The investment banking outfit provides research, execution, corporate broking and advisory services to companies in the UK and their investors. The recent weakness in the wider stock market has been unkind to the shares, and I think financial services firms like this tend to exaggerate stock market movements.

Investing to grow

On top of that, Numis delivered a profit warning recently caused by extra recruitment costs. The company is building up its payroll with additional talent, with the aim of pursuing growth opportunities – arguably that’s the best kind of profit warning. However, the reality is that the share price is down around 36% in just three months – painful if you’ve been holding the stock. But what about now? Is it time to buy?

In today’s full-year report, the firm explained that the benefits of the investment it made in the business during 2018 “are now materialising.” The directors point to three new corporate clients won since the start of the current trading year in October, and said that growing the corporate client list underpins their confidence in the firm’s future prospects.

But the company’s activities in the Equity Capital Markets (ECM) have been challenging since October because of the stock market declines, which particularly affected “mid-market growth stocks.” The new trading year has started quite well with 14 deals, “including three IPOs,” but that’s a decline in deal volumes compared to the equivalent period last year.

However, the directors sound upbeat about the outlook, saying that activity levels “remain high across the business.”And the pipeline is “strong” with IPOs, and capital raisings planned for corporate clients, although “the execution of these transactions is increasingly unpredictable.”

The rise in volatility has hit the equity side of the business too, and the firm achieved lower trading profits and institutional income during the first two months of the year than it did in last year’s equivalent period. But Numis thinks it can gain further market share regardless of the market environment.

Big ambitions

Numis reported record revenues today for the trading year to September, although that’s immaterial to the outlook. What matters is what the firm does next, and there’s a clue in the dividend decision — the directors held the full-year dividend at the previous year’s level, suggesting a cautious view on the outlook.

However, Alex Ham and Ross Mitchison, the co-chief executive officers, said in the report that Numis aims to build “the investment bank of a generation,” which sounds like a lofty ambition. They reckon that the investment in people that affected profitability during the year has strengthened the firm’s “competitive position, expanded the range of services available to our clients and enhanced the overall quality of the Numis platform.”   

Meanwhile, the current share price close to 275p values the company at a forward earnings multiple for 2019 just below 11, and the forward dividend yield is around 4.4%. I’m tempted to take a chance on the growth prospects of the firm at this depressed share-price level.

The post This could be the perfect time to pile into this high-dividend growth proposition 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.

Despite this rise in its share price though, the group’s stock still trades at just 14 times consensus forward earnings and still kicks off a very attractive 4.9% dividend yield. While investors may be squeamish about investing in tobacco stocks, I think this high yield, attractive valuation and rising earnings still makes it one FTSE 100 stock to consider for the years ahead.

In fact, in Q1 the group’s revenue, excluding the acquisition of Reynolds American, grew by a respectable 1.9% in constant currency terms while operating profits were up by 2.4% on the same basis. But adding in the purchase of the parts of Reynolds American it didn’t already own is what makes BATS truly exciting.

On this statutory basis, revenue was up a full 56.9% to £11.6bn while operating profits leapt 72.4% to £4.4bn. Of course, this growth will naturally slow as it won’t be making anymore huge acquisitions any time soon. But there is still great long-term potential to wring increased profits out of Reynolds American through cost-cutting, improved leverage with suppliers and customers, and cutting investments in low-growth brands in favour of core names like Lucky Strike and Camel.

Now, it’s unwise to discuss investing in tobacco stocks without discussing the elephant in the room – declining rates of smoking. This is certainly an issue, but despite being an industry in decline, there is still potential for revenue and sales growth as the sector’s biggest players buy out smaller competitors. This is the position BATS is in and with high margins and huge cash flow I’d expect it to continue making deals once it’s deleveraged its balance sheet following the Reynolds American purchase.

With this being the case, I think it still has the potential to continue hugely rewarding shareholders for years to come and that its current price is quite attractive.

A faster-growing option 

Another reasonably priced stock that’s caught my eye is small- and mid-cap broker Numis (LSE: NUM), whose shares trade at just 16.4 times forward earnings despite rising over 80% in value in the past year.

This rapid rise in the group’s share price looks quite justified to me as the group has been growing quickly by carving itself out a leading position in corporate broker services for the small- and mid-cap companies that bulge bracket investment banks have ignored in recent years.

