The occasion was a trading update ahead of results due on 13 September, and markets were clearly disappointed by predictions that underlying pre-tax profit for the full year looks set to come in towards the lower end of analysts’ forecasts. 

The company put it down mainly to weaker automotive performance due to a lower level of UK orders in the second half, along with “some difficult projects which were delivered in the year.“

Group revenue did rise, from £352m last year to more than £380m, but the year ahead looks threatened by the uncertainty surrounding Brexit. The firm expects revenue growth of 3%-5%, but says that’s “assuming that UK market conditions remain as they are today.“

Time to sell?

Should we bail out of Ricardo shares? I don’t think so, and I still see the company as an attractive long-term investment with both growth and dividend prospects. Ricardo has been growing earnings steadily for years — by 44% over the past three years in fact, which is a great performance.

While that’s set to slow, even single-figure annual growth in the coming few years would still look good to me. And along with that growth, we’ve been seeing progressive dividend rises well ahead of inflation. Yields have been relatively low at around 2.5%, but they’re very well covered and a progressive dividend is key to my idea of a good retirement investment.

And even after the earnings growth of the past few years, we’re still looking at P/E multiples of only around 15. For a company with modest debt of around £26m, that looks good value to me.

Insurance cash

I’ve always been a fan of insurance companies, though they have to be viewed as long-term investments and you need to be able to switch off from the short-term volatility that afflicts the industry.

On that thought, I’m seeing the bearish sentiment towards Esure Group (LSE: ESUR) of the past 12 months, which has led to a 35% share price slump, is overdone. The price was perhaps getting a little overheated in summer last year, and folk presumably saw the firm’s early rapid rise and what looked like increasing dominance of the motor insurance market coming to an end.

But I think that was inevitable, as it’s not the hardest of markets for competitors to get into. But now, I see Esure shares as being attractively undervalued.

Premiums up

The company saw its gross written premiums grow by 25% last year, and the first quarter of 2018 brought an 18% rise over the same period last year. There have been some exceptional weather costs, but the firm reckons it’s “well placed to deliver profitable growth in 2018.“

Liquidity looks fine with solvency coverage at December 2017 of 155%.

For me, the real attraction is Esure’s dividends and a low share price valuation that makes the whole thing looks like a tasty package. Yields are expected to provide 6.9% this year and 7.7% next, with decent cover by earnings of around 1.5 times.

And with forward P/E multiples of 10 and nine for this year and next, I see share price growth potential too.

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

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• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

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.

A backdrop of rising car insurance premiums supported a scenario of solid and sustained profits growth, but this was not the main reason I was compelled to champion the FTSE 250 component. Rather, its ability to grab market share from its rivals was what really appealed to me.

Market appetite for eSure has eroded over the past year as investors have fretted over the increasing competitive pressures washing over the motor insurance segment. While I wouldn’t say I was unconcerned, I reckon that this particular stock has the smarts to overcome this scenario and keep delivering delicious shareholder returns.

Policies continue marching higher

Latest trading numbers released by eSure at the start of May reinforced my positive outlook. The insurer saw gross written premiums across the group boom 18% during January-March to £221.2m, helped by a 21% increase in premiums at its Motor division to £201.4m.

Although the business highlighted the increased competition it’s facing, this factor didn’t stop the number of customers on its books from surging again. It had a total of 1.96m policies up and running as of March, up 17% year-on-year.

The numbers paid testament to eSure’s ongoing bid to boost its footprint and have left it “well placed to deliver profitable growth in 2018,” according to temporary chief executive Darren Ogden. And the company’s aim to have an aggregated 3m home and motor insurance policies up and running by the close of the decade is looking like a very real possibility. It had 2.43m in force as of the close of March.

To add a cherry on top, eSure’s head advised that it “remains on track to achieve a combined operating ratio similar to 2017” in this month’s latest update. This improved to 96.7% last year from  98.8% back in 2016.

Rising dividends = remarkable yields

eSure paid a special dividend in 2017 to keep the annual dividend locked at 13.5p per share. With earnings expected to keep rising and cash flow remaining strong, the City is anticipating further special rewards in the near term and beyond, estimates that nudge payout projections above last year’s levels.

An expected 8% earnings bounce this year results in an anticipated 14.4p dividend, meaning the yield stands at an eye-watering 6%.

