Reaching the magic million milestone may feel like a distant dream to many. But buying stock in companies offering juicy dividends (and then re-investing them) is as good a way as any for getting there, albeit slowly.

Today, I’m taking a look at three less-well-known stocks, all of whom provide a great source of income to their owners at the current time.

Under the radar

Small-cap ceramic tableware, cookware, giftware and tabletop accessory provider Portmeirion Group (LSE: PMP) might not raise pulses, but it’s done no harm at all to the wealth of its owners. Those who purchased the stock just one year ago would now be sitting on a 26% capital gain. 

Having delivered a “strong first half trading performance” — during which revenue and pre-tax profit grew by 11.4% and 29.1%, respectively — it looks likely this positive momentum will continue.

But Portmeirion is also no slouch when it comes to returning cash to its owners. While the forecast 3.3% yield for 2019 isn’t the biggest, it’s worth highlighting that the business boasts a solid history of hiking its payouts. As seasoned Fools will know, a consistently rising dividend is usually preferable to a large but stagnant one.

At 16 times forecast earnings, Portmeirion isn’t cheap, but returns on capital are invariably high, its finances look sound, and the decision to diversify into new markets should mean it continues growing. One to capture on general market sell-offs, perhaps. 

Next up is fellow AIM-listed stock Character (LSE: CCT) — a designer and distributor of toys for a number of established brands including Peppa Pig and Teletubbies.

Earlier this month, the market minnow released a reassuring trading update in which it highlighted “a return to its previous growth pattern during the second half.” Having recovered quickly from the administration of Toys R Us (a big customer), sales in the UK are at record levels, allowing the company to state that it will “comfortably reach market expectations” for the full year. 

Like Portmeirion, Character also generates high returns on the capital it invests. Unlike Portmeirion, its stock is on sale for a more-than-palatable 10 times forecast earnings. For those who dislike firms loaded with debt, the £110m-cap boasts a net cash position. 

Character’s shares come with a fairly tasty forecast 4.5% yield at the current share price. With a habit of raising dividends by double-digit percentages, I suspect it will continue to be a reliable source of income going forward. 

A final stock that would likely pass many dividend hunters by is supply chain solutions provider Wincanton (LSE: WIN). 

Never one to shout from the rooftops, things have been fairly quiet on the news front since the company last reported on trading in late June. Back then, it was revealed that the £278m-cap continued to perform in line with expectations, with a new contract win with EDF Energy complementing a number of renewals.

While the business appears to be ticking along nicely, it’s the dividend stream I like most.

Wincanton is likely to return 10.5p per share this year — equating to an attractive 4.7% yield at its current share price. Having now resolved issues relating to its pension fund, there appears to be little preventing management from increasing payouts in the future.

The stock currently trades on an inviting price-to-earnings (P/E) ratio of 7 for the year ending 31 March. 

The post 3 unknown but great dividend stocks that could help you make a million appeared first on The Twelfth Magpie.

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

In my opinion, it’s important to get off to a good start. For me, that means avoiding big losses and hopefully booking some steady profits. The two stocks I’m looking at today both have the potential to deliver handsome profits, but carry very different levels of risk.

Sales up 43% in one year

Shares in online music instrument retailer Gear4music Holdings (LSE: G4M) have risen by 377% over the last two years.

However, progress has stalled over the last year, and the shares slipped lower this morning after the company reported ‘only’ a 43% rise in sales for the year to 28 February. Is this a potential buying opportunity, or a sign that the good news is already in the price?

One potential answer is that the business is starting to mature. Growth has slowed over the last year. UK-specific sales rose by ‘just’ 27% last year, compared to 34% the previous year. And although international sales rose by 69%, this is less than half the 2016/17 figure of 124%.

What about profits?

To some extent, slowing sales are inevitable. Sales are growing from a bigger base, so larger percentages are harder to achieve. But there is a second concern, which is that the group isn’t achieving the kind of profitability investors might be hoping for.

Profits are expected to be broadly flat this year, despite the sales growth of 43%. This means profit margins have fallen. The company says that the main reason for this is investment — Gear4music invested heavily in warehousing and its online platform in 2017.

In today’s statement, chief executive Andrew Wass said that both revenue and profitability should improve in 2018, as last year’s investments pay off. I believe him. But with the shares already trading on 50 times 2018/19 forecast profits, the potential rewards seem outweighed by the risk that the shares could have further to fall. This is too expensive for me at current levels.

