But there’s plenty of beautiful big-yielders outside Britain’s premier share index that you should seriously consider today. These are just a couple of them…

Homes giant

I’ve made no secret of my belief that the UK’s shocking housing shortage is here to stay.

Indeed, the uncertainty facing the domestic economy is the worst that it has been for many years and yet homebuyer demand, helped by historically-low interest rates, the government’s Help to Buy purchasing scheme, and growing competition in the mortgage market, continues to outpace supply.

Springfield Properties (LSE: SPR) underlined this favourable backdrop when it released fresh trading commentary last month. In it the AIM-quoted business advised that “[we] made significant sales and profit progress in the first half of 2017/18, with the momentum being maintained through the second half of the year.”

Profit before tax is likely to rise 43% in the 12 months ended May, it advised, in line with the forecast upgrades made in February. Continuing the recent run of upgrades, however, Springfield added that revenues are likely to have shot 27% higher, above earlier expectations and thanks to accelerated completion of the sites it bought from Redrow around the turn of the decade.

Don’t miss out

Clearly, Springfield is a company still on the up and this is reflected in City forecasts which are suggestive of earnings rises of 51% and 16% in fiscal 2019 and 2020, respectively.

And these give rise to predictions of impressive dividend growth during this period. Last year’s anticipated payout of 3.7p per share is expected to rise to 5.2p in the present period and to 6.1p next year, figures that create giant yields of 4.5% and 5.1%.

And as I say, the outlook for the Scottish developer is extremely bright beyond the medium term, helped by its desire to keep building its land bank through selective M&A and organic investment. In late July, it snapped up 400 acres of zoned land in West Lothian, one of the fastest-growing residential housing markets in the country, to order to create a 1,900-home site there. 

Right now, Springfield can be picked up a dirt-cheap forward P/E ratio of 8.4 times.

Marketing star

 The other income stock I’m looking at is Communisis (LSE: CMS), which also carries a valuation under the accepted bargain benchmark of 10 times and below, on this occasion, a prospective P/E multiple of 8.5 times.

What’s more, although earnings are expected to flatline in 2018, the marketing giant’s strong balance sheet still means it is expected to grow the dividend to 2.8p per share, from 2.66p last year. And this results in a chunky 5.2% yield.

Furthermore, next year a 10% annual earnings improvement is forecast at the small-cap, giving support to a predicted 2019 dividend of 2.9p. Thus the yield marches to an even-better 5.4%.

It’s easy to see why brokers are so optimistic. Business continues to roll in from all over the world, driving revenues at Communisis 9% higher during January-June, a period which also saw it ink a major contract with Zurich Insurance Group, among others. And by expanding its global presence, Communisis is set to keep adding to its esteemed client list.

The post Cheap and EXTREMELY cheerful! Two 5%+ dividend yields that could help you to retire in comfort 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.

With housebuilding demand on course to keep rising in the years ahead, I am backing Forterra (LSE: FORT) to generate exceptional profits growth for many moons to come.

Build rates in the UK have been lagging requirements for decades now, and politicians are only really beginning to cotton on to the scale of the problem as ‘Generation Rent’ swells in numbers. The Conservative government has vowed to take fresh measures to remedy the housing shortfall and it will need to maintain this commitment as it battles against falling voter numbers. And this bodes well for sellers of building materials like Forterra.

Indeed, the country’s second biggest provider of bricks, plans to fully utilise this favourable backdrop by dealing with bottlenecks at its facilities, while it is also drawing up plans to construct a jumbo new brick manufacturing facility.

The Northamptonshire business is already enjoying strong demand for its heavy construction products as housebuilder activity chugs steadily higher. It saw revenues rise 12.4% — or 10.4%, excluding the acquisition of precast concrete specialist Bison last year — to £331m. It said that this bubbly result was “due to strong demand in the new-build residential market leading to [a] double-digit increase in brick and aggregate block volumes.”

And critically, while Forterra is battling against a rising cost base, the positive market fundamentals are allowing it to successfully pass these larger expenses onto its customers.

Brick beauty

Against this backcloth City analysts are expecting the small-cap to deliver solid earnings growth of 8% in both 2018 and 2019. This, combined with the Forterra’s surging cash flows — operating cash flow jumped to £90.2m last year from £69.8m in 2016 — is expected to keep dividends swelling at a splendid pace too.