And with an 11% profits boost expected in 2019, a dividend of 15.9p is being predicted. Consequently the yield marches to an excellent 6.7%.

I understand that many of you may not share my enthusiasm for eSure. However, those fearful over the impact of intensifying competition on the firm’s future profits can take some solace in an ultra-low forward P/E ratio of 11.5 times.

In fact, this undemanding multiple leaves plenty of upside should — as I fully expect — eSure continue to report exceptional business growth.

The post This 6%+ yielder is too cheap to miss! appeared first on The Twelfth Magpie.

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• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

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.

Latest numbers from the British Insurance Brokers’ Association (BIBA) last week showed that car insurance premiums leapt 10.7% year-on-year excluding the impact of the Insurance Premium Tax during the final quarter of 2017.

The momentum in premium growth is clearly picking up and this was apparent in eSure’s latest set of financials. The company advised earlier in March that gross written premiums leapt 25% in 2017, to £820m, a result that caused pre-tax profit to explode 36% from the previous year, to £98.6m.

But rising premiums are not the whole story as eSure is also drawing more and more business from its competitors. Indeed, the number of in-force policies at the business climbed 9% last year to 2.37m. And the company has eyes on hitting the magic 3m marker by the start of the next decade.

Those 6%+ yields

While the competitive landscape is expected to see earnings expansion at eSure slow from the double-digit percentage improvement posted last year, a 9% anticipated rise forecast for 2018 is nothing to be scoffed at. And this positive forecast is expected to support abundant dividends too.

Last year’s 13.5p per share reward is expected to rise to 14.2p this year, resulting in a monster 6.4% yield. And the good news continues — on the back of an 11% earnings rise in 2019, the insurer is predicted to raise the dividend again to 15.4p, a number that yields an outstanding 6.9%.

ESure has seen its share price drop 27% from the peaks above 300p per share punched last July, and I see this as a prime buying opportunity. The company now changes hands on a forward P/E ratio of 10.6 times, a bargain in most cases and particularly for a firm that is growing in stature in a positive marketplace.

Take a sip

Another FTSE 250 income share worthy of close attention today is Majestic Wine (LSE: WINE).

The yields may fall some way short of those over at eSure, but those seeking robust dividend growth for the years ahead may want to take a look. In the year to March 2018 the shareholder reward is expected to rise to 5.5p per share from 3.6p per share a year earlier, supported by a fractional earnings improvement and yielding 1.2%.

Additional payout expansion is predicted in fiscal 2019 too. With profits expected to advance 19% Majestic is anticipated to raise the dividend to 6.7p, moving the yield to 1.5%.

The wine retailer doesn’t pack the same sort of value as eSure. In fact, a prospective P/E ratio of 20.9 times looks a tad toppy on paper. But this shouldn’t deter investment in my opinion — rather, this premium can be considered a small price to pay given the progress of Majestic’s transformation plan that is helping it to thrive in a tough British marketplace.

When you also factor-in the brilliant global revenues potential of Naked Wines — divisional sales in the US rose almost 10% alone in the first fiscal half, illustrating the vast growth potential here — Majestic is a great selection for those seeking robust earnings and dividend growth in the years ahead.

The post Can you afford to miss this FTSE 250 6% yielder? appeared first on The Twelfth Magpie.

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• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

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.

And it doesn’t look as if the business is going to stop this policy of returning enormous amounts of excess cash to investors anytime soon either. 

Looking after investors 

Today the company announced its results for the year ended 31 December revealing a 25.2% increase in the value of gross insurance premiums written and a 9.2% jump in the number of insurance policies in-force to 2.4m. This growth helped the firm report a better-than-expected 36% rise in full-year pre-tax profit despite its management issues.

Off the back of this growth, management has decided to pay a final dividend for the year of 13.5p, which is 31% higher than last year when adjusting for the impact Gocompare.com profits had on Esure’s earnings. Esure spun off its Gocompare.com price comparison website at the end of 2016. 

