Earnings per share have grown at a compound annual rate of 42% since 2013, and it doesn’t look as if this trend is going to come to an end anytime soon. In Redrow’s results for the financial year to the end of June, it revealed a 13% year-on-year increase in completions and 10% increase in revenues. Earnings per share increased 8%, and cash generated from operations hit £124m, up from 2018’s £63m.

Commenting on the firm’s trading performance since the end of the reporting period, CEO John Tutte said: “Since the start of the new financial year, trading has been encouraging, and the demand for our homes is strong with reservations running ahead of last year.“

So, it looks as if fiscal 2020 is going to be another year of growth for the group as well. 

Cheap income

Based on the numbers in today’s earnings release, the stock is currently trading at a historical P/E of 6.1. Assuming Redrow’s earnings will grow further in fiscal 2020, we can assume this ratio applies for the current year too. On top of this, the firm announced an additional 20.5p per share dividend this year, taking the full-year cash return to 60.5p, a dividend yield of 9.4% on the current share price. 

I think it’s unlikely investors will see the same kind of cash return in fiscal 2020, but analysts have pencilled in a regular dividend yield of 7.6%. This level of income, coupled with Redow’s discount valuation, makes the stock too good to pass up, in my opinion. 

Cash champion

Another company that I think might also be worth your research time is PayPoint (LSE: PAY). The company, which primarily operates a payments network, helps customers convert cash into electronic payments and provides payment terminals for small shops around the UK.

This business is highly lucrative. Last year, the company reported an operating profit margin of 26% and a return on equity of 79%. There are only a handful of other stocks on the London market that reported returns higher than this. 

With its market-leading profit margins, PayPoint is highly cash generative. Last year the company generated free cash flow per share of 71p. Management is returning the bulk of this cash to investors with regular and special dividends.

City analysts believe the company will distribute 83 per share in dividends for its current financial year, which gives a dividend yield of 8.9% on the current share price. With net cash on the balance sheet of £38m, there’s plenty of capital there to support these special payouts. 

At the time of writing, shares in PayPoint are dealing at a forward P/E of 14.2. That’s not too dear, in my opinion, considering the firm’s healthy profit margins and cash generation. That’s why I think it might be worth taking a closer look at this business today.

The post Have £1,000 to invest? I’d buy these two dirt-cheap FTSE 250 dividend stocks appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of PayPoint. The Motley Fool UK has recommended Redrow. 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.

Going up!

Full marks to Rupert Hargreaves, who saw the opportunity in December when he wrote that time is running out to buy this FTSE 100 dividend stock at a bargain price. 

The Informa share price is up more than 5% this morning after a bouncy half-year report to 30 June, which showed revenues up 47.1% on a reported basis, although that is flattered by its recent UBM acquisition and the underlying increase is just 3.4%.

The enlarged group delivered £306.4m of enhanced free cash flow, more than doubling last year’s £131.1m. Management has been whittling down debt to make the balance sheet more efficient, reducing it from 3.1x EBITDA to 2.7x over the year.

Not so cheap now

Group CEO Stephen A. Carter said a year on from the UBM acquisition the enlarged Informa Group is “performing to plan, delivering a further period of growth in revenue, adjusted operating profit, free cash flow and dividends”.

The obvious downside with buying this £10.6bn company today is that it’s no longer a bargain trading at 16.5x forward earnings. The forward yield is relatively low at 2.8%, although cover of 2.2 gives scope for handsome progression, as we saw in today’s 7.1% interim dividend hike.

Earnings growth has been steady at mid-single-digits for the last five years and this looks set to continue, City analysts say. No longer a bargain, but still a buy.

At your convenience

Payment processing firm PayPoint (LSE: PAY) is also up today after reporting a 3.6% rise in group net revenue to £28.7m, although the stock moved by a less spectacular 1.66%.