Simple and profitable

Homewares firm Portmeirion Group (LSE: PMP) sells ceramics, cookware and table accessories under brands including Royal Worcester, Spode and Wax Lyrical. Not all of these brands are huge in the UK, but they are very popular in North America, which accounts for nearly a quarter of sales.

Indeed, this is a surprisingly profitable business. Sales have risen by an average of 7.5% per year since 2011, while profits have risen by an average of 7% per year.

Return on capital employed — a measure of profitability favoured by long-term investors — is high, at over 15%. This is reflected in strong cash generation and five-year average dividend growth of 10%.

I expect the firm’s growth to continue. And its strong presence in the US market means that I wouldn’t rule out a takeover bid at some point.

You might expect these shares to be expensive. I don’t think they are. Portmeirion trades on a 2018 forecast P/E of 14 with a prospective yield of 3.5%. Given the financial strength of the group’s operations, I think that could prove to be a very good buy.

The post One growth stock I’d buy today with my first £2,000 and one I’d avoid appeared first on The Twelfth Magpie.

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• 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 of the shares mentioned. The Motley Fool UK has recommended Portmeirion Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

World-famous brands

The group, based in Stoke-on-Trent at the heart of the world famous Staffordshire Potteries region, is engaged in providing ceramic tableware, cookware, giftware and tabletop accessories. Aside from the Portmeirion brand, the company is also home to other world-famous labels, namely Royal Worcester, Spode, Pimpernel, and newly-acquired Wax Lyrical, the UK’s largest manufacturer of home fragrances.

In this morning’s half-year report the AIM-listed group reported total sales of £33.1m for the six months ended 30 June, 16% ahead of the same period last year. Pre-tax profits for the first half came in at £1.6m, an 18% improvement on last year, with earnings (before interest, taxation, depreciation and amortisation) up 27% to £2.7m, compared to £2.1m in 2016.

Waxing Lyrical

The UK became the group’s largest geographical market this year following the acquisition of Lake District-based Wax Lyrical, and with sales in the US and South Korea, its second and third largest markets, remaining challenging, this would normally be an area of concern. But strong growth in Europe and Asia in particular means the company is reducing its reliance on its three key markets and continuing to diversify its sales to the rest of the world.

Despite its vintage image, I’m pleased to see the business isn’t standing still, introducing new products, launching new ranges, and refreshing and extending existing collections. I think the acquisition of Wax Lyrical was a shrewd one, as this should help drive sales and further diversify the company’s product range. At 14 times forecast earnings, the shares are well worth buying for the long term, in my opinion.

Ageing populations

Another London-listed firm announcing its half-year results this morning was FTSE 100 medical products business ConVatec (LSE: CTEC). I’ve been a fan of the group for some time, and indeed by the close of business yesterday, the shares were up 29% on my original recommendation at the start of 2017.

That said, this morning’s results were frankly a little disappointing. Group revenue rose 0.3% to £831.3m, but operating profit suffered a 7.4% slide to £193.5m as a result of increased expenses, offset by higher sales and margins. Mr Market wasn’t impressed and earlier in the day the shares were down by more than 9%.

But I sense a buying opportunity here, with long-term growth coming from ageing populations and the increased prevalence of the chronic conditions the company’s products help to manage. A P/E rating of 20 isn’t too demanding for a quality firm making inroads into an increasingly large market.

The post 2 top growth stocks I’d buy in August 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?
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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Portmeirion Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

With a market cap just north of £70m and a business model covering everything from providing farmers with food stock, delivering fuel to petrol stations, and providing grocers with ambient warehousing, its little surprise that NWF Group (LSE: NWF) is relatively unknown to most investors. However, as its shares trade on just 11 times trailing earnings and offer a respectable 4% dividend yield, I reckon this small-cap is well worth taking a closer look at.

The company is a bit of a classic conglomerate of yesteryear with its focus on so many disparate business lines that all have little overlap. And while many City analysts would rightly find flaws with this business model it has worked wonders for NWF by diversifying and smoothing out the lumpy profits that come from the feed and fuels business, which are highly dependent on commodity prices.  

