With that in mind, here are two companies with high dividend growth potential. Buying them now could be a shrewd move.

Long-term potential

Reporting on Wednesday was Frenkel Topping (LSE: FEN), a specialist independent financial advisor and asset manager focused on asset protection for vulnerable clients. The company has recently been undertaking a detailed review following changes to its management team. It now believes that the potential addressable market available to the company is broader than that which it has previously targeted. It has therefore made investments in its cost base in order to restructure the business.

This could provide the business with higher sales and profit growth potential in the long run. Certainly, it will lead to reduced profitability in the short run, and that could be why the company’s shares are down 10% following the update. However, with a larger potential market from which to seek new business, the company’s future could be brighter following its strategic review.

In terms of its income prospects, Frenkel Topping currently has a dividend yield of 2.5%. While this may seem relatively low, the shareholder payouts are covered around 2.4 times by profit. This suggests that there could be significant growth in dividends in future years. With the company now having a larger market to target, its financial performance could improve in the long run.

Increasing dividends

Also offering the potential for higher future dividends is wealth management specialist Old Mutual (LSE: OML). It is currently undergoing a major restructuring which will see it split into four separate entities. This is being undertaken in order to improve its efficiencies through the prospect of lower costs. It also means there are asset disposals, the latest one of which was for the company’s Single Strategy division for £600m.

With a dividend yield of 3.2%, Old Mutual offers a real income return at the present time. However, in the long run its dividend growth rate could be relatively high. Its shareholder payouts are currently covered three times by profit, which suggests that they are highly affordable and very sustainable.

The company’s price-to-earnings (P/E) ratio of 10.4 suggests that there is a wide margin of safety on offer for new investors. This means that there could be significant upside potential in the long run. In the near term there could be some weakness as investor sentiment may decline to some degree ahead of what is a major change for the business. But with a low valuation, cost-cutting drive and rising dividend, it could be a strong performer in future years.

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

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Peter Stephens owns shares in Old Mutual. 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.

Investors reacted to the news that Frenkel has, following the completion of a strategic review, decided to withdraw plans to put itself up for sale.

The business — which provides asset protection for vulnerable clients — said that having launched a review at the start of April, it has “decided that it is in the best interest of shareholders, employees and clients to continue as an independent company, pursuing its existing business plan.”

In particular, Frenkel noted the improved prospects brought about by the proposed changes to the Ogden Discount Rate, amendments that it says “will materially alter the landscape of the industry.”

Frenkel noted that “the effects of the Ogden Review are now starting to translate into higher levels of damages available to our clients and this should accelerate the growth of AUM for the group.”

As a consequence Frenkel advised that it “is not in active discussions with any third party in relation to a corporate transaction, such as a merger with or sale of the company and as such the Formal Sale Process has now been terminated.”

On the right track

And today’s positive half-year numbers go some way to vindicating Frankel’s decision to keep going it alone.

Frenkel advised that it expects profit from operations for the six months to June to have rocketed to £1.2m from £300,000 in the same period last year, while revenues are also anticipated to have increased to £3.7m from £2.8m previously.

Furthermore, assets under management are expected to have clocked in at £770m, up from £745m last year. It has designs on hitting the magic £1bn marker on an organic basis.

The City certainly believes it is a hot growth stock to watch, and anticipates earnings expansion of 302% and 37% in 2017 and 2018 respectively. These projections make the Manchester business very attractive value for money, a forward P/E ratio of 14.6 times falling below the widely-considered value watermark of 15 times.

And a sub-1 prospective PEG reading of 0.1 underlines Frenkel’s brilliant value relative to its growth prospects.

Catwalk star

Fashion favourite Supergroup (LSE: SGP) may not be packing the same sort of value as Frenkel, but I reckon those seeking excellent long-term growth need to check out the London label.

The number crunchers have pencilled in earnings expansion of 13% in the years to April 2018 and 2019 respectively, following on from an expected 17% rise last year. And these punchy projections come as no surprise given the exceptional progress the Superdry owner continues to make across the globe.

The business saw revenues explode 20.6% in fiscal 2017, to £501.6m, underlining the success of its store rollout programme and improvements to its e-commerce proposition. So while Supergroup trades on a slightly-toppy forward P/E ratio of 16.4 times, I reckon this remains great value given the company’s stunning top-line momentum.

The post 2 growth stocks that could deliver spectacular returns appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Supergroup. 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.

High yield

Updating the market on Wednesday was currency management provider Record (LSE: REC). It announced a tender offer to return up to £10m to its shareholders via the purchase of a maximum of just over 22m ordinary shares which represent 10% of the share capital of the company. Each investor in the company is entitled to tender up to 10% of their shareholding at the tender price of 0.4479p per share. There is the potential for a greater proportion to be tendered by an individual investor, depending on the number of shares tendered by other shareholders in total.

As well as the return of capital to investors, Record also has a healthy dividend yield of 5.1%. This is expected to reach as much as 7.2% next year as dividend growth of over 40% is forecast in 2018. This has the potential to significantly improve investor sentiment in the company, and it could lead to a higher share price in future.

With Record trading on a price-to-earnings growth (PEG) ratio of 1.8, it seems to offer attractive value for money for the long term. Certainly, it is a smaller company which carries significant risks and volatility due in part to its area of operations. However, for investors seeking a high yield, it could be worth a closer look.

Dividend growth

Also offering a bright future from an income perspective is fellow financial services company Frenkel Topping Group (LSE: FEN). The provider of financial services advice is expected to return to strong profit growth over the next couple of years, with its bottom line due to rise by 37% in the next financial year. This means higher dividends could be on the cards, while its PEG ratio of 0.3 remains highly enticing even after a share price rise of 38% in the last year.

Although the company’s dividend yield currently stands at just 1.8%, dividend growth is expected to be around 25% per annum during the next two years. This is expected to push the company’s yield to as much as 2.7% by 2018. But even then, Frenkel Topping’s dividend is set to be covered 3.1 times by profit. This suggests that further rapid dividend growth could be on the horizon, which may make the stock even more attractive.

Given this potential, now could be the right time to buy it ahead of inflation-beating income prospects. While its yield may be relatively low today, it could easily surpass inflation over the medium term.

The post 2 super income shares I’d buy right now appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?

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.