The £628m FTSE 250 group operates a network of payment terminals in local stores and corner shops, and is trying to broaden its convenience retailer offering. Today’s trading update reported 30.7% service fee growth of £700,000, driven by a 2.8% service fee hike and the rollout of PayPoint One to 13,633 sites at 30 June, which puts it on track to reach its year-end target of 15,800.

However, ATM net revenues dropped 8.4% to £3m due to LINK’s 10% interchange fee cut and a 3% fall in transactions to 10.4m.

To the point

CEO Patrick Headon nonetheless hailed “a good financial and operating performance” as new initiatives drive future growth and profits, and declared his confidence that there will be a progression in profit before tax and exceptional items for the year to 31 March 2020.

Some 99% of the UK population is within a mile of a PayPoint terminal, and the forecast valuation of 13.9x earnings is tempting, while the forecast yield is now a blockbuster 8.7%. Cover is thin at 0.8 but the business has a net cash cushion of £36.1m.

The PayPoint share price has underwhelmed in recent years, and is down another 12% over the last month, possibly because it has been caught up in the Neil Woodford debacle. The stricken star went big on this stock but has sold roughly half his 20% stake in recent months. PayPoint’s long-term prospects remain promising, despite that.

The post Have £2,000 to invest? Here are 2 dividend stocks I’d buy in an ISA today 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 owns shares of PayPoint. 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.

Today, I’m looking at three stocks that have all been big holdings in the past for troubled fund manager Neil Woodford. Mr Woodford has sold some of his shares to raise cash. But I believe these firms look attractive at current levels.

A retail essential?

Payment processing firm PayPoint (LSE: PAY) is trying to make the leap from handling cash bill payments to providing a comprehensive range of services for convenience retailers.

The company says that 13,000 of its 28,000 sites are now using the firm’s flagship PayPoint One electronic point of sale system, which provides a wide range of business services.

However, investors received a sharp reminder about the importance of this strategy in June, when PayPoint said its contract to handle British Gas bill payments and prepayment services will not be renewed.

This is expected to result in a £3.5m loss of revenue next year, but management says that underlying pre-tax profit is still expected to rise. I think the bigger question is whether the firm will have to cut its fees to avoid further contract losses.

Despite this concern, I continue to rate this profitable and cash-generative business as a buy. Its national network means that 99% of the UK population is within a mile of a PayPoint terminal.

Trading on 14 times forecast earnings and with an 8% dividend yield, I remain happy to hold and may buy more. Mr Woodford remains a major shareholder too, with just under 11% of PayPoint stock.

This 7% yielder could start climbing

Another of Neil Woodford’s long-term holdings is subprime lender Provident Financial (LSE: PFG).

Shares in this doorstep and online lender crashed in 2017, when previous management attempted a botched restructuring. The firm lost customers and missed many payment collections in the chaos that followed. A number of regulatory issues have also caused problems.

However, the company says that all of these issues have largely been resolved and that trading is improving. All four of the group’s main divisions reported lending growth during the first quarter.

Mr Woodford has cut his stake from 23.44% to 17.98%. But I suspect that he is a reluctant seller. My view is that the firm’s turnaround is likely to come good over the next year.

With the shares trading on just 8 times 2019 forecast earnings and offering a yield of 7%, I can see plenty of upside if Provident delivers on forecasts for 23% earnings growth in 2020.

Unfairly dismissed

My final pick is defence-focused engineering contractor Babcock International (LSE: BAB). The shares have fallen by more than 40% over the last year as the firm has weathered suggestions of contract problems and financial difficulties.

So far, none of these have proved to be true. Babcock’s 2018/19 results showed stable performance and an unchanged £31bn order book. Net debt fell and the group’s cash generation improved.

This type of business is always at risk of a major contract going bad. But Babcock’s specialist engineering skills mean that it enjoys much higher profit margins than most outsourcers.

The shares currently trade on just 6 times forecast earnings and offer a well-covered 6.8% dividend yield. Mr Woodford has reduced his funds’ stake below the 5% disclosure limit and may have sold completely. Personally, I think the shares are too cheap. I rate BAB as a buy.

