of £562m. This put the stock on a trailing price/free cash flow ratio of 9, which looks very cheap to me.

Looking ahead, adjusted earnings are expected to fall by about 14% to 39p per share this year, as cost pressures and falling letter volumes squeeze margins. Although this is disappointing, profits are expected to return to growth in 2019/20.

In the meantime, the forecast dividend of 25p per share should be covered 1.6 times by earnings. This looks affordable to me, given the group’s minimal debts and strong cash generation.

Indeed, with the shares trading on 12 times forecast earnings and offering a prospective yield of 5.4%, I think there’s a good chance of gains when sentiment improves towards this sector. I’d rate the shares as a long-term income buy at current levels.

A 30-year dividend record

Royal Mail isn’t the only FTSE 250 dividend stock I rate highly. Merchant bank Close Brothers Group (LSE: CBG) is another long-lived stock I’d be happy to hold in a long-term income portfolio. This City stalwart hasn’t cut its dividend for 30 years, despite the 2008/9 financial crisis.

The firm said on Wednesday that its results for the year to 31 July are expected to be in line with expectations. During the year to date, the group’s loan book has grown by 6.6% to £7.3bn, while bad debts have remained low.

The majority of the group’s lending falls into two categories — car loans for private buyers and asset finance for businesses. One risk is that this business could suffer badly in a recession. Demand for new lending would be likely to fall, and bad debt levels would probably rise.

Still a buy at record highs?

The good news is that there’s no evidence of lending problems or a recession at the moment. To help protect profits, management has slowed new lending over the last year to maintain the quality of the loan book.

A 30-year unbroken record of dividends suggests to me that this firm’s management knows how to manage risk.

With the shares trading on a 2018 forecast P/E of 11 and offering a 4.2% yield, I’d rate this bank as a long-term buy-and-hold stock.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Today the firm announced that it had continued this record of growth with adjusted operating profit rising 6% in its fiscal first half. 

Asset management growth 

What has allowed Close Brothers to outperform its peer group over the past few years is its asset management business.

Asset management tends to have higher margins than traditional banking, which relies on the size of the net interest margin — the difference between what rate the bank can lend at and the rate it pays to depositors — that can vary from year-to-year. As asset management also involves managing client money, rather than lending out funds, it is also more profitable because Close Brothers does not have to foot the bill if there’s a default, as it does with loans. The bank’s bad debt ratio for the first half of 2018 was 0.7%.

That being said, Close Brothers has a disciplined approach to lending and prefers quality to quantity, which is why the group’s book grew at a relatively sedate 7% year-on-year during the half during the half compared to positive net flows of £573m in the asset management business representing an annualised rate of 13% of opening managed assets. Thanks to higher inflows, the company achieved a 25% increase in adjusted operating profit for asset management during the period. 

For the full year, yet to be reported, City analysts are expecting the company to turn in earnings per share growth of 4.6%. On this basis, the shares are trading at a relatively attractive forward P/E of 11.8 and also support a dividend yield of 4%.

So overall, based on Close Brothers’ record of historical growth and its future potential, as well as the bank’s attractive valuation, I believe that the shares could be an excellent buy for your portfolio today. And another fast-growing back I’m positive on the outlook for is Arbuthnot Banking (LSE: ARBB). 

Defensive banking 

One of the UK’s fast-growing challenger banks, Arbuthnot has put in a mixed performance over the past five years, but City analysts are expecting big things from the company over the next two.

Specifically, analysts have pencilled in earnings per share growth of 75% for 2018, indicating that the shares are trading at a forward P/E of 16.4.

Arbuthnot is relatively complicated to understand because the private bank has many moving parts. For example, during the first half of 2017, the firm booked £2.1m of income from its 18.6% share of Secure Trust Bank. Meanwhile, net asset per share fell nearly 20% thanks to the payment of a £44m special dividend. On the plus side, customer deposits and assets under management passed the £1bn milestone.

But despite all of the complexity, I believe that Arbuthnot’s assets under management will continue to grow as savers and investors continue to move away from high street banks to more bespoke offerings. What’s more, private banks tend to be less exposed to harmful economic trends thanks to their wealthy client base.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

It turns out that analysts had been expecting slightly higher profits. City watchers also suggested that the bank’s focus on Asia — which now accounts for 75% of profit — meant that HSBC might benefit less from rising US interest rates.

