Turnaround potential

Nick Train first purchased shares in Imperial Leather owner PZ Cussons (LSE: PZC) towards the end of 2019. The company’s valuation has climbed roughly 20% since. This morning’s interim results may not have added to the momentum but I do think they’re encouraging considering the troubles PZ has encountered in recent years. These include a challenging economic backdrop in Nigeria (a key growth market) and consumer uncertainty in Europe. 

As a result of the huge demand for hand wash and sanitiser, overall revenue rose 14.6% to just under £313m in the six months to the end of November. Reported pre-tax profit came in at £36.3m — 1.6% lower than over the same trading period in 2019 due to some one-off costs. 

For me, however, one of the big highlights of today’s statement was the reduction in net debt to £18.2m. Back in 2019, it stood at £137.7m. A further positive was the interim dividend being maintained. Yes, a gently rising dividend is preferable. However, I don’t think investors will be too disgruntled by the 2.67p per share cash return. Let’s not forget that many, far larger companies have had to halt their dividend payments entirely.

PZ is not a share for the impatient. In addition to uncertain trading conditions and higher costs, the new management team is also attempting to turn around key brands and simplify operations. This is a multi-year job and goes some way to explaining why the company remains a contrarian pick.

As a committed buy-and-hold investor, however, this is probably what attracted Nick Train. It also chimes with my own Foolish approach to investing, namely holding quality stocks for the long term. I don’t own a slice of PZ Cussons just yet, but today’s news does suggest to me that the worst could be over for those already invested. 

Ready to fizz?

Another one of Nick Train’s favourite UK shares (and mine) is IRN-BRU producer AG Barr (LSE: BAG).

Today, Barr said that revenue for the last financial year would now be somewhere in the region of £227m. That’s less than the £255.7m achieved in FY19/20. Nevertheless, it’s still “marginally ahead” of what the company had expected. Positively, the beverage-maker also thinks pre-tax profit will be higher than analysts had been predicting. 

“So, why aren’t the shares rallying?“, you might ask. Similar to PZ Cussons, at least some of this must be down to Barr’s foggy earnings outlook now that we’re back in lockdown. Talk of restrictions lasting until the summer could also be keeping a lid on investors’ enthusiasm for the stock. 

Not that I — or probably Nick Train — am concerned. Barr has £50m in net cash on the balance sheet. This should be enough to see it through to the other side. 

At 21 times forecast FY22 earnings, the shares aren’t cheap. Then again, this could turn out to be a reasonable price to pay later in 2021. Once the hospitality sector reopens, I think AG Barr could get its fizz back. 

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• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?

Paul Summers owns shares in AG Barr. The Motley Fool UK has recommended AG Barr and PZ Cussons. 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.

Unsurprisingly, the market always takes notice when he takes a new position. This is what happened last year when he bought soap maker and FTSE 250 member PZ Cussons (LSE: PZC).

Today, the shares are down over 6% following a trading update for the first quarter of its financial year. What on earth is wrong?

FTSE 250 recovery play

Actually, not all that much. Today, PZ reported a 23% rise in revenue to £158.1m in the three months to the end of August compared to the same period in 2019. Unsurprisingly, these results were partly driven by “strong demand” for its hygiene brands, such as Carex.

Growth in its European and the American markets was particularly strong. Collectively, revenue here grew by 49% to £61.5m, thanks to all that handwashing and sanitising we’ve been doing. That said, sales of its most recognisable brands, Imperial Leather and Original Source, declined. 

Elsewhere, revenue from PZ’s Asia Pacific and Africa regions rose 9% and 4% at constant currency respectively. Signs that sales in important markets such as Australia and Nigeria were recovering was particularly encouraging.

No, PZ’s share price tumble appears to be down to the cautious tone of CEO Jonathan Myers.

Cautious tone

Commenting on today’s numbers, Myers said that PZ’s operating landscape “remains highly volatile” for three reasons.

First, many of the economies in which the company operates are either in, or shortly to be in, recession. Clearly, this could impact on consumption of the company’s products as people tighten the purse strings.

Second, the trajectory of the virus remains uncertain, thereby making it hard for the business to provide guidance on earnings.

Third, the markets in which PZ operates — personal healthcare and consumer goods — will continue to be highly competitive. No surprise there.