Indeed, in the year to May the group was able to achieve record earnings despite operating profits from the core feeds business falling from £2.1m to £1.5m year-on-year (y/y) due to rising commodity prices impacting margins. The food business, which provides warehousing for grocers, recorded another year of enviably dependable profitability with operating profits rising from £2.7m to £3m y/y as capacity was maintained at record levels. Finally, the fuels business benefitted from increased volumes shipped from its depots and raised operating profits from £3.9m to £4.5m.

Now, it must be said that these businesses all have very low margins with group underlying operating margins just 1.6% last year. This provides little room for error, but NWF’s management team has proved adept at growing the business even through tough trading conditions by acquiring smaller competitors. And with cash flow safely covering last year’s dividend payouts several times over and net debt just one times EBITDA, income investors who aren’t afraid of a little volatility may find NWF an appealing long-term holding.

Selling Britain abroad 

A second small-cap income stock worth looking at is porcelain maker Portmeirion (LSE: PMP), which offers shareholders a 3.4% dividend yield and is valued at 14 times forward earnings. Since listing in 1988, the group has never had to cut its dividend thanks to a management team that has successfully sought out overseas markets that demand the quintessentially British porcelain it can produce.

Growth in overseas markets and continuous small acquisitions have proven a winning combination for Portmeirion with revenue up 16% y/y in H1. That said, it did run into some problems last year as lapping a tough comparative period in India and falling demand for luxury products in South Korea dented sales growth. Still, despite problems in these two large markets, total revenue increased 11.7% y/y due to an acquisition and growth in more developed markets.

There is still plenty of room for expansion through acquisition to complement organic growth as the company had net debt of just £2.4m at year-end, compared to operations that generated £8.7m in cash. With decent cash flow, high growth potential and very safe dividend payments, I believe Portmeirion could be a hidden gem for income and growth investors alike.

The post 2 high-yielding small caps you’ve overlooked 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?

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

Strong performance

Reporting on Friday was homeware manufacturer and distributor Portmeirion (LSE: PMP). The company’s share price declined by 5% after a trading update, even though it suggested the business was performing well. For example, total group sales increased by 16% in the first half of the year. Even when the positive impact of recently acquired Wax Lyrical was excluded, the company’s sales were 3% up on last year.

As an exporter, the depreciation of the pound has been welcome news for Portmeirion. Although interest rates are forecast to rise in the medium term in the UK, which could prompt a stronger pound, it continues to be on track to meet its guidance for the full year. In fact, it is due to increase its bottom line by 11% this year and follow this with growth of 9% next year. Both of these rates of growth are ahead of those of the wider index. They suggest that investor sentiment could improve.

Portmeirion’s valuation indicates that improved share price performance could be ahead after its 14% decline in the last year. It trades on a price-to-earnings growth (PEG) ratio of just 1.5, which is relatively cheap given its sound financial performance. As such, now could be the perfect time to buy it.

Growth potential

Also offering growth at a reasonable price is luxury interior furnishing company Walker Greenbank (LSE: WGB). It has experienced a consistent level of performance in recent periods, with its bottom line increasing in each of the last five financial years. It has recorded annualised growth of almost 11% during this time, which suggests it has a sound strategy that could perform well in a variety of market conditions.

Looking ahead, Walker Greenbank is expected to report a rise in earnings of 16% in the current year. This puts it on a PEG ratio of just 0.9, which appears to be rather low given its outlook and track record of consistency.

As well as its growth appeal, the company is also gradually becoming an enticing income stock. It currently yields 2% from a dividend which is covered 3.5 times by profit. This indicates there may be significant scope for dividends to rise at a higher rate than profit over the medium term. During a period of time when inflation is forecast to move higher, this enhances the company’s investment appeal.

The post 2 undervalued growth stocks I’d buy right now 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?

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

Electronics recovery

Shares in TT Electronics (LSE: TTG) haven’t really gone anywhere over the past couple of years, but they picked up 3.5% on the day that 2016 results were announced, to reach 169p.

The manufacturer of electronics components reported a 40% rise in underlying pre-tax profit to £26.9m (up 20% at constant exchange rates), with underlying earnings per share up 36% and the dividend lifted modestly from 5.5p to 5.6p.

That beat expectations, with chief executive Richard Tyson speaking of “excellent” free cash flow. He added that “We have a clear and realistic strategy for TT to focus on structural growth markets where there is increasing electronic content“, and an ever-industrializing world can only help in that quest.

