As such, now could be the perfect time to buy it. Alongside another dividend stock, which reported a positive update on Wednesday, it could boost your portfolio returns over the medium term.

A changing business

The main reason for the expected increase in Barclays’ dividend over the next couple of years is the progress of its strategy. Under its present CEO, the company has sought to improve its financial strength and the efficiency of its business model. In order to achieve this as quickly as possible, it placed less emphasis on dividends, which meant that they were cut from 6.5p per share in 2015, to 3p per share in 2016.

At the time, many investors were unhappy about the cut. However, after asset disposals and a focus on efficiency, the company appears to be in a stronger position to generate earnings growth over the medium term. In fact, its bottom line is forecast to rise by 15% in the next financial year, which is expected to catalyse dividend growth.

With Barclays’ dividend coverage ratio expected to be 2.8 in the 2019 financial year, further dividend growth could be ahead in 2020 and beyond. In fact, if the company reduced its coverage ratio to 1.75, it could yield as much as 6.6% at its current price level. As a result, now could be the perfect time to buy the stock ahead of what may prove to be a strong period for dividend growth.

Solid growth

While Barclays has delivered a ‘rollercoaster ride’ when it comes to dividends, housing support services company Mears (LSE: MER) has posted robust dividend growth in recent years. The company’s shareholder payouts have risen in each of the last four years, increasing on an annualised basis by 8%.

Looking ahead, the company’s dividend growth prospects appear to be bright. Its pre-close trading update released on Wednesday showed that it’s making solid progress in core divisions. Its pipeline of opportunities remains enticing, while its strategic evolution as a business could mean that it’s able to access growth opportunities that were previously unavailable.

With Mears forecast to grow its dividends by 12% per annum over the next two years, the company has an attractive forward yield of around 4.7%. Given the fact that its dividends are covered 2.4 times by profit and as it’s expected to report positive earnings growth over the next two years, income investing prospects appear to be bright.

The post How Barclays’ high yield could help you become a stock market millionaire appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Barclays. The Motley Fool UK has recommended Barclays. 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 difficult period

Since the release of half-year results by Mears in August, trading conditions for its Housing division have continued to be tough. Many of its clients have focused on ensuring that their portfolios are safe and compliant, which has resulted in a softening of revenues for the current financial year.

As well as this, the company is expected to report an exceptional item of up to £16.5m in the current financial year. This relates to the disposal of its Mechanical and Electrical division in 2013, which included an entity operating in the UAE that had a number of contractual guarantees from the company. They remain in place, and a number of them have been called. As such, the company is required to settle funds against the contingent liabilities.

Although there is a realistic expectation that the funds will be recovered, they will be provided for in the company’s current financial year. This could cause the performance of the business to disappoint, which may mean investor sentiment in the stock remains weak over an extended period of time.

While the performance of the company’s Care division has been in line with expectations and its bid pipeline remains strong, its share price could disappoint in the short run. As such, there may be superior investment opportunities available elsewhere.

Dividend potential

Operating within the same sector as Mears is Travis Perkins (LSE: TPK). The building products specialist is experiencing a challenging year, with its bottom line forecast to fall by 6%. Much of this is due to weakness in the UK economy, with Brexit seemingly causing confidence across the sector to come under pressure. As such, its share price could be volatile in the near term.

However, in the long run Travis Perkins could deliver improved performance. It is expected to return to positive growth next year, with its bottom line expected to rise by 4%. It trades on a price-to-earnings (P/E) ratio of just 13, which suggests that it could offer good value for money.

Furthermore, the company has a dividend yield of 3%. While not the highest in the FTSE 350, it could rise at a rapid rate. Dividends are currently covered 2.5 times by profit, which suggests that they could rise at a much faster pace than earnings over the medium term without jeopardising the company’s financial standing. As such, and while its outlook is highly uncertain, Travis Perkins could be worth buying for the long term.

The post Why I wouldn’t buy Mears Group plc as shares crash on trading update 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.

Rolls-Royce Holdings (LSE: RR) shareholders must be starting to sleep easy again. The group’s latest trading update confirmed that trading is in line with previous guidance, and reassured investors that the referendum outcome will have “no immediate impact” on the business.

The group’s underlying profit for the first half of the year is expected to be “close to breakeven”. During the second half of this year, stronger engine deliveries and aftermarket revenues are expected to help generate a full-year after-tax profit of £471m. That’s a big improvement on last year’s figure of £84m.

Rolls confirmed that it’s on track to deliver planned cost savings of £30-50m this year. As a major exporter, it may also benefit from the weaker pound. In my view, chief executive Warren East already seems to be creating the same stable and improving performance he achieved when in charge of ARM Holdings.