Taking all this into account, Myers expects “some adverse headwinds for the rest of the year.” Perhaps the share price drop makes sense after all.

So, are the shares a buy?

PZ Cussons was trading on 19 times forecast earnings before markets opened this morning. Whether this represents good value or not is tricky to say. 

On the one hand, it’s possible that the psychological impact of the coronavirus will remain long after the bug is gone. This bodes well for the mid-cap given its self-proclaimed “clear leadership” of the UK hand sanitiser market.

I also like that PZ isn’t overly dependent on one region or country for sales and that it’s talked of making progress in reducing its debt burden.

On the other hand, you might argue that demand for its hygiene products is already reflected in the valuation and the emergence of a vaccine could mean a sharp reversal in sales.

Less committed, short-term traders may also be inclined to sell following news that the FTSE 250 member plans to increase investment in its brands over Q2.

Personally, I think there are far worse things to do with your money than buying PZ Cussons. However, if you don’t feel confident enough to do so right now, you could always opt for the LF Lindsell Train UK Equity Fund instead. 

The post Here’s why this Nick Train-backed FTSE 250 share is suffering today appeared first on The Twelfth Magpie.

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• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended PZ Cussons. 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.

Train’s strategy for the trust is simple. Buy “excellent listed companies that appear mostly undervalued” with the intention of beating the return of the FTSE All-Share Index. He looks to do this through a concentrated, high-conviction portfolio of around 30 stocks.

Perhaps the most important aspect of the strategy is its very low turnover rate — an approach also followed by peer Terry Smith. When Train puts money to work, it’s usually worth paying attention. And that looks to be exactly what he’s just done.

New addition

Yesterday afternoon, it was strongly rumoured the fund manager had made his first UK-listed purchase for an astonishing nine years by taking a stake in soap maker PZ Cussons (LSE: PZC) — owner of brands such as Imperial Leather, Sanctuary Spa and Original Source. 

If true, the fact Train has decided to buy a slice of PZ makes sense. Based on its November factsheet, very close to half of the trust’s portfolio is made up of stocks from the consumer goods sector with Unilever, Burberry and Diageo three of its largest holdings.

Notwithstanding, the addition of PZ is intriguing when it’s considered Train very recently bemoaned the lack of valuable UK brands, stating that many had previously been sold off too early to foreign buyers.

It looks like he’s had a change of heart. The question is, should Foolish investors follow his lead?

Tough trading

To say PZ Cussons is having a difficult time of late is putting it mildly. Problematic trading in Nigeria — one of its biggest markets — has contributed to the shares halving in value in roughly 18 months. Taking last week’s trading update for the six months to the end of November into account, a recovery still looks some way off.

Despite growing market share in the UK, US and Indonesia, the business saw falls in revenue and operating profit compared to over the same period in 2018. On top of this, CEO Alex Kanellis announced he will be leaving with a decision on his replacement not expected until mid-2020. 

Of course, you might say PZ’s predicament is already factored into its price. Right now, the shares trade on just under 15 times earnings — cheaper than other defensive consumer goods giants such as the aforementioned Unilever and Reckitt Benckiser (on 19 times and 18 times earnings, respectively).

Aside from value, it’s also worth highlighting PZ’s income credentials. The company is expected to return a total of 8.31p per share to its owners this year. At the current share price, that gives a yield of 4.6%, covered 1.5 times by profits — decent income for those prepared to wait things out. 

While not all of his picks have been winners (education product supplier Pearson being an example), it would be brave to bet against Train. Assuming management’s attempts to restructure the company prove successful, there are no further setbacks in key markets, and a new CEO is able to hit the ground running, his decision to buy PZ may be inspired. It’s on my watchlist for now…

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• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?

Paul Summers owns shares of Burberry. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK owns shares of PZ Cussons. The Motley Fool UK has recommended Burberry and Diageo. 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 focusing on two firms that, while going through challenging times, will likely fall into the former category. 

Worth a bet

With gambling firms continuing to feel the pressure of increased taxation and regulation across the industry (the recent introduction of a £2 limit on fixed-odds betting terminals in shops is an example), it’s not all that surprising their stock continues to be shunned by investors.