One thing that does concern me a little is net debt standing at £55.4m. While that’s probably not a big problem, for a company with a market cap of approximately £250m and in a low-margin business, I’d like to see it coming down.

Still, the results confirm that the expected reversal in TT’s fortunes is under way, and that the earnings falls that have blighted the previous two years are well into reversal. Analysts have a modest further EPS gain of 5% penciled in for 2017, though with 2016 results better than I expected I wouldn’t be surprised to see that rerated upwards now.

Forecasts suggest a P/E of 12 by 2018, and with the dividend yield approaching a very respectable 4% yield, I see TT as a decent growth opportunity.

Pottery success

Portmeirion Group (LSE: PMP) is a very different company, making a range of tableware products — as well as the Portmeirion brand itself, the group owns Spode and Royal Worcester.  It also owns Wax Lyrical, which produces candles, reed diffusers, scent oils and sprays.

The shares had a dreadful 2016, losing 40% of their value between a peak in May that year and a low point in October.

And 2016 results confirmed the expected falls, with pre-tax profit down 9.7% to £7.8m and earnings per share down a similar proportion to 59.6p. But it’s looking like a one-off, with the company putting its profit fall down to “increased amortisation and depreciation as a consequence of the Wax Lyrical acquisition and a full year’s depreciation of our new kiln“.

And with chairman Dick Steele telling us it was the firm’s “eighth consecutive year of record revenue“, and the dividend actually lifted by 7.5% to 32.25p per share, were the shares oversold in 2016?

Yes, I think they were, and at 960p today the price has already recovered 28% since their low last year. Looking forward to forecasts for this year and next, we see an expected resumption of EPS growth adding 13% to the bottom line this year and another 11% next.

The company’s very well covered dividend looks set to keep rising too, and should provide yields of around 3.5%. Year-end net debt at £2.3m is nothing to worry about, and it doesn’t damage the attractiveness of forward P/E multiples for this year and next of 14.3 and 12.9 for me.

While the screaming bargain days of late 2016 are over, I still think we see a lower-than-average valuation for a better-than-average company. And while PEG ratios of a little over one might not set the rapid-growth bells ringing, I think we’re in for slow and steady growth coupled with reliable and rising dividends. Can’t be bad.

The post 2 growth stars to perk up your portfolio 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?

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

AA

AA (LSE: AA) has risen by over 5% today after releasing a positive trading statement. It notes that the company is trading in line with expectations and has arrested the decline in personal member numbers in recent months.

In fact, AA recorded growth in membership in the first half, which is reflective of the success of its new strategy where the company has improved brand advertising, added additional benefits to the membership proposition and focused on greater digital engagement with customers.

On the topic of digital applications, AA’s relationship management system is now fully operational and the company continues to build its digital profile. Its roadside assistance app is seeing increased usage, which leads to not only a better customer experience but also greater efficiency for the business.

AA expects Brexit to have a minimal impact on its business and with its shares trading on a price-to-earnings (P/E) ratio of 10.8, it seems to offer good value for money. Furthermore, its earnings are due to rise by 11% next year and this could act as a positive catalyst on its future share price.

Hill & Smith

Infrastructure and galvanizing specialist Hill & Smith (LSE: HILS) has also updated the market today, with its sales rising 6% in H1. With operating margins rising by 170 basis points to 13%, Hill & Smith has recorded a 20% increase in operating profit. And due to 90% of operating profit being derived in the US and UK, where infrastructure investment spending remains relatively high, its medium-term outlook continues to be positive.

Hill & Smith has also announced the £12.5m acquisition of Signature, which specialises in road sign and traffic management systems. This should complement its existing product offering and contribute to positive earnings growth.

On this topic, Hill & Smith is expected to grow its earnings by 18% in the current year, which could act as a positive catalyst on investor sentiment and on its share price. And with it having a price-to-earnings growth (PEG) ratio of just 1, its upside potential seems high.

Portmeirion

Ceramic tableware and cookware specialist Portmeirion (LSE: PMP) has today released a rather disappointing set of first-half results. Although sales rose by 2% versus the prior year’s period, pre-tax profit fell by 22% during what was a highly challenging six months for the business. It has seen a reduction in demand from some of its Asian markets and while it sees this as a short-term issue, investor sentiment could come under further pressure in the weeks and months ahead.