A full-year dividend of 13.5p means the shares now support a dividend yield of 6%, and it looks as if this market-beating distribution is here to stay. The company is planning to grow the number of in-force insurance policies to three million or 25% by 2020, driving further improvement in probability. The business is well capitalised to chase this growth plan with a solvency ratio of 155% reported at the end of 2017, which is “ahead of its normal operating range” according to management, allowing the firm to “pursue both our current strategy and to position the business for the future.“

As the company builds on its success, City analysts are expecting earnings per share to rise 12% next year putting the shares on a forward P/E of 10.7, although following today’s results, I would not be surprised if these forecasts are revised higher in the weeks ahead.

Surging payout 

Esure is just one cash-rich insurer that has established itself as a dividend champion. Indeed, Hastings Group (LSE: HSTG) has only been a public company for two years, but during this period it has increased its annual dividend to investors by around 50%.

Actually, this is not strictly true. For fiscal 2015, the company paid a dividend of 2.2p, but this was reported only a few weeks after the firm’s IPO, so many investors would have missed out. The following year, the distribution jumped to 9.9p and then for 2017, off the back of a 39% jump in operating profit, management announced a dividend of 12.6p per share, and analysts are expecting the distribution to hit 14.7p for 2018. So, if you count Hastings’ 2015 payout, the firm’s dividend has surged 570% in four years, although if you go off the more established figures between 2016 and 2018, the distribution is up 48%.

Still, whichever numbers you use, the conclusion is the same: Hastings is a dividend growth champion.

Based on the estimated payout of 14.7p for 2018, the shares yield 5.4% rising to 6.4% if the company increases its distribution by a similar amount in 2018. With earnings per share expected to grow by 42% over the next two years to 27p, there’s no reason why the group cannot hit this dividend target.

The post Interested in a 6% dividend yield? Take a look at these FTSE 250 winners appeared first on The Twelfth Magpie.

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• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

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.

With this in mind, today I’m going to take a look at two FTSE 250 stocks which seem to offer both enticing valuations and dividend appeal.

Tate & Lyle

First up is food ingredients maker Tate & Lyle (LSE: TATE). The company, which sold its sugar refining business in 2010, now makes its money from selling ingredients such as sweeteners, texturants and fibres to food manufacturers.

It has had a difficult few years amid a price war in the sucralose market, but has since made great efforts to diversify away from the commodity. With the launch of new products in the bulk ingredients business, Tate & Lyle has delivered broad-based volume growth, along with steady margin improvement.

What’s more, although market conditions remain challenging in North America, competition in most markets has eased considerably, leading to a stabilisation in prices. Free cash flow has also improved noticeably, leading the company to resume dividend growth for the first time since 2015.

Improving outlook

Turning to the outlook, total dividends per share are expected to grow from 28p in 2017, to 28.6p this year, giving prospective investors a dividend yield of 4.9%.

On the earnings front, Tate & Lyle expects underlying pre-tax profits for the full year to be ahead of previous expectations. City analysts currently have forecasts for the company to record a rise in adjusted earnings of 3% this year, with further growth of 2% forecast for next year. As such, valuations are undemanding, with shares trading at 11.3 times its expected earnings in 2019.

esure

Meanwhile, in the motor insurance sector, esure (LSE: ESUR) offers even more income, with a prospective dividend yield of 5.6% next year.

The internet and telephone-based insurer is often overlooked by its larger rivals, but the company deserves more attention than it gets. esure has a strong track record of profitability and looking ahead, it seems well placed within to cope with changes affecting the insurance sector compared to its peers.

The company has been less badly affected by the UK government’s recent change in the Ogden discount rate, which increased the cost of personal injury claims, due to its lower-risk approach to underwriting and conservative reinsurance programme. And as it emerges from a relative position of strength, it’s well placed to benefit from stronger pricing in premiums going forward.

Double-digit earnings growth 

Looking ahead, City analysts offer upbeat forecasts on earnings growth. Although adjusted earnings is set to have fallen by 3% in 2017, they expect a strong rebound in 2018 and 2019, with earnings growth of 12% and 10%, respectively.

Despite this, valuations are inexpensive, with a 2018 forward P/E of 11 comparing favourably against the sector average of 13.1.

The post 2 FTSE 250 dividend stocks on sale 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.

It’s now been nearly eight years since the Gulf of Mexico disaster, during which the company has paid out more than $63bn in fines and damages. Along the way, the oil market crashed, putting even more pressure on BP’s balance sheet and cash flow.