One that I continue to think has been undeservedly punished, however, is 888 Holdings (LSE: 888), particularly as it doesn’t have a presence on the high street whatsoever. Instead, 888 is focused purely on providing online casino, bingo, sports and poker games. In contrast to other operators, it also benefits from owning its own technology platform.

Recent trading at the small-cap has been far better than at some of the UK’s battered bookmakers. June’s trading update highlighted a 6% increase in group revenue on a like-for-like basis as a result of increased marketing investment. This has, in turn, helped the company record a 20% rise in new customers. The only real fly in the ointment was the poker market which, while seeing a slight improvement in revenue, “remained challenging.“

Another attraction to 888 is the fact it already has an established presence in the US through its tri-state poker network and administration of the Delaware state lottery — something which could prove particularly lucrative if regulation over betting continues to be initiated in multiple states across the pond.

Taking all this into account, a forward price-to-earnings (P/E) ratio of 12 for this financial year looks cheap to me. The 6.4% yield should also be adequate compensation while investors await a full recovery. 

As a holder of the stock, I’ll be hoping for more positive news when interim results are revealed on 10 September.

Share price stabilising

Another business reporting next month is consumer products mid-cap PZ Cussons (LSE: PZC) — owner of brands such as Imperial Leather and Original Source. The company is due to issue a trading update to coincide with its Annual General Meeting on 25 September. 

After a pretty awful few years, the share price has shown signs of stabilising in 2019 (although it’s still down roughly 40% from where it was three years ago).

That’s not to say, however, that PZ is out of the woods just yet. As my Foolish colleague Kevin Godbold summarised last month, the company’s last set of full-year results were hardly great with issues in its African markets continuing to offset performance elsewhere.

Nevertheless, the very fact the company is so geographically diversified is, for me, one of its biggest attractions. Combine this with the fact consumers often stick with brands they can trust in sprite of cheaper alternatives and you have a pretty defensive investment.

Shares in PZ currently trade at 16 times forecast earnings and yield a smidgen over 4% with the latter covered 1.5 times by profits. While I doubt the share price will rocket next month, news that trading hasn’t got any worse could bring more investors back to the stock. 

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• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?

Paul Summers owns shares in 888 Holdings. The Motley Fool UK owns shares of PZ Cussons. 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.

As previously flagged to the market, the figures are quite poor with like-for-like revenue down 2.6% compared to the previous year, adjusted operating profit almost 10% lower, and adjusted basic earnings per share down close to 3%.

Figures down, share-price up

If a firm can’t even make its adjusted figures look good, we know for sure the numbers are bad, in my view! But at 225p as I write, the share price is just over 11% higher than my last article on the company in June, and more than 26% higher than the nadir seen in January. Indeed, operationally, the trend is upwards based on expectations, and that’s reflecting in the elevating trend of the share price.

City analysts following the company anticipate robust single-digit percentage advances in earnings for the current trading year and the year after that. PZ Cussons is in recovery mode and, as such, I think it’s a good time for me to run my analyses over the stock with a view to adding it to my long-term retirement portfolio.

The report explains that the revenue decline was driven by “weak” economic conditions in Africa. I reckon the Africa situation has been responsible for much of the share-price retreat over the past few years. Happily, a “solid performance” in the Asia Pacific region, Europe and the Americas partially offset the revenue plunge. And it was a similar story with operating profit. A strong result everywhere else dragged down by losses in Africa.

But there were bright spots. Net debt fell almost 8% to just over £152m because of “a stronger focus on cash management throughout the business.” And cash is key to the attraction of the stock, to me. I’ve been a fan of the fast-moving consumer goods sector for a long while due to its often predictable and steady cash-generating qualities. Decent cash flow makes it easier for firms to keep up their dividend payments to shareholders.

A new strategy and positive outlook

The directors reckon they have a new strategy aimed at delivering increased focus and scale, which should help the company “return to profitable growth.” Meanwhile, management held the dividend level flat, “reflecting good cash generation and confidence in the new strategy.” I find that stance to be encouraging, because any cut in the dividend would surely have caused a plunge in the share price, thus reversing the stock’s recovery and frustrating existing shareholders.