However, looking ahead to next year, Portmeirion is expected to return to growth. Its bottom line is forecast to rise by 18% and with its shares trading on a PEG ratio of 0.8, it seems to offer excellent upside potential. Furthermore, its completion of the acquisition of Wax Lyrical for £17.5m could positively catalyse its earnings and this makes now a good time to buy Portmeirion for long-term investors.

The post Should you buy these 3 stocks after today’s updates? 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. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Is this a short-term blip?

Homeware firm Portmeirion Group warned investors this morning that pre-tax profits are likely to be “materially below” last year’s level of £8.6m. The shares are down by 22% as I write, at just 852p.

Portmeirion says an unexpected downturn in demand from Asian markets is to blame. The company says UK demand has also softened and that the falling pound hasn’t yet triggered an increase in overseas orders. Luckily the US market — the firm’s largest — is still performing well.

Management believes that the problems in Asia represent a short-term issue and that sales should rebound. To demonstrate its confidence, the company plans to increase the interim dividend by 14% this year, in line with previous guidance.

Based on current forecasts, Portmeirion shares offer a forecast yield of 3.8% after this morning’s falls. Assuming a drop in profits of about 10%, the stock now trades on roughly 14 times forecast earnings.

If the management view that this is a short-term blip is correct, this could be a buying opportunity. But for now, I’d rate the shares as a hold.

Housebuilders still bullish

Housebuilders were among the biggest casualties of the Brexit sell-off, but so far evidence of a downturn in business is slim. Shares in Bovis Homes rose by 5% this morning after the group said that the number of houses sold rose by 5% during the first half. The group’s average selling price rose by 15% £255,000 as it focused on family homes in southern England.

The EU referendum got a brief mention, but only to say that it was too early to say what the impact might be on the housing market.

So is Bovis a buy? The group remains confident in its outlook for 2016 and the shares are now 35% cheaper than they were at the start of the year. At 650p, Bovis trades about 10% below its tangible net asset value and offers a forecast yield of 6.9% for the current year.

Bovis’s focus on the south of England should also be advantageous. My only concern is that it really is too soon to say how the housing market will react to Brexit.

Production slowing

Genel Energy has downgraded its production guidance for the current year to between 53,000 and 60,000 bopd per day, from a range of 60,000 and 70,000 bopd previously.

The group is drilling a number of new wells to help address falling reserves in its Taq Taq field. That’s useful, but in my view isn’t enough to make Genel shares a buy.

While all oil companies have to contend with low oil prices, Genel also faces the twin challenge of operating in a region where payments are uncertain and usually in arrears. The group’s results in March showed estimated arrears of $365m, which Genel doesn’t expect to receive this year.

While Genel’s financial position is still stable, it’s not as strong as it was. The group now has nearly $700m of debt. The shares could deliver big gains from current levels, but the uncertain financial outlook deters me.

The post Should you buy Bovis Homes Group plc, Portmeirion Group plc and Genel Energy plc after today’s updates? appeared first on The Twelfth Magpie.

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Roland Head has no position in any shares mentioned. 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.

Chalk and cheese

The Dividend Dog is simply a high-yield income strategy, which in truth is one of the simplest strategies in investing. All you need do is select the 10 highest-yielding stocks in a major market index, such as the FTSE 100.

While there are a number of versions of the strategy that use the current or historic dividend yield, I prefer to use the forecast dividend yield as a potential safety net as it tends to filter out the companies that are likely to either cut or scrap the dividend payout, which has happened with mining giants BHP Billiton and Rio Tinto.

This strategy was popularised by Michael B O’Higgins in 1991 and was one focused on US markets where O’Higgins sought out large, mature and well-financed companies with long histories of weathering economic turmoil.

Using Stockopedia I’ve selected banking giant HSBC (LSE: HSBA). It currently has the highest forecast yield (on a 12-month rolling basis) in the FTSE 100 with 7.85% not to be sniffed at.

On the other side of the coin we have companies known as Dividend Achievers. This is a slightly different income strategy, which looks for companies that have grown their dividend payouts for at least the past five consecutive years.

As we’re searching for companies that are growing the payouts we can probably expect a lower yield. However, the trade-off should be that investors see a reasonable amount of capital growth alongside the dividend growth as company earnings grow alongside the dividend.

Again I used Stockopedia and selected Zytronic (LSE: ZYT), a UK-based developer and manufacturer of a range of touch sensor products, and UK-based owner and manufacturer of ceramic tableware brands Portmeirion, Spode, Royal Worcester and Pimpernel, Portmeirion Group (LSE: PMP).