At over 500p, the stock is up by more than 50% on its 2016 lows. The shares have probably moved out of value territory, but the dividend yield remains attractive at 5.5%. As I’ll explain, I think the shares could prove to be cheaper than they seem.

What comes next?

BP’s financial situation isn’t completely untarnished by the pressures of recent years. Net debt of $39.8bn is slightly higher than I’d like to see, and the dividend has not been covered by earnings since 2014.

However, extensive cost-cutting and restructuring means an oil price of $50 per barrel is all that’s needed to achieve balanced cash flow. Anything above this level should mean that BP’s operations start to generate surplus cash.

Given that the price of oil is now close to $70, I think there’s a decent chance that management will upgrade 2018 guidance when the 2017 results are published next month.

Even without this, current forecasts suggest that BP’s adjusted earnings will rise by a further 39% to $0.42 per share this year, bringing the dividend of $0.40 per share back under cover (just).

Although the shares may look fully priced on a 2018 forecast P/E of 17, I think the 5.5% dividend yield is a more accurate reflection of value here. I expect earnings to rise significantly from current levels over the next few years, and would be happy to buy today.

Time for a change

Insurance firm Esure Group (LSE: ESUR) surprised the market with a double-barrelled trading update this morning. On the one hand, the group’s gross written premiums rose by 25% to £820m last year, while policy numbers rose by 9% to 2.4m.

Both figures suggest faster growth than in 2016, and this is confirmed by management guidance for a pre-tax profit of £95m-£98m. That’s 30%-35% higher than in 2016, when pre-tax profit ‘only’ rose by 19%.

There was just one surprise. Although Esure’s growth remains on track, the company also announced the immediate departure of its chief executive, Stuart Vann.

Mr Vann has been at the company since its foundation in 2000, and seems to be departing on friendly terms. However, an immediate departure is slightly unusual.

The text of today’s announcement suggests to me that chairman and founder Sir Peter Wood has his eye on broadening the firm’s market.  

To help evolve Esure’s long-term strategy, the board wants to replace Mr Vann — an accountant with two decades of insurance experience — with someone who has “significant expertise and experience in a broad spectrum of customer-facing businesses”

I suspect we’ll find out more about Sir Peter’s vision for the future when a new CEO is named. But in the meantime, Esure continues to look like a tempting income buy to me, with a 2018 forecast P/E of 12 and a prospective dividend yield of 5.5%.

The post BP plc isn’t the only 5% yielder I’d buy today appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended BP. 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 business, like energy suppliers Centrica and SSE, has seen its share price take no little a hammering during the latter half of 2017 as investors have responded to government pledges to put an end to excessive electricity charges.

Whilst I wouldn’t back investment in either SSE or Centrica, however, given a combination of possible price caps and a rising competitive backcloth, I reckon National Grid’s share price fall (it tipped to 27-month lows earlier in December) makes it a compelling dip buy today.

Dividends shooting higher

Of course, the FTSE 100 business is also exposed to the highly regulated environment laid down by Ofgem, and National Grid could find itself in the fallout of any attempts to soothe the pressure on household budgets in the months and years ahead.

Still, I believe that National Grid remains a solid pick for those seeking reliable profits growth year after year. The importance of its wires and pylons does not change regardless of the state of the broader economy, and the company continues to invest heavily each year to expand its asset base (and on both sides of the Atlantic Ocean) to keep earnings on an upward slant.

With earnings expected to edge 5% higher in the year to March 2018 National Grid is predicted to drag the full-year dividend up to 45.6p per share from 44.27p last year. This means that the power play sports a meaty yield of 5.2%.

And expectations of a further 3% earnings improvement in fiscal 2018 drives the dividend projection to 46.8p, in turn nudging the yield to 5.4%.

Get in the fast lane

Motor insurance giant eSure Group (LSE: ESUR) is another monster yielder that could make investors a mint in the new year.

With premiums marching ever northwards, the outlook for the entire car insurance segment is looking pretty rosy. And things are looking particularly peachy for eSure, whose ambitious expansion programme is helping to build its customer base at a tremendous pace (indeed, the number of in-force motor policies jumped 19.6% during July-September, to 1.83m, the biggest quarterly jump since 2013).

As a result, City analysts are expecting eSure to bounce from an anticipated 3% earnings decline in 2017 to punch an 18% bottom-line improvement in the upcoming year. And this is predicted to get dividends marching higher again, too.