In my view, investors don’t need to worry about this kind of minor short-term detail. This £146bn banking group is a big picture stock — and from what I can see, the picture is one that I’d like to buy.

A brighter view

Newly-retired chief executive Stuart Gulliver spent most of his eight-year term of office fixing problems at the bank. He’s settled multi-billion dollar misconduct issues, sold troublesome operations and cut costs.

The scale of these changes is impressive. The bank’s annual running costs are now $6.1bn lower than in 2015. Its risk-weighted assets have fallen by $338bn over the same period. I think it’s best to view this £146bn group as a supertanker — it’s hard to change direction, but once it starts moving, it carries a lot of momentum.

Most analysts agree that the business is now nicely positioned for a return to growth, just as interest rates finally start to rise. So what can investors look forward to?

Profits + income

Broker forecasts for 2018 and 2019 suggest that earnings will grow at around 5% each year. The dividend — unchanged at $0.51 per share since 2016 — could also start rising. Shareholder returns may be boosted by further share buybacks, which have been promised “when appropriate”.

With the stock trading on a forecast P/E of 14 and offering a 5.1% yield, I’d rate HSBC as a dividend buy.

Better for dividend growth?

FTSE 250 merchant banking group Close Brothers Group (LSE: CBG) hasn’t featured in the news very much in recent years. That’s because it’s carried on banking profitably and avoided the kind of bad publicity that’s dogged the big banks.

Revenue has risen from £655.3m to £819.6m since 2014, while profits have climbed from £149.8m to £191.2m over the same period.

Long-term shareholders have been rewarded with reliable dividend growth. Impressively, Close Brothers didn’t cut its dividend during the financial crisis. The payout was merely frozen from 2008 until 2010 before growth resumed.

What could go wrong?

Although this group also has stockbroking and asset management divisions, the vast majority of profit comes from lending. In 2016/17, the biggest driver of profit growth was property finance. Car finance is another area where the group is quite heavily involved.

A UK recession could cause a sharp rise in impairments. However, the firm claims to “prioritise our credit quality and margin”. Given its track record over the last decade, I’m inclined to trust management.

These shares currently trade on a forecast P/E of 12 with an expected yield of 4%. If you’re looking for a UK-focused financial stock, I believe Close Brothers deserves a place on your short list.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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.

One is Keir Group (LSE: KIE), which released a full-year trading update Thursday that boosted its share price by 15% to 145p. The firm’s “two-year portfolio simplification programme” is now complete, and trading has been in line with expectations.

At 1,130p, Kier shares are currently trading on a forward P/E of a very modest 8.4 with a 10% rise in EPS predicted for the year to June. That would drop even further, to 7.5, based on June 2019 forecasts, so why so low?

Debt

The overstretched debt problem that killed off Carillion must weigh heavy on investors’ minds, and Kier is carrying debt too. By full-year time at 30 June, net debt had risen to £110m, from £99m a year previously. And we now hear that the firm’s continued investment in its Property and Residential divisions has let to a further rise in average net debt.

But with Kier’s capital investment in those businesses having reached its desired level, the company expects to report a net debt/EBITDA ratio of under one by 30 June 2018. I don’t see that as any cause for concern, and I’m buoyed by Kier’s expectation for its “average net debt position to reduce over the period to 2020.”

The low valuation of Kier shares doesn’t seem to be a result of the firm’s dividend, which has been strongly progressive since a return to EPS growth in 2015. From a yield of 3.9% that year, it rose to 5.5% last year, and there’s a decently covered 7.1% on the cards for the current year with a further hike to 7.4% next.

I see reasonable earnings growth in the coming years, coupled with strong and reliable dividends. 

Banking upstart

I expect the banking sector to do well over the next decade, with smaller banks enjoying a rare opportunity. The big banks are still hurting from the financial crisis and from Brexit, and there’s a big pool of domestic demand that the little ones can expand into.

On Thursday Close Brothers Group (LSE: DBG) told us its first half has been good so far “with all three divisions ahead of expectations.” Its banking division has, in particular, “continued to generate strong returns and profit growth,” while interest margins have remained stable.