In the half year to 31 March, the group’s revenue increased 41% to £74.1m while pre-tax profits grew 86% to £19.5m. This increase in sales and profits was led by a rise in activities like IPOs and secondary fundraisings by its clients, as well as an uptick in M&A advisory services.

Looking ahead, there are a few potential worries for Numis such as the MiFID II restrictions on how clients pay for research, as well as the company’s obvious reliance on healthy corporate earnings and upbeat financial markets. However, with a proven growth strategy, plenty of cash on hand and a respectable 2.8% dividend yield, I think Numis is still attractively valued considering its long-term prospects.  

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Ian Pierce 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 I don’t believe this growth is set to come to an end any time soon. City analysts are expecting earnings growth of around 5% for 2018, and a similar rate for 2019 as Numis continues to win clients.

Indeed, Numis recently toppled JPMorgan Cazenove from its long-held position as the most popular stockbroker in the City, adding 70 corporate clients to its books since 2010 as JPMorgan’s roster fell by a quarter.

Beating the market 

In a trading update today, Numis said it has “delivered a strong first half” and is expecting “to report revenue and profits significantly ahead of the comparable period.” Capital Markets and M&A activities have been strong thanks, in part to “higher average deal fees” while Corporate Broking & Advisory has “delivered revenue materially higher than the first half of the prior year.“

It looks to me as if Numis is firing on all cylinders and is well on the way to meeting City growth forecasts for the year. That said, it did warn today that first-half performance is “below the record performance achieved in the second half” of 2017, although the introduction of the MiFID II regulation earlier this year is responsible for some of the disruption. Numis is not alone here as MiFID II has caused confusion across the financial services industry. 

Still, it looks to me as if it is on track to report another strong year. But despite the firm’s outlook, and record of growth, shares in the company still look cheap. 

Undervalued growth 

Last time I covered it, I calculated that the stock was trading at a cash-adjusted forward P/E of 10.2 and it does not look as if much as changed. 

With the City expecting the firm to earn 27p per share for 2018 and a net cash balance of £96m at the end of September 2017, I calculate that the shares are currently trading at a cash-adjusted forward P/E of 10.1, a valuation that looks too good to pass up. 

Keeping it in the family 

Another growth stock I believe that you should include in your ISA is property company Henry Boot (LSE: BOOT). 

Property construction is a cyclical business, and generally, these companies do not make for good long-term investments.

However, Henry Boot has been in business for 132 years and is still family managed. The secret to the firm’s longevity seems to be its conservative business model. As my Foolish colleague, Roland Head pointed out last week, the company’s net debt declined from £32.9m to £29m last year, giving a gearing level of just 11%, indicating to me that this business has a robust balance sheet designed to weather market downturns. 

Henry Boot also reported last week that group sales for fiscal 2017 rose 33%, while pre-tax profit climbed 40% to £55.4m. Chairman Jamie Boot said the firm has a “strong pipeline” for 2018 with positive customer sentiment continuing to support sales growth. Since 2013, profits have risen 280%. 

Nevertheless, despite the bright outlook and conservative balance sheet, shares in the company trade at a relatively depressed 10.7 times forward earnings. In my opinion, the shares deserve at least a market average multiple of 13.7.

The post 2 of the market’s top growth stocks to consider before the ISA deadline 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.

Earnings have risen by an average of 18% per year since 2011 at recruitment firm Staffline Group (LSE: STAF). And the firm’s momentum — helped by acquisitions — seems to remain strong.

Staffline published its full-year results this morning, revealing a 28% increase in pre-tax profit to £24.1m. Revenue climbed by 8.5% to £957.8m, highlighting the improvement in the firm’s pre-tax profit margin, which rose from 2.1% to 2.5%.

A tale of two halves

Staffline has two main divisions. The recruitment division specialises in providing workers for sectors such as transport, agriculture, retail and manufacturing. In 2017, Staffline’s operations provided 52,000 workers per day to more than 1,500 clients.

The other part of the company is PeoplePlus, which runs training and employment programmes, mainly for public sector clients. One risk is that the main contributor in this sector, the Work Programme scheme, is currently winding down. Underlying profits from PeoplePlus fell by 10% last year.