Last year’s 9.5p per share reward is anticipated to rise to 10.5p in the current period and again to 11.5p in 2019. Consequently investors can drink in chunky yields of 3.4% and 3.7% for this year and next respectively.

Despite its bright profits picture, Forterra deals on a forward P/E ratio of just 11.8 times. This makes it an irresistible pick right now, in my opinion.

Marketing star

Communisis (LSE: CMS) is another dirt-cheap small-cap on course to put out meaty dividends in the near term and beyond.

An anticipated 6% earnings improvement in 2018 leaves the company trading on a prospective P/E multiple of just 9.1 times. This bright bottom-line outlook also gives rise to predictions of further dividend growth with a predicted 2.9p per share reward, which is up from the 2.66p paid out last year and carrying a stunning 4.7%.

The good news spills over into next year as well, with an anticipated 7% profits rise giving rise to an estimated 3p payment. This means the yield leaps to a chubby 4.8%.

Communisis is an important marketing partner with major companies all over the world, and its ability to keep grinding out long-running contracts with such businesses convinces me that it should remain a lucrative stock for years to come.

The post 2 dividend 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 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.

The bathroom products and tiles business has been expanding steadily over the past five years, although the market seems to have ignored this growth. 

Since 2012, operating profit has grown at a compound annual rate of 9%. However, today shares in the company trade at a depressed forward P/E of only 6.3, a valuation which, in my opinion, fails to reflect the group’s outlook.

Double-digit growth

A mid-single-digit valuation implies that Norcros is struggling to grow, but that is not the case. According to a trading update issued by the firm today, for the year ending 31 March, following the significant acquisition of Merlyn — the UK and Ireland’s No. 1 supplier of shower enclosures and trays — last year, revenue increased to 10.7% year-on-year. 

On a like-for-like basis, excluding this acquisition, revenues increased 4.4% as tough trading in the UK was more than offset by growth in the South African business, which reported constant currency revenue growth of 6%.

Unfortunately, Norcros is not immune from the headwinds affecting the broader retail sector here in the UK. The group’s Johnson Tiles business suffered significantly during the second half of the year, prompting management to begin a restructuring programme. As trading continues to deteriorate, management has now unveiled a new round of cuts with the goal of saving £2m per annum at a cost of £2.1m and the loss of 50 jobs. 

Poor trading at Johnson Tiles dragged down UK like-for-like sales to a dip of 0.8% during the second half of the financial year. Excluding this business, second half like-for-like revenue grew 8.4% in the UK, following growth of 11.4% in H1. So it looks to me as if, barring this one division, Norcros is powering ahead.

With this being the case, and considering the low valuation, as well as its 4.5% dividend yield (covered nearly four times by earnings per share) I believe the stock has what it takes to outperform the FTSE 100, as the market wakes up to the opportunity on offer.

And I believe that the same is true for marketing business Communisis (LSE: CMS). 

Sector discount 

Like Norcros, shares in Communisis look cheap. The stock is currently trading at a forward P/E of 9.4 and supports a dividend yield of 4.3%, even though earnings per share have grown by 17% annualised over the past six years.

It looks as if this growth is set to continue. As my Foolish colleague Jack Tang recently pointed out, Communisis has just embarked on a three-year Value Enhancement Programme to deliver 5%-10% annualised adjusted earnings growth through to 2020, via its three critical strategic themes: Digital First, Global Reach and Empowered Organisation. 

If the company can hit this goal, then in my opinion, the shares deserve a much higher valuation. How much higher? Well, the broader media services sector is currently trading at a median forward P/E of 12 while the professional and commercial services sector is trading at a median valuation of 14.2. I think Communisis deserves a valuation between the two, around 13 times forward earnings, implying a share price of 95p based on City projections that the firm will earn 7.3p per share for 2019.

The post Two 4% small-cap dividend stocks that could beat the FTSE 100 appeared first on The Twelfth Magpie.

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

Strong position

In this space, I reckon Communisis (LSE: CMS), the small-cap marketing company, could be one of the best dividend stocks to buy right now.