The post 3 FTSE 250 dividend stocks with yields over 5% I’d buy in July appeared first on The Twelfth Magpie.

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Roland Head owns shares of Centrica and PayPoint. The Motley Fool UK owns shares of PayPoint. 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.

Today I’m asking whether it’s time to start buying this unloved stock, which offers a dividend yield of more than 8%.

I’ll also be taking a look at a smaller financial stock with a unique UK presence and a 7.8% dividend yield.

Don’t panic

Standard Life Aberdeen’s performance in 2018 didn’t do much to reassure nervous investors. Pre-tax profit fell from £660m to £650m, while assets under management dropped from £608.1m to £551.5m.

Happily for shareholders, the dividend was left almost unchanged at 21.3p per share, a level that management plans to maintain until the business returns to growth.

It’s all a bit of a worry, especially as the logic behind combining these two businesses was to benefit from economies of scale. However, I believe things may not be as bad as they seem.

Returning to growth?

For a mature business, growth often comes from cost-cutting as well as outright growth. In this case, a cost-cutting approach makes sense — both Standard Life and Aberdeen were big businesses in their own right when they merged.

The merger deal targeted £350m of cost savings, and so far £175m of these have been identified. According to the results, the company also delivered an extra £56m of savings last year in addition to this.

I’m confident that management will deliver in terms of cost-cutting. But to really reward shareholders, the company will need to deliver some underlying growth.

My view is big asset managers like SLA will remain relevant, despite changes to the fund management market. I expect growth to return gradually, after the shake-out that’s resulted from the two groups combining their offerings.

In the meantime, the group’s cash generation from fees is supported by cash from the gradual exit of the group’s insurance businesses. Although a dividend cut can’t be ruled out, I think Standard Aberdeen probably offers good value as an income buy at current levels.

Why I own this stock

One high yielder I own myself is mid-cap firm PayPoint (LSE: PAY). This company operates a network of bill payment terminals and point of sale systems that covers about 28,000 convenience stores, garage forecourts and newsagents across the UK.

The firm’s roots are in allowing customers to pay household bills in cash. But as this need declines, PayPoint is gradually transforming itself to become a financial hub for convenience retailers. Its latest system offers services such as card processing, stock management and the Collect+ parcel drop-off network.

Buy today?

For investors, this business poses a dilemma. On the one hand, it’s very profitable and generates a lot of spare cash. On the other hand, growth has been limited in recent years.

New boss Patrick Headon believes that the group’s extensive network — which is larger than the Post Office, supermarkets and banks — will support long-term growth. I can see the potential.

With the shares offering a forecast yield of 7.8%, I’m happy to hold, although I’d be looking for a dip below 1,000p to justify further buying.

The post The Standard Life share price: is now the time to buy this 8% yielder? appeared first on The Twelfth Magpie.

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Roland Head owns shares of PayPoint. The Motley Fool UK owns shares of PayPoint. 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 consumer payment and other services provider has been doing a good job of churning out chunky dividends to its shareholders. With the share price close to 1,046p, the combination of ordinary and special dividends yields just below a whopping 8%. And the forward-looking price-to-earnings multiple a little under 17 for the trading year to March 2020 suggests to me that the valuation remains anchored to the reality of the firm’s immediate prospects.

One big thing that could reignite growth

Meanwhile, PayPoint enjoys its super-stock label, according to one popular share research website, because of strong showings against valuation, quality and momentum indicators. Indeed, the operating margin is running close to 25% and the shares are up around 30% since the beginning of the year.

Today’s full-year figures are unremarkable. Revenue came in broadly flat and diluted earnings per share rose 3.3%. The directors pushed up the ordinary dividend by 1.9% and confirmed a repeat of last year’s special dividend, which is almost 80% of the value of the ordinary dividend and paid out on top.