However, the company is involved in a number of other such public sector schemes and says that the new Apprenticeship Levy “has created a huge new market” which represents “an excellent growth opportunity” for the firm.

Impressive track record

Falling profits from Work Programmes may mean that Staffline’s overall profits flatline for a while. Earnings per share growth is expected to be just 2.7% this year. However, the company has an impressive track record of growth and a strong balance sheet. With the stock trading on a forecast P/E of 8.6 with a prospective yield of 2.9%, I think this could provide a decent long-term opportunity for investors.

A super City dividend

Stockbroker Numis Corporation (LSE: NUM) makes most of its money by helping companies raise funds on the stock market and assisting with other corporate transactions. It’s a cyclical business and when times are good, it’s extremely profitable.

The group’s last set of results show that Numis generated an operating margin of 29% on revenue of £139.1m in 2016/17. Costs are fairly low, as the company only has around 200 staff and some office accommodation to pay for. As a result, Numis generated £39.9m of free cash flow last year, after using a further £3.3m of cash to purchase shares for employee bonuses.

This is a useful reminder that the value of this business lies in key staff members, who are usually well rewarded. But unlike some small financial firms, Numis does seem to focus on shareholder returns as well as staff remuneration. The company paid out £13.5m in dividends last year and spent almost £20m on share buybacks.

Looking ahead

Although the direction of the market is largely unpredictable, comments made with December’s results suggest to me that management are reasonably confident about the year ahead.

The group has certainly taken advantage of strong trading in recent years to strengthen its balance sheet. Net cash was £133m at the end of September, equivalent to four years’ after-tax profits.

The firm’s unbroken dividend track record suggests that the payout would be maintained, even in the event of a market correction. With this in mind, the stock’s forecast P/E of 12 and 3.6% yield looks fairly attractive to me.

The post 2 secret dividend stocks you might regret not buying 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 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 can this financial services business continue on its current trajectory? 

Buy ahead of further growth? 

Even though Numis is a relatively young business, the firm recently toppled JPMorgan Cazenove from its long-held position as the most popular stockbroker in the City. Numis has grabbed market share as bigger banks have focused on more significant corporate clients. 

Since 2010, Numis has added a net of about 70 clients to its books compared to JPMorgan Cazenove’s client roster that has fallen by nearly a quarter from 253.

Market share growth has helped Numis grow, but the firm’s profits are ultimately dependant upon market conditions. Pre-tax profit has roughly doubled during the past five years thanks to buoyant markets, but analysts are expecting earnings to slide next year by 19%, amid mixed markets. Even though the group reported pre-tax profit growth of 18% for the fiscal year ending 30 September, first half profits slumped 38% year-on-year. 

If markets remain buoyant, next year could be another of growth for Numis but, as yet, it’s impossible to tell. 

Still, I believe that the company has what it takes to continue to grow over the long term, no matter what the market environment. With net cash of nearly £100m, the shares trade at a cash-adjusted forward P/E of 10.2, according to my figures. 

Charging ahead

Numis isn’t the only small-cap growth stock that’s attracted my attention for its potential. Shares in filtration business Porvair (LSE: PRV) have surged by nearly 200%, excluding dividends, since the end of 2013. 

This performance has left the stock trading at a premium multiple of 25.2 times forward earnings, although this is a multiple I believe is entirely deserved. 

Porvair is a highly specialised business, which means it has a unique position in the market. Management is using cash generation to reinvest, buying bolt-on acquisitions, such as Dutch group Rohasys BV just last week. This particular deal brings robotic sample handling expertise to the group, enhancing its bioscience sample preparation capabilities.  

As well as these deals, strong organic growth is helping the company. In a recent trading update, management announced that earnings for the year to 30 November are expected to be ahead of forecasts with overall underlying revenue growth of 13%. 

If Porvair can continue to grow earnings organically while reinvesting in its business, in my view there’s no reason why the shares can’t head higher while maintaining their high multiple. There’s also scope for significant dividend growth as the payout of 4.1p is covered 4.5 times by earnings per share. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of Porvair. 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.

Yes to RWS

Today it published final results for the year ended 30 September and market excitement has ebbed, its share price flat at time of writing. This is despite the fact that the language and intellectual property support services provider hailed this as “an outstanding year, strengthening our leading position in Life Sciences.”