Amid a changing market landscape, the company has successfully transformed itself from an old-fashioned printing business into an integrated marketing specialist with fast-growing digital capabilities.

It has put itself in a strong position to take advantage of the shift from print towards digital services and has continued to win new contracts, which has been translating into healthy earnings growth and exciting further growth prospects.

The company has also recently announced an ambitious three-year Value Enhancement Programme to deliver 5%-10% annualised adjusted EPS growth through to 2020, via its three key strategic themes: Digital First, Global Reach and Empowered Organisation.

Low valuations

Despite its attractive outlook on growth, the valuation multiples for the company seem undemanding. As City analysts are expecting underlying earnings growth of 6% this year, its shares trade at just 9.5 times its expected earnings. And looking further ahead, analysts have pencilled in a further 7% growth in its bottom line, which would reduce its 2019 forecast P/E to a mere 8.8 times.

Dividends per share are also forecast to rise impressively, from 2.66p last year, to 2.84p and 3.02p for 2018 and 2019, respectively. This means its prospective yield is set to rise from 4.1% currently, to 4.4% and 4.7%, respectively. Moreover, its dividend safety is attractive, with dividend cover forecast to be around 2.4 times over the next two years.

Free cash flow

Elsewhere, Photo-Me International (LSE: PHTM), a small cap company which operates a wide range of instant service equipment, offers prospective investors a dividend yield of 4.9% that is supported by steady earnings growth.

With a forward P/E of 17.8, valuations seem pricey for the company. But this is offset by its strong free cash flow generation, which allows it to return a relatively high proportion of its earnings — more than 70% in the last financial year — to shareholders via dividends.

Future growth

As a leading global operator of self-service photobooths, Photo-Me benefits from robust geographical diversification which shields it from a slowdown in any one particular market. As such, despite a slowdown in the UK and Japan, revenue growth keeps chugging along steadily as rises in continental Europe and Ireland offset the slack.

The company is also doing well in its expanding self-service laundry business. Photo-Me added more than 700 self-service laundry units in the first half of the year, which should help the company deliver continued earnings hikes going forward.

City analysts are sanguine. Out of three brokers covering the stock, all three rate it as either a ‘strong buy’ or a ‘buy’.

The post This small-cap could be one of the best dividend stocks to buy now appeared first on The Twelfth Magpie.

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Jack Tang has no position in any 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.

A new phase of growth

I like the stock because of its modest-looking valuation, strong showing on quality metrics and the momentum in the business and in the share price. The firm could be on the cusp of a new phase of growth, which may lead to a valuation re-rating down the line. Operational progress during 2017 looks compelling. Communisis won a new contract for marketing communication and renewed an existing contract for transactional communication with a “major UK bank,” which will last for five years providing useful earnings visibility. On top of that, a partnership contract with Proximity Ltd to provide communication services to the BBC for the TV Licensing programme was renewed for six years.

Chief executive Andy Blundell announced the launch of a “focused three-year plan” aimed at enhancing returns to shareholders “as we raise the value we provide to our clients.” The firm said it has “clear evidence” that the themes of Digital First, Global Reach and Empowered Organisation “resonate” in its key markets. Buzzwords aside, I’m optimistic that because the new value enhancement programme has been built into the firm’s senior management remuneration policy, we’ll get some decent financial results in the years ahead to drive up the share price.

Underlying progress and a big yield

While we are waiting for renewed growth to materialise there’s a dividend yield running at just over 4% for 2018 to collect. I think it’s a good deal and the stock is well worth your research time right now. Perhaps Communisis would sit well in a portfolio alongside big-dividend payer Vodafone Group (LSE: VOD), the telecommunications company.

For a long time, I wasn’t keen on Vodafone because the firm looked over-valued to me. But since January 2014 the share price has wobbled up and down a bit without making any upwards progress. During that period, operating profits and cash flow have been rising, suggesting progress in the underlying business. Meanwhile, City analysts following the FTSE 100 stalwart have quite robust-looking expectations for forward earnings growth of around 11% for the year to March 2019 and 24% for the year after that.

On balance, I think it’s a good time to revisit the stock. Today’s share price around 206p throws up a forward dividend yield for the trading year to March 2019 of almost 6.5%. I think it’s worth collecting that income while we wait for growth to move the share price up over time. The company has held its dividend firm over the last few years so I think it unlikely we’ll see a cut in the dividend soon when expectations of earnings growth are high.