Looking ahead, the company isn’t expecting a change from “challenging” economic conditions in any of its regions, including troubled Africa. But revenue growth is still on the cards because of the new strategy, which will increase resources and investment behind key product categories and brands. 

Meanwhile, the forward-looking earnings multiple for the current trading year to May 2020 sits just below 18 and the anticipated dividend yield is 3.75%. My guess is that if I bought some of the shares today, I’d be glad I did when it comes to my retirement several years from now.

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• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?

Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of PZ Cussons. 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’s announcement reveals Brandon Leigh – the firm’s chief financial officer (CFO) – “has resigned and has stepped down from the Board with immediate effect.” 

A decent trading update

It’s a big deal because the chief financial officer is often number-two in charge of a company – if PZ Cussons were the government, this is like the chancellor of the exchequer putting in his resignation letter.

Leigh has been with the firm for more than 22 years and became a director in 2006. Chair Caroline Silver said in the announcement he “played a leading role in the Company’s development since that time.”  For context, the share price is up just over 40% since the beginning of 2006 and shareholders have also enjoyed decent dividend income along the way.

Pending the appointment of a new CFO, Leigh’s responsibilities will be taken on by Alan Bergin, the commercial finance director, with help from the chief executive. In the short term, I don’t think this news changes anything about the case for investing in PZ Cussons because the reasons for Leigh’s sudden departure don’t appear to be in the public domain. Of more relevance is the trading update the firm released today alongside the resignation announcement.

The update relates to the trading year ended 31 May, which is a general note that the company is trading in line with previous expectations. City analysts following the firm expect earnings to lift by high single-digit percentages during the current year to May 2020, and again the year after that.

The company is seeing “resilient” performance in Europe and Asia “driven by product innovation and renovation as well as distribution expansion.” The beauty division is also performing “particularly well.” Meanwhile, it’s no secret that Cussons has been having trouble with trading in Africa, which reflects in the way the shares have dropped from a peak above 420p in the autumn of 2013 to just 199p today, as I write.

The stock looks up with events

Recent results from Africa continue to be “disappointing,” which the firm puts down to “the macroeconomic situation in Nigeria and the challenging conditions at the port.” Last year, around 30% of overall revenue originated in Africa, but only about 2% of the overall operating profit. It seems to me there could be plenty of potential for future recovery in the Africa operation. Alternatively, it’s possible that Cussons could withdraw from the region, given that earnings there are so low.

However, I think the stock is well up with events in Africa and the current valuation isn’t outrageous given the firm’s overall steady cash-generating qualities. The forward-looking price-to-earnings ratio for the trading year to May 2020 runs just below 16 and the anticipated dividend yield is around 4.3%.

The company has a good record of raising its dividend a little every year, even with the ongoing situation in Africa. I see this one as troubled, but attractive. 

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• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?

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

Certainly, in some cases, this may mean taking on additional risks versus buying larger and better-diversified FTSE 100 income shares.

However, with the potential to generate capital growth alongside a 4%-plus income return, these two mid-cap shares could offer impressive prospects.

PZ Cussons

Consumer goods company PZ Cussons (LSE: PZC) has experienced a hugely difficult time over recent years. The main reason for this is a challenging economic performance in Nigeria, which is a major market for the company’s products. This has impacted negatively on demand, and has acted as a drag on the overall performance of the business. In fact, over the last four years, the company has reported a falling bottom line in each year.

Looking ahead though, PZ Cussons is expected to post a rise in earnings of 9% in the next financial year. Since it trades on a price-to-earnings growth (PEG) ratio of 1.8, it could certainly offer good value for money.

A rising bottom line may mean the company is able to increase dividend payments in the future. It currently yields around 4.5%, but with dividends due to be covered 1.7 times by profit next year, it would be unsurprising for a rapid rate of dividend growth ahead.

Therefore, while there’s a risk the company will experience further difficulties in some of its key markets, its strong range of brands and improving financial outlook may mean it offers impressive total return potential.

Card Factory

The performance of retailer Card Factory (LSE: CARD) has been mixed, with its share price volatile and its bottom line declining over the last two years. This isn’t a major surprise, given the difficult operating conditions that have been present in the UK during the period.

Looking ahead, consumer confidence could weaken further. Brexit may yet include a number of twists and turns that cause consumers to become increasingly price conscious. This could impact negatively on sales for a variety of retailers, while also hurting margins.