However, one big thing that I believe could reignite growth in the business is that a new chief executive took over on 1 April. Patrick Headon succeeds Dominic Taylor who had been in control for more than 21 years and who led the company from start-up to where it is now. But I think a change at the top in a firm can bring in fresh eyes, renewed enthusiasm and a youthful determination to succeed, which could help power an upsurge in earnings growth.

Big plans for the future

A lot of today’s report is dedicated to the firm’s strategic plans. The company already has a vast network of users in the convenience retail sector and its low-cost offering is scalable.  The directors believe there is “a significant opportunity” for further growth from the retail services offering and they think it can be achieved via its PayPoint One, parcel, and card payments products and services.

I think the PayPoint One platform is interesting. The product combines an Electronic Point of Sale (EPoS) machine with integrated bill payment, card and parcel services, and seems like a neat solution for many smaller retail outfits. In fact, the machine is live in around 13,248 sites and rising, which means more than 74% of PayPoint’s independent retailers are now using the platform. That strikes me as a massive take-up of the system suggesting it ticks a lot of boxes for the firm’s customers. The forward growth prospects of the system look exciting to me.

I reckon growth is on the way. In the meantime, the company is “committed” to its special dividend programme worth £25m per year, which is due to continue until December 2021. I think the shares are attractive.

The post Here’s one thing that could make this big-dividend super stock burst into life appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of PayPoint. 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.

Whilst these FTSE 100 housebuilders have enjoyed a rip-roaring start to 2019, Persimmon’s share price has failed to produce similar fireworks. It’s long overdue for a northwards surge, in my opinion, and I believe fresh trading numbers due on Wednesday could provide the catalyst for such a move.

The company certainly impressed in February when it announced completion numbers up by 406 homes to 16,449 in 2018, which along with a marginal rise in average selling prices, pushed revenues 4% higher to £3.74bn. Combined with a significant improvement in margins, the builder’s pre-tax profits soared 13% to £1.09bn.

Industry data on the housing market has remained pretty robust since then, and so there’s plenty of reason to expect another great update.

As for dividends, the City forecasts another 235p per share reward in 2019 and that yields a show-stopping 10.4%. This, combined with a low forward P/E ratio of 8 times, makes Persimmon a terrific buy today, I think.

Pay master

Preliminary results due from PayPoint (LSE: PAY) on May 24 could prompt fresh waves of buyer interest here as well.

The FTSE 250 firm’s already gained 16% in value so far in April, taking it through the £10 per share marker for the first time since last June. Investors are excited by the rate at which demand for PayPoint’s retail systems is surging, the tech titan having upgraded its adoption target for the PayPoint One terminal to 12,700 sites by the close of the fiscal year to March 2019.

This was up 300 sites from its prior goal and I’m expecting the business to have drawn up another ambitious target for the current year. Make no mistake: the broad range of operations that PayPoint’s cutting-edge products allow is transforming the way retailers do business, and I’m expecting the company to paint another sunny trading picture when it updates the market next month.

Right now the company carries a forward P/E ratio of 14.9 times and a jaw-dropping 8.5% dividend yield. All things considered I think it’s a great buy right now.

Pints powerhouse

My final selection for this piece, Marston’s (LSE: MARS), is set to release half-year results on May 15. It’s true that the tough economic environment is crimping our disposable incomes but I’m tipping the pub operator to churn out another set of lovely numbers.

The small-cap has proven its resilience in tough conditions time and again, and in its most recent update advised that like-for-like turnover at its pubs rose 1.4% sales in the 16 weeks to January 19, a period which included record Christmas trading when comparable sales shot 5.7% higher.

Marston’s has vowed to keep dividends around recent levels of 7.5p per share and this creates an enormous 7.3% yield for the 12 months to September 2019. City brokers are predicting steady earnings growth through this period to support this estimate, and with the business also embarking on asset sales, I believe it’s in good shape to meet this theoretical payment.

Throw a mega-low forward P/E ratio of 7.4 times into the bargain and I reckon Marston’s is a splendid share to load up on.