The post Vodafone Group plc isn’t the only super stock I’d buy right now appeared first on The Twelfth Magpie.

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Kevin Godbold 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.

As the business has transitioned, earnings have multiplied. For 2017, City analysts are projecting normalised earnings per share of 6.4p, compared to 3.2p for 2012… 100% growth in five years. 

However, despite this rapid growth, the market continues to place a low multiple on the shares. At the time of writing, shares in Communisis are trading at a forward P/E of 11. They also support a dividend yield of 4%. 

On-track for growth 

According to a trading update issued by the firm today, management believes that Communisis is on track to hit City forecasts for the year. The year-end update notes the company “performed well in 2017, with growth in sales and profitability, good free cash flow and a further marked reduction in net debt“. As a result, “the board anticipates that audited results for the year will be in line with expectations.” 

During the period, net debt declined to £24.3m from £30.4m, while the accounting deficit related to the group’s defined benefit pension scheme fell to £38m from £55.5m. And it looks as if Communisis’ buoyant trading is set to continue for the next few years, revealing today that it has expanded “facilities in the North East of England to meet increased demand for fast-turnaround campaign fulfilment“, as well as signing a new five-year contract with a major UK bank client. 

All in all, Communisis is growing, has a bright outlook for growth, and is generating plenty of cash. To add to the investment case, the shares are also trading at an attractive earnings multiple and offer a market-beating dividend yield. This is why I’d buy the stock in 2018. 

Steady recovery 

Communisis’ peer Huntsworth (LSE: HNT) is also on my radar for 2018. Huntsworth is a marketing firm that specialises in healthcare, but management has made some missteps over the past five years. These issues saw the group plunge into a loss of £56m on writedowns for 2014.

Nevertheless, since 2014, Huntsworth has made steady progress streamlining its operations and analysts expect the group to report a net profit (for the first time since 2014) of £18m this year. Net debt at 30 November 2017 was approximately £44m, equating to less than 1.5x net debt to pro forma EBITDA, and below the £75m borrowing limit agreed by creditors.

Like Communisis, Huntsworth also trades at an attractive valuation considering its growth potential. With adjusted earnings per share growth of just under 15% expected for 2017, the shares look cheap, trading at a forward P/E of 13.2 and support a dividend yield of 2.5%.

As the firm continues to reinvest earnings back into its operations (management agreed at least one major acquisition last year), growth should continue. What’s more, now that the company has put its problems behind it, the market might reward the shares with a higher multiple. 

The post 2 top value and income stocks I’d buy in 2018 appeared first on The Twelfth Magpie.

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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.

One such company could be Rolls-Royce (LSE: RR). It has faced a challenging period, where many of its end markets have been under pressure as military spending has been reduced. However, with an era of austerity apparently now drawing to a close and the company offering a low valuation as well as a new strategy, now could be the perfect time to buy it.

Improving outlook

After two years of declining profitability, which included a £4.6bn pre-tax loss last time, the company now appears to have a bright future. In the current period is it expected to record a return to profitability, with its bottom line due to rise by 10% in the next calendar year. This suggests that its new strategy under a refreshed management team could be having a positive impact on the company’s financial performance. Efficiency gains through various cost-cutting measures look set to boost its bottom line.

As well as this, higher military spending seems likely in future years. The Trump administration has repeatedly called for higher spending on defence, and this looks set to become a reality as cutbacks in a range of government departments across the developed world becomes less attractive to voters. This could catalyse Rolls-Royce’s financial performance beyond next year and mean that it enjoys a tailwind in future years.

Valuation

Despite its upbeat earnings growth outlook, the company trades on a relatively low valuation. Rolls-Royce has a price-to-earnings growth (PEG) ratio of 2. This suggests there could be more upside potential ahead. As its strategy is implemented and its markets begin to improve, it could reasonably be expected that a higher earnings growth rate will be achieved. As such, now could be the right time to buy it for the long run.