Card Factory, though, is forecast to post a rise in earnings of 4% in the current year. Since it trades on a price-to-earnings (P/E) ratio of around 10.5, it seems to offer good value for money. In fact, investors may have priced in many of the potential challenges it faces over the medium term.

With the company having a dividend yield of around 9%, it also offers around three times the income return of the wider index. Although it may lack the defensive appeal and resilience of fellow high-yielding shares across the FTSE 100 and the FTSE 250, it could deliver an improving total return as its profitability moves higher.

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• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?
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Peter Stephens owns shares of Card Factory. The Motley Fool UK owns shares of Card Factory and PZ Cussons. 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’m convinced such an opportunity is currently on offer with FTSE 250 firm PZ Cussons (LSE: PZC). Let me explain more fully why I think today’s investors in this particular stock will be glad they bought in 30 years’ time.

Unilever-ish

PZC is a branded consumer goods business with a focus on Personal Care & Beauty (its largest category) and Home Care. It also owns brands in certain food and nutrition categories, which it sells in several territories, as well as electrical retail stores in Nigeria and Ghana only.

Its international family brands, such as UK number one hand wash Carex, translate seamlessly across its markets, but it also owns a good number of leading local brands in specific geographies that cater for unique consumer needs.

If you’re thinking, hmm, a bit Unilever-ish, I’d agree. PZC has similar attractions to the FTSE 100 giant, but is much smaller. The companies that became Unilever were already substantial enterprises at the end of the nineteenth century, while PZ (George Paterson and George Zochonis) were only just beginning to expand a trading post they’d founded in Sierra Leone, and the Cussons family’s soap manufacturing business — with which PZ later combined — had yet to be born.

Underlying progress

Earlier this decade, PZC was posting record annual revenues and profits, and its shares were making new all-time highs of over 400p. However, revenues and profits have fallen over the last few years, and the share price has sunk to nearer 200p.

Despite the depressed price, longer-term investors in PZC are still sitting on very strong returns, including 44 consecutive annual dividend increases, up until last year when the board maintained the payout at the same level as the prior year.

The main challenge PZC has faced over the last few years is that Nigeria — for historical reasons a major market — has presented a really tough economic backdrop. This has detracted from the underlying progress of the group, and how well it’s positioned for future growth, particularly in emerging markets.

Looking to the future

PZC’s financial strength and ongoing profitability have enabled it to continue investing in the business. In all the time Nigeria has been a drag on performance, the company has continued to expand in its target geographies, investing in its manufacturing facilities and distribution networks, investing behind its existing brands and selectively acquiring others, such as leading Australian baby food brand Rafferty’s Garden.

The decline in PZC’s revenues and earnings of recent years is expected to bottom out in its current financial year (ending in May), with growth resuming thereafter. Trading on 17 times nadir earnings, with a starting dividend yield of 4.1%, I’d happily buy the stock today, in the expectation of being handsomely rewarded over the coming decades.

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• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?

G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK owns shares of PZ Cussons. 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 fact, in my most recent piece on the FTSE 250 firm, I tipped its share price to rise following trading results released last week and, hey presto, this is what indeed transpired. In it, the Imperial Leather manufacturer advised “full year profit expectations remain in line with the guidance issued at the time of the interim results in January,” news that would have prompted much fist-pumping from its investors.

Great news!

You may be asking why such a brief statement would be the cause of celebration. Well, this latest update has to be seen in the context of the last couple of market releases which Cussons issued in December and then January, statements in which the business twice hacked back its full-year expectations because of challenging trading in Nigeria.

In the article linked above, I described how conditions in its critical African territory may finally be stabilising following many, many months of deterioration caused by rampant inflation. And today’s unspectacular update from Cussons suggests just that.

Should the household goods giant manage to repeat the trick and publish another reassuring update when next trading details are unpacked on June 13 then we could really see demand for the stock pick up. Particularly so if Cussons continues to be attractively valued (right now it deals on a forward P/E ratio of just 15.3 times for the fiscal year beginning in June).