Sales rose 34.4% to £164m and adjusted profit before tax jumped 41.5% to £43.3m. Organic growth clocked in at 8%, excluding acquisitions and currency movements, with organic profit growth of 18%. Basic earnings per share (EPS) jumped 22% from 9p to 11p. The total dividend increased 16.1% to 6.5p, continuing an unbroken series of dividend increases since it floated in 2003. Nice.

Pricey, but…

Net debt did multiply from £1.5m to £20.2m, but this was largely due to the £74.8m cost of the acquisitions of LUZ and Article One Partners. Group gross margin improved by 96 basis points to 43.75% after significant gains in 2016, while chairman Andrew Brode has reported a strong first two months of the new financial year.

Perhaps the main reason investors are not jumping up and down with excitement is that they knew all this stuff already, which explains why the stock trades at a forecast 30.7 times earnings. Prospects remain promising, with forecast EPS growth of 26% in 2018, and although the yield underwhelms today at 1.7%, there is plenty of scope for progression. Expensive, but it looks a buy to me. Although you may be tempted by these brilliant bargains instead.

Market swinger

Numis Corporation (LSE: NUM) also reported today after a storming year which has seen its share price rise 33%, while it is up 147% over five years. Again, the market reaction to its preliminary results for the year to 30 September has been muted, with the share price down 0.57%.

Yet it was a good year for the small- and mid-cap broker, with revenue up 16% to a record high £130.1m. Profit before tax rose 18% to £38.3m and EPS were up 17% to 27.4p. What’s not to like, stock market?

The total dividend for the year was maintained at 12p, the same as in 2016. However, the directors have pledged to pay a stable dividend and reinvest in the company, rather than lavishing shareholders with excess cash.

In the pipe

Market conditions provided a positive backdrop to UK equities and co-CEOs Alex Ham and Ross Mitchinson said the group’s “deal pipeline is strong,” while trading in the new financial year has started well. The stock also trades at a bargain 12.3 times earnings while the forecast dividend is a solid 3.9%, covered 2.1 times. If still unconvinced, you may prefer this hot growth stock.

City analysts have some concerns about Numis’s future, forecasting a 19% drop in EPS in 2018, with forthcoming new Mifid II EU regulations no doubt playing a part, but this also looks like one for your watch list.

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

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Harvey Jones 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.

Photo-Me International

£660 market cap Photo-Me International (LSE: PHTM) operates a wide range of instant service vending equipment, such as photobooths, digital printing kiosks and unattended laundry facilities. The company has nearly 50,000 vending units in operation in high footfall areas such as supermarkets and shopping malls across 18 countries.

While sales haven’t always progressed in a linear fashion over the last five years, the company’s top line now looks to be trending in the right direction. Sales jumped 17% last year (boosted by favourable currency movements) and City analysts expect further growth of 6% this year and next. Profitability has increased significantly in recent years, with earnings per share rising from 5.7p in FY2014 to 9.3p per share last year.

The improvement in the bottom line, as well as the company’s ability to generate substantial amounts of cash, has enabled Photo-Me to reward shareholders with some hefty dividend payments recently. Last year, investors received 7.03p per share, a yield of 4% at the current share price. This year, analysts expect a payout of 8.43p, taking the yield to 4.8%.

Over the last five years, dividend growth has been strong, averaging 23%. The group has paid several special dividends as well. However, investors should note that the group doesn’t have a perfect dividend record, as it was forced to cut its payout in 2008. It’s also worth noting that after investing heavily in its laundry business last year, the dividend reduced the company’s cash pile from £71m to £48m.

With analysts forecasting earnings of 9.75p for this year, the stock currently trades on a forward P/E ratio of 18.2. That valuation appears reasonable to me, and as such, I believe there could be potential for both capital gains and further dividends going forward.

Numis

Another dividend stock flying under the radar of many investors is independent institutional stockbroker and corporate advisor Numis (LSE: NUM). I last covered Numis back in April. At the time, the shares had risen from 200p to 260p over 12 months, and since then, after a positive trading update in October, they have kept climbing, to now sit at 308p.