The post 3 cheap dividend stocks with 7%-plus yields to buy before May appeared first on The Twelfth Magpie.

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Royston Wild owns shares of Barratt Developments and Taylor Wimpey. The Motley Fool UK owns shares of PayPoint. 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.

I suspect Mr Fitzgerald was motivated more by the knowledge that shares in the company he runs were priced to give an 11.4% dividend yield at that time. The Bovis share price has recovered somewhat since then and the forecast yield on the stock has fallen to 10.4%.

Trading figures released today make it clear that for 2018 at least, this yield is very real and will be delivered. At a time when the best easy access cash ISA rate is just 1.45%, I think it’s worth considering the income potential of dividend stocks.

That’s certainly what I’ve done in my own portfolio, which includes some Bovis shares. Today I want to explain why I remain a buyer of this housebuilder. I’ll also highlight another 10% dividend stock I own.

Ahead of expectations

Brexit was dominating the headlines on Wednesday morning, but the only comment from Bovis was that the resulting uncertainty had slowed sales of its larger homes. To address this — and the risk of a wider slowdown — the company is increasing its focus on sales to housing associations.

The firm’s figures for 2018 certainly seem impressive. Profits for the year are expected to hit a record high and be “slightly ahead” of market forecasts. The number of homes built rose by 3% to 3,759 and the group’s HBF customer satisfaction rating has increased from 2 star to 4 star.

Bovis will pay a total dividend of 102p per share for 2018, giving a yield of 10.4% at the last-seen price of 980p. But it’s worth noting that 45p of this is a special dividend, which may not be repeated in future years.

However, the group’s ordinary dividend alone still provides an attractive yield of 5.8% and is less likely to be cut, unless profits really collapse. I think Bovis is one of the best buys in the housing sector.

A 10% buy-and-hold stock?

Bovis isn’t the only 10% yielder in my portfolio. I also own shares of payment processing group PayPoint (LSE: PAY). This company’s main business is providing payment processing services to convenience stores and corner shops.

Historically, the firm’s focus was on allowing customers to make cash payments for bills such as utilities and mobile phone top-ups. But the group is expanding its services. Its newest systems also handle tasks such as parcel drop-offs, card transactions and stock management.

The company’s equipment is now installed in more than 28,800 shops in the UK, and its Collect+ parcel drop-off service is now available at more than 7,000 sites. As far as I can see, PayPoint doesn’t have any direct competitors in the UK.

The firm’s business model doesn’t require high levels of investment and can easily be scaled to add new customers. These characteristics have helped to make this a very profitable business, with strong cash generation.

The current forecast dividend yield of 10% is made up of a mix of ordinary and special dividends. I believe the total payout could fall as the firm nears the end of a period of cash returns. But I estimate that a yield of 7%-8% should be supportable. I may buy more of this stock.

The post Forget the top cash ISA rate. I’m collecting 10% from this FTSE 250 dividend stock appeared first on The Twelfth Magpie.

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Roland Head owns shares of Bovis Homes Group and PayPoint. The Motley Fool UK owns shares of PayPoint. 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.

Even during times of financial market tumult like these, electing to invest in cash accounts like an easy access ISA remains one of the biggest mistakes that savers can make.

Conventional thinking, which asserts that these products are ‘safer’ than investing in the stock market, couldn’t be more wrong. How could it not be when the inflationary impact is actively eroding the value of your savings? And that deficit between the best-paying cash ISA (1.45% AER from Virgin Money) and the pace of consumer price inflation (2.4% in October, according to latest Office for National Statistics data) is pretty wide.

Dividend hero

A much better way of making your cash work for you is buying into some of the FTSE 250’s big dividend stocks. One such share is Ibstock (LSE: IBST), and I’m so confident in the company’s ability to deliver huge shareholder returns that I myself bought into the company last year.