In 2017 the insurer is expected to downgrade the full-year dividend to 12.3p per share from 13.5p in the previous period (though share pickers should note that this still yields a formidable 4.7%).

And thanks to next year’s anticipated return to profits growth, eSure is predicted to pay a dividend of 13.6p, meaning that the yield rises to 5.2%.

The post Two 5% yielders I’d buy for the new year 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.

And as part of this mission, today the firm announced that it has decided to acquire UK online voucher code website Global Voucher Group Ltd, trading as MyVoucherCodes.co.uk and its subsidiaries for £36.5m in cash.

According to today’s press release on the matter, GoCompare is buying MyVoucherCodes with a combination of existing cash resources and the extension of existing credit facilities. The deal is expected to be to be completed in January and be earnings accretive in 2018 on an underlying basis. 

It is an exciting buy for GoCompare, as it takes the company out of its price comparison home market. Management believes that the deal makes sense as it will increase the opportunities to grow both brands cost-effectively and sustainably. Apparently, the enlarged group will generate 100m views annually on its sites, a vast audience to which management can flog products. 

Dividend Growth ahead

Even though GoCompare has only been a public company for 13 months, the firm has made a splash. After reporting earnings growth of 24% last year, this year analysts are projecting an increase of 11% followed by growth of 18% next year. Today the group confirmed that adjusted operating profit for 2017 is expected to be at the upper end of market expectations.

So it looks as if the company is on track to meet these growth numbers and this should be great news for income investors. 

GoCompare’s management has declared that the company will target a dividend payout ratio of 20% to 40% of earnings per share. For 2017, City analysts are predicting a total distribution of 1.6p per share, rising to 2p next year — payout ratios of around 25% based on current earnings forecasts.

If management decides to pay out 40% of 2018 earnings, the dividend could hit 3p per share, giving a yield of 2.9% at current prices. Put simply, this is undoubtedly one dividend stock worth keeping an eye on. 

Excess cash 

Alongside GoCompare, insurer Esure (LSE: ESUR) does not look like a dividend growth champion, but it is compared to the rest of the market. 

Since its IPO in 2013, it has paid out 55p per share in regular and special dividends, which is equal to around 18% of its IPO price. Analysts have pencilled in a dividend payout of 12.3p for 2017, giving a dividend cover ratio of 65% and dividend yield of 4.8%

Its interim results showed that at the end of the first half, the company had a solvency coverage ratio of 153%, indicating that the firm’s balance sheet is strong enough to support further generous payouts and earnings are growing strongly. For the nine months ended 30 September, the group reported a record quarter of premiums at £233m, up 25% year-on-year. 

This growth should underpin further special dividends and regular payout rises from the group. City analysts are forecasting earnings per share of 18.7p for the full year, giving a forward P/E of 13.5. For 2018, earnings are projected to expand by 13%, and analysts are calling for an 11% dividend increase. So, for 2018 the shares are set to yield 5.4% excluding any special payouts. 

The post 2 high-growth dividend stocks you might regret not buying appeared first on The Twelfth Magpie.

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• Is there any value left in Lloyds shares now they’re over £1?
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• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

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.

But despite this hefty yield, I’d skip investing in Lloyds and instead consider insurer Esure (LSE: ESUR), whose stock offers a 5.21% trailing yield and has far higher growth potential in my eyes.

My reticence to invest in Lloyds is multi-faceted, but given the many years I have until retirement, it’s Lloyds low growth potential that has me most concerned. Now, low growth isn’t necessarily a bad thing. If the financial crisis taught us one thing, it’s that banks striving to hit ever-higher growth targets due to intense shareholder pressure can end very, very badly.

But I’m looking to grow my portfolio through capital appreciation and unfortunately Lloyds doesn’t offer much of this in my opinion. The reasons for this are twofold: the overall domestic economy is growing sluggishly, and Lloyds already has such high market share that it will find it difficult to significantly move the dial organically.

The bank’s management is aware of this, and its recent £1.9bn purchase of Bank of America’s MBNA credit card arm will enhance its offerings in this hot sector. However, this deal will only grow annual turnover by £650m initially, which is a drop in the ocean for a bank that controls nearly a quarter of the domestic mortgage market and is the largest provider of retail banking services.