However, despite the strong share price performance, the yield on offer still looks attractive, in my view. Last year, the broker paid out 12p per share, which equals a yield of 3.9% at the current share price. Dividend coverage was strong, at 1.9 times. Looking forward, City analysts currently expect a similar payment of 12p for this year, before a rise to 12.5p next year.

Numis’s dividend history is quite impressive. Indeed, since paying a maiden dividend in 2000, the firm has never cut its payout, including during the Global Financial Crisis, when conditions were extremely challenging for financial services companies. As such, in my view, there’s a strong possibility that Numis will continue to reward its shareholders with healthy cash payouts in the future.

The post 2 under-the-radar stocks paying big dividends 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.

Having said that, I reckon a few high-yielding blue-chip stocks can make a great portfolio cornerstone, and one that has consistently produced the goods is Royal Dutch Shell (LSE: RDSB).

Despite earnings crashing during the oil price crisis, Shell has kept its dividend going at a steady 188 cents per share. That’s around 142p, and with the shares at 2,372p it would yield a little over 6% this year and next.

The big question has been whether the oil giant would continue handing over these levels of cash while earnings had been dwindling — at the lowest point, in 2015, earnings per share (EPS) only covered 16% of the year’s dividend.

On the mend

That’s since improved, and we have a couple of years of impressive EPS growth pencilled in for this year and next, but even by December 2018 we’d only see the dividend barely covered by earnings.

But I think the time for worrying about dividend safety has passed, with Shell having easily had enough cash to keep it going through the hard times — if we were going to see a cut, surely it would have happened when earnings were at a low rather than now when they’re coming back.

Cash flow at the interim stage soared by 600%, and Shell is now looking like a much leaner operation after having offloaded a chunk of non-core assets — and its acquisition and integration of BG Group seems to have gone smoothly.

Shell has always been a great long-term investment, and I reckon it still is.

Progressive dividends

The other side of the dividend coin to big yields is progressive ones — even a low yield today can be very attractive when there are prospects of the annual cash payout growing faster than inflation every year. And that’s what I’m seeing at Numis Corporation (LSE: NUM).

Numis is a broker and has been doing well by focusing on small and mid-cap clients, and that’s led to an impressive rise in EPS over the past few years — from 6.4p in 2012, it rocketed to 23.5p by September 2016.

The share price has risen along with earnings, putting on 175% over the past five years to reach 308p, though with EPS being so strong we’re still looking at forward P/E multiples of only around 12-14.

The cash

But the big attraction for me is the dividend, which has been wiping the floor with inflation — from 8p in 2012 it climbed to 12p in 2016, with forward yields now standing at around 4%. And what’s nice is that the company offers a dividend reinvestment plan, so you can take additional shares instead of the cash each year.

An update earlier this month told us that “second-half trading performance was very strong” with revenues up 47% over the first half, which should lead to an overall 15% increase in full-year revenue. With the firm telling us that profit should show similar levels of growth, I’m happy with the dividend prospects for this year too.

The broker business can be variable and revenue doesn’t always fit neatly into the annual reporting period, so investors should probably expect some down years. But I think I’m seeing a solid long-term dividend prospect here.

The post A ‘secret’ dividend stock I’d buy alongside Royal Dutch Shell plc’s 6% yield appeared first on The Twelfth Magpie.

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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Royal Dutch Shell. 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.

Polar Capital Holdings (LSE: POLR) is one I like the look of as it’s been handing out healthy dividends for years. The dividend has actually been held flat at 25p for a few years as earnings have slipped a little, but it still amounted to a 6.9% yield for the year to March 2016.

And this year we saw the expected 25p again, for a yield of 5.8% on today’s share price of 430p. The shares had been in a bit of a slump for a few years, but have put on a healthy 74% since a low in June last year, producing the reduced yield.

What seems to be behind the recent positive share price performance is the mooted return to earnings growth on the analysts’ cards starting next year — the City folk are predicting a 27% boost in EPS in 2018, followed by a further 30% the year after, and Thursday’s results lend some support to that.

Assets growing nicely

Adjusted earnings per share came in ahead of the year’s expectations at 20.4p, down just 7% over last year, after pre-tax profit declined by 14% to £20.4m. And with assets under management up 11.5% to $11.6bn (in sterling the rise was bigger, but that’s just currency exchange movements), and the firm’s new UK Value Opportunities UCITS fund launched in January already sitting on assets of more than £256m, it does look like investors are flocking to Polar’s offerings.