Since that time, the news flow hasn’t been too encouraging. Ibstock’s share price took a whack in summer when it advised that production issues at its brickmaking factories would hurt full-year output levels, and patchy market sentiment since then has seen it fail to recover.

My enthusiasm for the construction materials colossus remains undimmed, though. Housebuilding in the UK remains strong and is likely to continue to be so given the country’s yawning homes shortage. Indeed, Ibstock commented last month that “whilst the uncertainty around the ongoing negotiations for the UK’s withdrawal from the EU persists, the market backdrop in the new-build housing sector remains positive.”

Throw in the domestic production shortage that is driving brick imports from foreign suppliers, and the stage appears set for brick prices to keep on rising. This means that City analysts expect Ibstock, whose earlier production problems are expected to push profits 11% to the downside in 2018, is anticipated to come roaring back with a 10% bottom-line increase next year.

And this bright outlook means that the business, helped by the sale of its Glen-Gery US division for $110m a month ago, will have the confidence to keep paying generous dividends. Full-year rewards of 14.5p per share are anticipated for both 2018 and 2019, resulting in a massive 7.1% yield.

11% dividend yields!

Like any stock, Ibstock carries a certain degree of risk, but in my opinion its forward P/E ratio of 10.7 times is far too low a rating. I’d say the same for payments processing and retail services tech builder PayPoint (LSE: PAY), whose corresponding multiple of 12.3 times also sits below the widely-accepted value benchmark of 15 times and below.

Last time I covered the FTSE 250 firm I lauded the rate at which its new products are being adopted and I was encouraged by fresh trading details last week in which it advised that the rollout of its Paypoint One terminals remains on track to hit the 12,400-site marker within the next few months. It’s no surprise then that City analysts are expecting earnings to rise 1% in the 12 months to March 2019 and by a further 5% in fiscal 2020.

The number crunchers are expecting last year’s 82.5p per share total dividend to be raised to 84.6p this year and to 86.1p next year. Such payouts yield a mammoth 10.8% and 11% for fiscal 2019 and 2020 respectively and make PayPoint a hot income stock to buy today.

The post Forget the top cash ISA rate. I’d rather get 7% and 9% from these FTSE 250 dividend stocks appeared first on The Twelfth Magpie.

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Royston Wild owns shares of Ibstock. The Motley Fool UK owns shares of PayPoint. 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.

Growth remains strong

When Tesco’s half-year results triggered a sell-off in October, my verdict was that “today’s dip could be a buying opportunity.”

Group sales rose by 12.8% to £28.3bn during the first half of the year, helped by a 3.8% increase in like-for-like sales in the UK and Ireland. Underlying operating profit rose by 24% to £933m, as profit margins improved, and wholesaler Booker made its first contribution.

Excluding the discontinued Tesco Direct business, the group’s operating margin rose by 0.3% to 3.02% during the first half. This suggests to me that chief executive Dave Lewis is on track to hit his target margin of 3.5-4% in the 2019/20 financial year.

The shares look cheap to me

During the summer, I’d have said that Tesco stock looked fully priced. But the selloff we’ve seen since then has made the shares look much better value, in my view.

Analysts expect the supermarket’s adjusted earnings per share to rise by about 20% this year, and by a further 20% in 2019/20. These forecasts place the shares on a 2018/19 forecast P/E of 14, falling to a P/E of 11.7 in 2019/20.

A lower share price means a higher dividend yield. Forecast figures for this year give a yield of 2.6%, rising to 3.8% next year.

Tesco’s dividend payout is still returning to normal, and the yield is rising fast. If you’re building a long-term income portfolio, I think now could be the perfect time to buy.

47,870 convenience stores

As I write, payment handling company PayPoint (LSE: PAY) is Thursday’s top riser. The £540m firm’s share price is up by more than 7%, following a strong set of half-year results.

PayPoint operates a network of payment terminals in convenience stores. The firm’s systems handle transactions such as cash bill payments, phone top-ups and card payments. It also operates the Collect+ parcel drop-off network, while new functionality being rolled out currently will allow retailers to place orders directly with wholesalers such as Booker.