On top of this, the bank’s current valuation of 0.99 times book value means that unlike peers such as Barclays or Royal Bank of Scotland, it doesn’t trade at a steep discount that signifies potential capital appreciation as turnarounds are effected.

Motoring up for future growth

These are the reasons I’m looking at Esure, which is growing rapidly from a small base as it takes market share in the motor insurance segment. This morning’s release of the company’s results for the nine months to September showed its gross written premiums rising 25.8% year-on-year to £625.8m and the number of in-force policies rising 10.4% to 2.3m.

And its management team isn’t chasing growth at all costs as gross written premiums for its smaller home insurance business fell 6% to £64.3m as highly competitive industry pricing led to fewer opportunities to write profitable premiums. In the trading update, CEO Stuart Vann also said the group now expects to beat previous guidance and for its combined operating ratio, an insurance metric of profitability which is better when lower, should come in at the lower end of its 96%-98% range.

Now, analysts do expect a slightly lower dividend payout this year as management has directed capital towards profitable growth rather than shareholder returns as motor insurance costs have skyrocketed. Yet consensus forecasts still predict a 12.21p per share payout that would yield 4.6% at today’s share price and remain comfortably covered by earnings. With a sane valuation of 14.4 times forward earnings, a substantial dividend yield and very good growth prospects, Esur is definitely higher up on my watch list than Lloyds.

The post Why I’d trade in Lloyds Banking Group plc for this 5%+ yielder appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays 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.

At first glance C&C Group (LSE: CCR) may appear a tasty selection for those seeking brilliant dividend yields.

The brewing giant has consistently lifted dividends even in times of sustained earnings weakness (C&C has endured three bottom-line reverses on the spin), and the City does not expect either trend to cease just yet.

A 6% profits drop is forecast for the year ending February 2018, worsening from last year’s 3% decline. But despite this, a total dividend of 15.5 euro cents per share is anticipated, improving from 14.33 cents previously and yielding a very chunky 5.3%.

And supported by an anticipated 5% bounceback in fiscal 2019 the firm is expected to lift the dividend again to 16.1 cents, shoving the yield to a formidable 5.5%.

C&C’s half-year market update on Thursday certainly suggested that payouts should continue swelling. In it the Dublin-based business announced it was lifting the interim payout by 5% year-on-year to 5.21 cents.

Too much risk

Still, in my opinion, today’s trading statement had a lot more for investors to worry about rather than news to encourage fresh bouts of buying.

The company — whose products include Bulmers and Magners cider and Tennents lager — saw net revenues slip 6.8% during the six months to August, to €273.1m, a result that pushed operating profit 4.9% lower to €50.5m.

C&C noted that “volatile market conditions remain across the industry,” and that while its UK businesses have made a “solid” start to the second half of the year, “in Ireland, where the cider category remains highly competitive, trading has been marginally slower than expected.” The firm has also been negatively impacted by currency movements, it advised.

C&C’s sustained share price weakness (the brewer has lost more than 25% of its market value in the course of 2017) reflects this increasingly-difficult trading environment. And while the business is doubling-down on brand investment to stimulate sales and cost-cutting to shore up the bottom line, I reckon the drinks giant is a risk too far right now.

I would give C&C a wide berth despite its undemanding forward P/E ratio of 13.1 times.

Dividend yields set to balloon

Those on the hunt for darling dividend stocks would be much better taking a look at eSure Group (LSE: ESUR), in my opinion.

Unlike C&C, the car insurer and its peers are enjoying a steady improvement in market conditions as motor premiums continue their relentless northwards march.

Indeed, price comparison website Confused.com said earlier in October that policy costs had rocketed 14% over the past year, and that even worse is likely to come for Britain’s drivers — motorist editor Amanda Stretton commented: “There is every possibility that car insurance prices will be the most expensive on record during the first half of next year.”

It is hardly a shock, therefore, that eSure is tipped by City analysts to flip from an anticipated 5% earnings decline in 2017 to report a 13% improvement in 2018.

And this is expected to push dividends northwards again then, from a reduced 12.5p per share in the current period to 14.4p. These projections yield a very-decent 4.6% and 5.2% respectively.

I am convinced eSure should prove a brilliant bet for growth and income investors now and in the future.

The post Will these 5% yielders make or break your shares portfolio? 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.