The expected growth resurgence should also see the dividend picking up again, with a rise to 27.5p (6.4%) on the cards for 2019. With a forward P/E by then of 13, Polar Capital looks attractive.

Steady or erratic?

Steady year-on-year EPS rises aren’t always necessary for solid dividend income. Earnings from Numis Corporation (LSE:NUM) have been a bit up and down over the past few years, but its dividends have been steady and rising.

It’s the nature of the company that does it, as Numis is a company stockbroker specialising in small and mid-cap companies seeking to raise funds — so it will have fatter years when there are more IPO and equity issues, and leaner years when there are fewer.

But having said that, the dividend has actually been reasonably well covered by annual earnings over the past few years — apart from 2012 when it was only 80% covered, but that quickly reversed to more than twice covered a year later. The share price has been on a bit of a roller coaster, though flat overall over the past couple of years, but dividend rises are steadily beating inflation.

Long-term cash

Last year’s 12p payment provided a yield of 5.5%, and was 4% up on 2015’s dividend (which in turn had been hiked by 10% from the year before). And though analysts are predicting an uncharacteristically flat dividend this year with the same 12p pencilled-in (for a 4.9% yield on a slightly higher share price), they’re expecting a further 4% boost in 2018.

Earnings were down at the halfway stage, but the second half has apparently “started very well with the completion of 10 fund raises generating fees of over £10m.“

I’m seeing a solid long-term cash cow here.

The post Two hot dividend stocks I’d buy today appeared first on The Twelfth Magpie.

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• 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?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Polar Capital Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Does founder exit spell trouble?

Shares of AIM-listed stockbroker Numis Corporation (LSE: NUM) fell by about 5% this morning, after the firm reported a 38% drop in pre-tax profit and said that founder and executive director Oliver Hemsley would step down.

The shock value of the firm’s news may have been high, but closer inspection suggests that things aren’t as bad as they might seem. Mr Hemsley will remain available in an advisory capacity and the firm’s activity levels still seem attractive.

Revenue was down by 8% to £52.4m during the first half, while pre-tax profit fell to £10.5m, down from £16.8m during the first half of last year. This decline left first-half earnings down 34% at 8p per share.

However, that’s still comfortably enough to cover the interim dividend of 5.5p per share, which was left unchanged. The group’s net cash balance was also broadly flat, at £71.2m.

One problem with the Numis business is that profits can be quite lumpy. The company’s biggest profits come from corporate transactions, such as flotations (IPOs). Last year was an exceptional year during which Numis completed 10 IPOs. The market for new flotations has been quieter so far in 2017, and the firm has only completed two so far.

However, “non-primary activity” such as placings remains strong, according to management. Numis says it has completed 10 corporate transactions since the start of April, generating more than £10m of fees. The board remains confident of meeting full-year expectations.

After today’s fall, Numis shares trade on a forecast P/E of 10 with a prospective yield of 4.7%. The group’s cash balance covers about 24% of its share price, giving solid support to the dividend. I think the stock rates as a potential buy at current levels.

Fast-growing cash machine

Shares of electronics supplier CML Microsystems (LSE: CML) rose by 7% this morning, after the company said that full-year profits for last year should be ahead of expectations.

CML said that unaudited figures indicated a pre-tax profit of £4.2m for the year ending 31 March 2017. That’s a 26% increase on the £3.32m figure reported for 2015/16. The group’s net cash balance remained broadly unchanged at £12.4m, despite the acquisition of Sicomm for £3.58m during the first half of the year.

Today’s gains mean that CML shares are now worth 24% more than they were a year ago. That gain reflects the group’s increased profits over the period, so I don’t think it’s excessive.

Although the stock now trades on a forecast P/E of 19 for 2017/18, earnings growth of 14% is forecast for this year. The group’s cash balance and lack of debt means that the risk of financial problems is low and the forecast yield of 1.8% should be safe.

The post These cashed-up dividend stocks could be bargains appeared first on The Twelfth Magpie.

More reading

• 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?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Roland Head 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.