A 7.3% growth in the bank’s loan book year-on-year looks good too, with bad debts remaining low as the focus remains on its Premium, Property, Motor and Asset Finance businesses. Asset management is going well, with assets under management up 8.2% to £9.6bn.

Forecasts to improve?

The earnings rises of recent years are actually forecast to flatten out this year, but I can’t help seeing that as unduly pessimistic and I wouldn’t be surprised to see it revised upwards after first-half results are released on 13 March.

Dividends are also rising, with yields of 4.3% and 4.5% expected this year and next, and they’d be more than twice covered. I see a safe cash cow.

Close Brothers shares have doubled in the past two years, to 1,532p. But with forecast P/E ratios still only around 11 and under, and coupled with those dividends, I rate the stock a buy.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Let’s take a look at the 2017/2018 dividend forecasts for Barclays. 

Low dividend yield

The first thing to note about the business is that it cut its dividend in March 2016. The bank shocked investors by announcing that it would be cutting its payout in half, and slashed the distribution from 6.5p per share in FY2015 to just 3p per share for FY2016. A dividend cut of that magnitude is never a pleasant experience for shareholders.

Is it expected to turn things around going forward? What is the expected payout for FY2017? At present, City analysts expect it to pay 3.05p per share for FY2017. At the current share price of 205p, that equates to an underwhelming yield of just 1.5%. When you consider that rivals Lloyds and HSBC have prospective yields of 6.2% and 4.9% right now, Barclays does not look like a good stock to own from an income perspective.

What about next year? Is the outlook more positive? The good news is that analysts do expect a dividend hike in FY2018. The current consensus dividend estimate is 5.6p per share. That’s a yield of 2.7% at the current share price – an improvement on the current yield. However, it’s still quite a low yield, especially when you consider that the average FTSE 100 forward yield is 3.2%. It’s also worth noting that over the last month, analysts have downgraded their FY2018 dividend estimates by around 0.3p. That’s a chunky downgrade. By contrast, analysts have upgraded their dividend estimates for Lloyds.

Looking at those dividend forecasts, Barclays has little dividend stock appeal to me right now. Given the large number of FTSE 100 dividend stocks paying over 4%, I’ll pass on Barclays’ low yield.

This bank yields 4.4%

One banking stock I do have my eye on is Close Brothers Group (LSE: CBG). The FTSE 250-listed merchant bank flies under the radar of many investors. But don’t let that put you off. Close Brothers has an outstanding dividend track record.

You see, the £2.2bn market cap bank has never cut its dividend. That’s some achievement. Even during periods of extreme financial turbulence such as the Global Financial Crisis, the bank managed to pay out a steady dividend. As larger rivals have slashed their payouts in recent years, Close Brothers has always maintained or increased its dividend. Growth has been strong too. Over the last six years, the payout has been hiked by 50%.

Right now, the bank’s dividend prospects look compelling. This year, analysts expect a dividend payment of 63.2p per share. At the current share price, that’s a nice yield of 4.4%. Coverage is anticipated to be healthy, at around 2.1 times, and a 5% dividend hike is expected for next year.

Given its higher yield and impressive dividend growth history, I’d be far more likely to add Close Brothers to my dividend portfolio than Barclays right now.

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Edward Sheldon owns shares in Lloyds Banking Group. The Motley Fool UK has recommended Barclays, HSBC Holdings, and Lloyds Banking 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.

Howden Joinery Group

£2.6bn market cap Howden Joinery Group (LSE: HWDN) is a leading supplier of fitted kitchens and joinery to trade customers. Founded in 1995, the company has 658 depots across the UK, and sees scope for up to 800 going forward.

The kitchen specialist has a strong track record of generating sales growth, with its top line rising from £854m to £1,307m over the last five years. Profits have also expanded at a formidable rate, with earnings per share climbing from 13p to 29p in that time.

The company published a trading update today for the period 12 June to 28 October and indicated that it has seen a “good trading performance” recently, and that it remains on track to meet the board’s expectations for the year. Revenue for the period increased 8.2% on last year, driven mainly by volume growth, and was up 6.3% for the first 44 weeks of 2017. The company noted that it has added 16 new depots so far this year and that it is planning to open more before the end of the period. The market is clearly impressed with the update, with the shares rising 7% today.