Also offering good value for money at the present time is integrated marketing services provider Communisis (LSE: CMS). The company released a positive trading update on Monday which showed that it is performing in line with previous expectations. Furthermore, it has appointed a new CFO who begins work today. This could help the company to deliver continued earnings growth in the long run.

Looking ahead, Communisis is expected to deliver a rise in its bottom line of 4% in the current year, followed by additional growth of 3% next year. It trades on a price-to-earnings (P/E) ratio of just 9.4, which suggests it has a wide margin of safety. This could mean that it is able to deliver further share price growth even after its 68% rise over the last year. With what seems to be a sound strategy and a wide margin of safety, it could be a stock worth buying for the long run.

The post Why Rolls-Royce Holding plc is a growth bargain I’d buy and hold for 25 years appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any 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.

The plastics manufacturer was last 3% higher on the day and trading at its highest since February after advising that revenues for the first half of the fiscal year “are projected to be well ahead of the corresponding period last year driven by the contribution from acquisitions, organic growth, polymer price tailwinds and translation benefits from foreign exchange movements.”

What’s more, RPC said that, despite the impact of a modest increase in polymer prices, it expects margins and profitability to sail past its prior expectations.

And the Rushden-based company maintains a bullish tone looking ahead, commenting that “our investment in innovation for both product design and process engineering continues to drive a healthy pipeline, and the group remains confident of continuing to grow through the cycle ahead of GDP.”

RPC noted that investments made last year had driven good growth in China, and added that the integration of Letica in the US (which it acquired back in March) continues to progress well.

Plastic fantastic

My belief that RPC is set fair for robust earnings growth on the back of its bright M&A strategy and excellent organic sales opportunities is validated by bubbly broker forecasts too.

The calculator tappers are expecting bottom line expansion of 11% and 9% in the years to March 2018 and 2019 alone, and these projections make the FTSE 250 star sensational value for money — a prospective P/E ratio of 14.1 times falls below the broadly-regarded value watermark of 15 times, while a corresponding PEG reading of 1.3 is not to be scoffed at either.

And RPC’s appeal does not end here either, the company also providing plenty for income chasers to get excited about. Indeed, its solid earnings picture and stellar cash flows are expected to keep dividends growing at a fair lick, with last year’s 24p per share reward predicted to swell to 27p and 29.8p in fiscal 2018 and 2019 respectively.

These estimates yield a handy 2.8% and 3.1%.

Making waves

Those on the lookout for great growth and dividend stocks also need to take a long look at Communisis (LSE: CMS), in my opinion.

While earnings are expected to grow at a more muted rate than over at RPC, anticipated expansion of 3% and 4% in 2017 and 2018 is not to be sniffed at. And these forecasts make the marketing mammoth a darling with value chasers — it presently changes hands on a forward earnings multiple of 9.3 times.

Communisis is an even more staggering selection for growth dividend chasers. The 2.42p per share payment forked out in 2016 is predicted to rise to 2.6p in the current period, and again to 2.7p in 2018. These numbers yield 4.4% and 4.6%.

And looking further down the line. I am confident the company’s growing success with blue-chip clients in international markets (it now sources around 30% of revenues from abroad versus 24% a year ago) should lay the foundations for delicious shareholder returns in the years ahead.

The post 2 bargain basement stocks offering great earnings and dividend growth 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 recommended RPC 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.

International Consolidated Airlines

British Airways owner International Consolidated Airlines (LSE: IAG) has been a strong performer over the last 12 months, its share rising from under 400p to around 600p today, a gain of approximately 50%.

Normally, when a stock puts in that kind of performance, any value disappears and the dividend yield on offer is no longer worth looking at. Not in this case.

With the airline owner forecast to pay out dividends of €0.28 this year, the forward yield equates to a generous 4.2% at the current share price and exchange rate. And with City analysts expecting it to generate earnings of €0.96 this year, not only is the stock’s dividend coverage ratio a high 3.4 times, but the forward P/E ratio is a low seven.

The company released its half-year report last Friday, with operating profit before exceptional items increasing 37.3% to €975m, and adjusted earnings per share rising 25.6% to €0.285. Management stated that it expects its operating profit for 2017 to show a double-digit percentage improvement year-on-year.

Of course, airline stocks come with plenty of risks right now, including volatile fuel costs, terrorism threats, Brexit uncertainty and competition from other airlines. However, at the current low valuation, I believe the risk/reward payoff for International Consolidated Airlines looks attractive.