With forecast yields of 3.42% and 2.76%, neither come close to HSBC.

Which strategy is best?

Well, with a quick look at the chart, certainly in terms of capital appreciation both the dividend achievers have beaten both the dividend dog and the market as a whole.

Not only that, if we rewind the clock by 12 months it wouldn’t be too difficult to calculate that the dividend yields wouldn’t have been too different. You see, as the shares of HSBC have slipped, the yield on offer increases. Over at Zytronic and Portmeirion the opposite would be true as even a growing yield will decrease if the shares appreciate enough – as they have in this case.

So, over the last 12-month period it’s clear that the dividend achievers have trumped the dividend dog. However, with a near 8% dividend yield on offer and the recovery potential once management has the business back on track, means it would be foolish to write off HSBC at these levels.

So in answer to the question in the headline, for me there’s a case to invest in all three businesses in order to bring some balance to a portfolio. The solid yield from HSBC, augmented by the earnings and dividend growth of Zytronic and Portmeirion means that this trio is worthy of further research in my view.

The post Should you buy dividend dog HSBC Holdings plc or dividend achievers Zytronic plc and Portmeirion Group plc? appeared first on The Twelfth Magpie.

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

The homewares manufacturer, which creates fine China products from its Stoke-on-Trent factory, makes for an extremely good investment case.

First — its revenues. Portmeirion will report revenues exceeding £68.0 million.

Second — its business strategy. This is innovative and shrewd. The company did not suffer at all during the latest financial crisis. And its current revenue  level is being realised even after investing in new manufacturing facilities following Portmeirion’s takeover of British potteries in 2014.

Third — profits. If its full-year profits for 2015 will have risen in line with revenues, they are going to be to the tune of £3.99 million. Portmeirion reported a  profit of £1.8 million in the first half of 2015, and £27.9 million in revenues.  

Fourth — dividends. In line with this growth, the company is expected to raise dividends to 3% this year, analysts say. Portmeirion has never cut or withheld dividends since 1988 when it listed on the LSE in 1988, and dividends have grown 10% for the past three years.

All Portmeirion’s financial numbers over the past decade reveal that this is one very stable, dependable company with solid growth year after year. Its revenues have been at record highs for the past six years, with 2014 being its best year ever.

With good, well-covered dividends, capable management, and a share trading at a P/E of only 15.9 and no debt to speak of, what’s not to like?

AO World (LSE: AO) briefly hit the list of top risers on the LSE this morning, piggybacking on Home Retail Group’s (LSE: HOME) rally, but as frequently is the case with this stock, excitement was short-lived and unsubstantiated by volume. But I am glad it caught my attention, though, because even though I would sell this stock straight away today, I am keeping an eye on it for the long term. 

The problem with AO World is that soon after the company was floated at £4.12, it started to make a loss. Investors who bought into the issue saw their investment largely evaporate in front of their eyes weeks later as a result. Forgiveness is hard to find given that the share is currently the trading at £1.51.

In-between then and now, AO World — which pursues a high energy expansion strategy — has been faced with high start-up costs in Europe and a sharp slowdown in its normally rapidly growing sales in the fourth quarter of 2014.

Its latest trading statement, issued last week, is somewhat hopeful that this could pay off at some point. AO World managed to post a 35% rise in third-quarter revenue year-on-year. UK revenue grew by 24% vs 14% the previous year. Those figures might bode a smaller loss. 

Those are also somewhat redeeming numbers if you consider that, in the six months to 30 September, AO World reported a £8.9m operating loss (compared with a profit of £0.9m in the corresponding period in 2014), while revenue rose 21.7% year-on-year to £264.3m.

Long-term group performance remains in line with expectations, the company informed its shareholders last Tuesday. Apparently Black Friday week worked a lot of magic, which — in light of the revenue growth in the UK — does figure.

Even though I believe the share is set to explode the minute the company starts to deliver profits, given the generally strong levels of its revenue and sales growth, I am holding off at least another three months to scrutinise fourth-quarter numbers before potentially picking up a stock that could, in my opinion, turn into a money-spinner overnight.

The post Why I Would Add Portmeirion Group plc And Axe AO World plc appeared first on The Twelfth Magpie.

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Angelique van Engelen has no position in any shares mentioned. 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.