Looking at the company’s valuation, Howden appears to offer value, in my view. With analysts forecasting earnings of 28p for this year, the stock trades on a forward P/E ratio of 16.1, which I believe is reasonable given the company’s growth history. A prospective dividend yield of 2.5% also sweetens the investment case. While Brexit adds an element of uncertainty in the short term, I believe the long-term investment case here is compelling.

Close Brothers Group

When investors think of dividend-paying banking stocks, names such as Lloyds Banking Group and HSBC Holdings come to mind.

However, another one that I believe has considerable potential is Close Brothers Group (LSE: CBG), which offers a range of financial services including deposit taking, lending, finance, wealth management and securities trading.

The bank has a fantastic dividend growth history, having increased its dividend substantially over the years. Furthermore, the company did not cut its dividend during the Global Financial Crisis. Yet despite this strong track record, the stock remains under the radar of many dividend investors.

Close Brothers released FY2017 preliminary results in September, and the numbers were solid, with adjusted operating profit rising 13% and adjusted earnings per share rising 3%. The bank rewarded shareholders with a 5% dividend hike.  

Close Brothers’ share price has pulled back by almost 20% over the last six months, and at the current valuation, value is on offer, in my view. Estimated FY2018 earnings of 130.3p place the stock on a forward P/E ratio of just 10.7, and with a dividend yield of a high 4.3% on offer, I believe the bank has the potential to reward long-term investors with both capital gains and powerful dividends in the future. 

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Howden Joinery Group, HSBC Holdings, and Lloyds Banking 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.

For the year to March 2018 Premier Foods is predicted to report a 10% profits improvement, and to follow this with an extra 6% improvement in fiscal 2019.

And such projections should make the St. Albans-based business an appetising pick for value chasers. Not only does the company carry a prospective P/E rating of 5.2 times – a long way below the widely-regarded bargain benchmark of 10 times – but it also boasts a corresponding sub-1 PEG reading of 0.5.

Turning the corner

Now don’t get me wrong: the Mr Kipling cakes and Ambrosia custard manufacturer is not out of the woods yet. With pressure on UK shoppers’ wallets rising thanks to increasing inflation and stagnating wages, Premier Foods may struggle to see a meaty uptick in sales any time soon.

Indeed, the company saw total sales drop 3.1% during the 13 weeks to July 1st, a result it said was “primarily due to lower sales volumes in the grocery categories, notably desserts.” However, the strength of its much-loved labels helped Premier Foods to continue outperforming the market in the period, and it expects these products to help it return to growth in the current quarter.

With the company’s cost-cutting programme also making huge strides, and overseas demand for its treats also marching higher (international sales rocketed 20% in the last quarter), I reckon Premier Foods could prove a very pleasing growth pick in the years ahead.

Close in on a dividend star

I also reckon Close Brothers Group (LSE: CBG) is worthy of proper attention at current prices.

In the year to July 2017, the Square Mile’s battalion of brokers expect the merchant banking specialist to report a mere 1% earnings improvement, followed by an even more fractional rise forecast for the current year.

These estimates still leave the FTSE 250 star dealing on a hugely-undemanding P/E rating of 11.6 times for fiscal 2018. And Close Brothers should come as a particularly attractive investment destination to income seekers.

For the last year a total dividend of 60.1p is anticipated, up from 57p in fiscal 2016. And this is expected to keep moving upwards with a 62.4p payout predicted for the current period, meaning the firm sports a brilliant 4.1% yield.

Moreover, share pickers can also take confidence in the company meeting these dividend projections, with coverage standing at a robust 2.1 times, above the broadly-considered security yardstick of 2 times.

The London firm’s broad suite of financial services remain in popular demand, and it reported in July that the loan book at its Banking division had grown 6.4% in the 11 months ending June, to £6.8bn.

Close Brothers’s Property Finance and Retail Finance arms also performed strongly in the period, while strong net inflows and favourable market movements helped its Asset Management operations rise 9% to £8.8bn.

Given the terrific momentum the business is enjoying across the board, I reckon Close Brothers is a solid pick for both growth and value investors.

The post 2 bargain stocks you can buy today 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 has no position in any of the shares mentioned. 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.