PayPoint terminals were present in 28,886 retailers in the UK and Ireland at the end of September. The company also has a network of 18,984 retailers in Romania, where cash is still more widely used for bill payments.

A 10% yield I couldn’t ignore

The company’s preferred measure of revenue excludes pass-through costs, such as mobile phone top ups. This net revenue figure fell by 1.6% to £55.6m during the six months to 30 September.

However, lower costs helped to increase operating profit by 4.5% to £25.5m. This lifted the group’s underlying operating margin to 45.8%. Such high margins mean cash generation is very strong and shareholders enjoying generous dividends.

PayPoint is expected to pay a total dividend of 84p per share this year, giving the stock a yield of about 10%. However, some of this has been funded by cash received from the sale of two non-core businesses in 2016.

Stripping out these special dividends, I expect the shares to offer a yield of about 6% next year. But if cash generation remains strong, shareholders could enjoy further top-up payouts. I remain a buyer at current levels.

The post Is the Tesco share price a bargain or should I buy this 10% dividend stock? appeared first on The Twelfth Magpie.

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Roland Head owns shares of PayPoint. The Motley Fool UK owns shares of PayPoint. The Motley Fool UK has recommended Tesco. 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 9%+ yielder

PayPoint (LSE: PAY) is a share whose exceptional profits and dividend picture seems to be undervalued by the market right now.

The 1% earnings decline forecast for the 12 months to March 2019 means that it changes hands on a cheap forward P/E multiple of 14.9 times. This reflects the fact that buoyant investor demand for the share has fallen back over the past three months, a strange phenomenon since latest trading details released in this period outlined the brilliant adoption rates for its bright new technologies.

Now PayPoint  isn’t only a great selection for value chasers, with City brokers also expecting the business to keep throwing out special dividends as well on account of its rock-solid balance sheet. Indeed, last year’s total 82.5p per share payment is anticipated to march to 84.6p in the present period. And this leaves the FTSE 250 firm boasting a jaw-dropping 9.1% yield.

The drinks ace

While the pressure on consumer spending power remains immense at the present time, Marston’s (LSE: MARS) continues to resist the worst of this environment and revenues continue to rise. Total sales rose 5.2% in the 42 weeks to July 21, reflecting solid organic sales at the firm as well as the fruits of its ongoing expansion programme.

I’m hugely impressed by its resilience in the face of a tough trading environment, and it’s this — allied with steps to expand its pub estate — that convinces me dividends should remain on the favourable side of ‘generous’ for some time to come.

The number crunchers agree with me, and they are forecasting dividends of 7.6p per share for the year to September 2019, up from 7.5p last year and yielding an exceptional 7.7%. And they are expecting Marston’s to flip from an anticipated 2% earnings decline this year with a 4% rise in fiscal 2020.

Right now the firm sports a forward P/E ratio of 7.1 times. This should make it an irresistible  pick for long-term value investors, in my opinion.

The Footsie giant

City analysts may be expecting Vodafone (LSE: VOD) to endure a little earnings trouble  in the near term, but thanks to the brilliant progress it is making in emerging markets the telecoms titan’s profits picture over a longer time horizon looks pretty robust.

This is reflected in broker predictions that the FTSE 100 firm will bounce from an 11% profits reversal in the year to March 2019 with a 15% rise next year. It also means that dividends are expected to keep skipping higher through this period, with last year’s reward of 15.07 euro cents per share predicted to jump to 15.15 cents in the current year.

Some recent trading troubles have caused Vodafone’s share price to drop almost 30% since the start of 2018, leaving the business dealing on an historically-low forward P/E ratio of 18.1 times. This, along with its giant dividend yields of 8.1% for fiscal 2020, makes it a very attractive share to snap up today.

The post Three ~8% yielders (including this FTSE 100 dividend stock) I’d buy now and hold for 10 years appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of PayPoint. 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.