Communisis

Turning my attention to the small-cap area of the market, I’ve spotted an under-the-radar stock that also sports a sizeable dividend yield and a low valuation. The stock I’m referring to is Communisis (LSE: CMS), a UK-based integrated marketing services company that helps brands communicate with their customers.

Over the last five years, revenue at the marketing specialist has climbed year after year, from £208m in FY2011 to £362m last year, and while profitability has been a little more volatile, the company has been very generous with its dividend payouts. Indeed, over this period, it has increased its dividend payout from 1.49p to 2.42p, a compound annual growth rate (CAGR) of an excellent 10%. City analysts expect a payout of 2.53p this year, equating to a yield of a formidable 5.4% at the current share price.

The £97m market cap company released half-year results this morning, and the numbers looks solid. Revenue climbed 6% to £186m, with adjusted operating profit increasing 10% to £8.5m. Free cash flow rose 6% to £6.5m and the company managed to reduce its net debt by a significant 19%. Impressively, the interim dividend was hiked another 10% to 0.89p. Chief executive Andy Blundell commented that “solid progress continues at Communisis” and that “trading expectations for 2017 are unchanged.”

Earnings per share of 6.25p are forecast for this year, placing the company on a forward P/E of just 7.5. At that low valuation, this stock could be one to keep an eye on.

The post These two dividend stocks are ridiculously cheap appeared first on The Twelfth Magpie.

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Edward Sheldon has no position in any 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.

The floor coverings specialist has seen its share price descend 18% in less than a month, market appetite sinking following a negative reception to latest trading details. This is despite news of solid sales growth, however — UK like-for-like revenues rose 1.9% in January-April despite strong comparables, while underlying sales on the continent advanced 3%.

And I expect robust construction market conditions across Europe to keep sales at Headlam trekking higher.

Perky projections

Supported by an anticipated 5% earnings rise, the City expects it to keep its progressive dividend policy rolling in 2017, and a 26.3p per share reward is currently anticipated. This would represent a chunky rise from last year’s 22.55p ordinary dividend.

This projection yields 5%, taking out the prospective forward average of 3.5% offered up by the FTSE 100’s blue chips by a vast margin. And the good news does not end here, a predicted 28.4p dividend for 2018 (assisted by an expected 3% profits rise) yielding a brilliant 5.4%.

I believe these forecasts appear pretty rock solid even though dividend coverage may fall a long way short of the so-called security watermark of two times, at 1.5 times through to the close of next year.

However, Headlam has a knack of generating boatloads of cash, and its net cash pile rose by almost a fifth last year to £52.6m. And this allowed the company to pay a 6p per share special dividend.

Marketing marvel

Those seeking generous dividend yields also need to check out marketing giant Communisis (LSE: CMS).

Even though the Leeds business is expected to suffer a 5% earnings slip in 2017, its ability to create lots and lots of cash (free cash flow soared 7% in 2016, to £12.9m) is expected to keep dividends rolling higher.

Indeed, a 2.6p per share bounty is currently predicted, up from the 2.42p dividend shelled out last year. And the dividend is expected to move to 2.7p in 2018, helped by an anticipated 5% earnings increase.

As a result, Communisis carries weighty yields of 5.4% and 5.6% for 2016 and 2017 respectively. And I reckon the company’s ambitious growth plans should continue to deliver explosive shareholder returns.

These projections are built on extremely solid foundations. Dividend cover rings in at 2.2 times and 2.3 times for this year and next, while the strong balance sheet should soothe the concerns of even the most jittery investors (net debt fell 23% last year, to £30.4m).

Communisis is becoming an increasingly important cog in the marketing strategy of the world’s biggest companies and institutions, and the firm is casting its net far and wide to bring in new business. Consequently revenues generated abroad leapt eight percentage points in 2016, to 26%. And the creation of a US office this summer could prove a significant step in the company’s growth programme.

I reckon both Communisis and Headlam should prove lucrative picks for both growth and income chasers in the years ahead.

The post 2 dividend giants that could make your fortune appeared first on The Twelfth Magpie.

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Royston Wild has no position in any 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.