City analysts certainly believe Cussons is about to put the extreme profits pain of recent years behind it and record earnings growth of 8% and 7% in the years to May 2020 and 2021, respectively. And consequently it’s expected to get dividends moving higher again too, predictions of another 8.28p per share reward for the year just ending anticipated to rise to 8.5p next year, and to 8.9p the following year. This means that yields sit at a fatty 4.3% for fiscal 2020, and 4.5% for the next period.

A FTSE 100 beauty

Unilever (LSE: ULVR) is another share with inflation-smashing dividend yields that’s impressed the market in recent days. In fact, this FTSE 100 company’s share price swelled to record peaks above £45 per share following a better-than-expected quarter one update released on Thursday.

In it the Marmite and Magnum manufacturer declared that underlying sales rose 3.1% in the three months to March, improving from 2.9% in the prior quarter, and underpinned by another strong performance in its developing markets where corresponding sales jumped 5%.

It’s this resilience in tough trading conditions which encouraged me to load my investment portfolio with Unilever, the strength of its product portfolio allowing it continue growing profits and dividends year after year. In fact, City analysts expect earnings to rise 7% and 10% in 2019 and 2020, respectively, figures that prompt predicted dividend increases to 144p per share for this year and 156.7p for next year, too. And these figures yield a healthy 3.2% and 3.5%.

I plan to hold my Unilever shares for many years to come, and I’m tempted to load up on PZ Cussons, too. Both companies boast brilliant product line-ups and excellent emerging market exposure, and I’m convinced this combination can deliver some tasty shareholder returns in the future.

The post Have £3k to spend? 2 top dividend stocks I’d buy following latest news appeared first on The Twelfth Magpie.

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• 3,566 shares in this FTSE 100 stalwart earns a £1,443 second income
• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?
• 2 FTSE shares for beginners starting an ISA
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Royston Wild owns shares of Unilever. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK owns shares of PZ Cussons. 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.

Coming around?

Aside from that ISA cut-off date, there’s another great reason why I think you should buy into PZ Cussons (LSE: PZC) in the coming days: I believe that the household good manufacturer’s share price could skip higher when trading details are released on Thursday, April 18.

Regular readers will know about the rapid improvement in the Nigerian economy which I recently described, a key market for Cussons and the chief reason behind the firm’s profits problems of recent years. Signs of this strength in the FTSE 250 firm’s upcoming update could prove the spark for a much-needed recovery in investor appetite for this former dividend hero.

It may have put paid to its long-running progressive payout policy last year, but another 8.28p per share reward forecast for the 12 months to May 2019 still creates a chubby 4% yield. Besides, City analysts are expecting Cussons to return to dividend growth from fiscal 2020 amid predictions that annual profits will start increasing again from this point. 

Another gold-lined great

Polymetal International (LSE: POLY) is an income stock that could be very much ‘for the moment’ in turbulent times like these.

The gold digger’s share price continues to edge steadily higher, with recent strong financials giving it an extra dose of rocket fuel. Last week it said that revenues rose 4% in 2018 to $1.88bn, due primarily to a 9% rise in aggregated output to 1.56m ounces. Output of 1.55m ounces and 1.6m ounces are expected in 2019 and 2020 respectively, but given Polymetal’s recent record of beating projections, I think actual production could surprise to the upside again.

BIG dividend yields

A strong gold price has supported Polymetal over the past several months, and although bullion values have reversed back towards the $1,300 per ounce marker more recently, I think another surge in demand for the safe-haven asset could be just around the corner.

Aside from Brexit-related worries that have powered gold sales of late, there’s a variety of other issues keeping the yellow metal well bought and which could send prices soaring again. Signs of economic distress in China and Europe; the soon-to-be-released Robert Mueller report in the US that could potentially lead to impeachment of President Trump; a recent rise in global terrorism; souring trade talks between the US and China…

There’s plenty of reason, then, to expect the recent bull run in the gold market to continue, reasons why City analysts expect profits, and thus dividends, at Polymetal to keep on rising through to the end of 2020 at least. And this means that 57.5 US cents per share is predicted for this year alone, resulting in a fatty forward yield of 5%.

The post Calling ISA investors! 2 FTSE 250 dividend stocks I’d buy before the deadline appeared first on The Twelfth Magpie.

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• After upgraded guidance, is PZ Cussons primed for a FTSE 250 comeback?

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