Although Rolls-Royce shares trade on a 2016 forecast P/E of 27 and do not appear cheap, earnings are expected to rise by a further 35% in 2017. A strong balance sheet and a 2.1% forecast dividend could mean that, for long-term investors, now may be a reasonable time to buy.

Good value but uncertain outlook

Full-year results from corporate van hire specialist Northgate (LSE: NTG) were always going to make interesting reading. I was looking for two things: confirmation that trading in Spain was improving as expected, and some indication of the outlook for the UK business.

Underlying operating profit rose by 24% to £41.3m in Spain last year. The average number of vehicles on hire was flat and utilisation remained satisfactory at 91%. In the UK, underlying operating profit fell by 15% last year to £58.2m. The average number of vehicles on hire was down by 3%, while utilisation fell from 88% to 87%.

The risks to Northgate’s Spanish business seem minimal to me when — or perhaps even if  —  the UK leaves the EU. I’m more concerned by the outlook for the UK. Northgate said this morning that the performance of the UK business in 2016 will be weighted to the second half of the year. That sort of statement is sometimes a coded profit warning.

Northgate shares are up by 5% this morning, but still look cheap given 6.7 times forecast earnings and a forecast yield of 4.9%. At this level, I believe they may be cheap enough to buy, despite the risk of a UK slowdown.

A profitable play on the housing shortage?

Investors are nervous about the housing market, but one segment that seems likely to continue to prosper is the rental market. Mears Group (LSE: MER) makes the majority of its profits from providing residential maintenance services for councils and housing associations.

In a statement today, Mears said that results for the first half of the year are expected to be in line with expectations. So far, 97% of this year’s forecast revenue of £973m has been secured. For 2017, the group has visibility of 85% of forecast revenue of £1,030m.

Mears reported a number of new housing contracts this morning and said that its pipeline of new opportunities remains strong. With the shares trading on a 2016 forecast P/E of 10 and offering a forecast dividend yield of 3.4%, this company might be worth a closer look.

The post Should you buy or sell Rolls-Royce Holding plc, Northgate plc & Mears Group plc after today’s news? appeared first on The Twelfth Magpie.

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Roland Head has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Of course, it is sometimes possible to buy stocks with bright futures at a very appealing price. One such example is housebuilder Barratt (LSE: BDEV). It reported a strong set of full-year results today, with its pretax profit rising by a very impressive 45% versus the previous financial year. A key reason for this was an increase in the number of completions from 14,838 in the previous year to 16,447 in the year being reported. Furthermore, the sale price per home also increased by 8.7% to £262,500, thereby providing a further boost to the company’s financial performance. And, with such strong results, Barratt has decided to pay a special dividend of 10p per share, which indicates that it has confidence in its future performance.

In fact, Barratt is expected to post earnings growth of 16% in the current year. That’s over twice the market rate and, with the company trading on a price to earnings (P/E) ratio of 12.2, it appears to offer excellent value for money.

Similarly, social housing and care specialist Mears (LSE: MER) is also due to rapidly grow its net profit. It is expected to rise by as much as 25% next year and, with the company having a P/E ratio of just 14.2, this equates to a price to earnings growth (PEG) ratio of just 0.5. This indicates that improved performance is on offer at a very reasonable price and, with Mears having an excellent track record of growth (its bottom line has risen in each of the last five years), it seems to offer a potent mix of growth, value and stability.

Meanwhile, technology company Laird (LSE: LRD) is expected to grow its net profit by 19% in the current year and by a further 11% next year. This rate of growth puts it on a PEG ratio of just 1.4, which indicates that its shares look set to continue the run that has seen them soar by 26% in the last year alone. In addition, Laird remains a relatively appealing income play (especially for a technology company; an industry in which generous yields are somewhat rare), with the company yielding 3.4% from a dividend that is covered almost twice by profit.

This yield is, of course, still some way behind that of AstraZeneca (LSE: AZN). It presently yields a very enticing 4.2% and, with earnings growth expected to be positive over the medium term, now could be a great time to buy a slice of the company. Certainly, its P/E ratio of 15.6 may be higher than the ratings of many companies listed on the FTSE 100 but, with an improving pipeline, a very sound balance sheet and the right strategy that focuses on acquisitions, AstraZeneca seems to have a very bright future and could prove to be a star performer.

The post 4 Of My Favourite Stocks: AstraZeneca plc, Barratt Developments Plc, Laird PLC And Mears Group PLC appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of AstraZeneca, Laird, and Mears Group. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.