As FTSE 100 companies dump their shareholder payouts due to Covid-19, you need to pick your shares carefully. The following two dividend stocks are holding firm, and could further your retirement plans.

If you add these two solid income stocks to your portfolio today, you could seriously boost your hopes of retiring before State Pension age.

I’d buy this cheap dividend stock

Wealth management business Quilter (LSE: QLT) demerged from South African insurer Old Mutual in June 2018, and has been building a strong UK brand. I was impressed by yesterday’s news that it is pushing ahead with its final dividend and share buyback scheme, despite the coronavirus and stock market crash.

Management said the FTSE 250 group is in a “strong financial position”, holding an impressive £750m in cash. It now wants to put that money to work on behalf of investors.

This is the type of cheap dividend stock you should be looking to buy in a crash. It boasts a healthy balance sheet, no debt worries, and is keen to reward loyal shareholders. Despite these advantages, the crash has hit the Quilter share price almost as hard as much weaker companies, as it fell by 35% to 113p.

Quilter’s assets under management and administration slumped 13.7% to £95.3bn, on 31 March, although the subsequent stock market recovery will have lifted that number. Management is looking to cut costs by up to £30m, through short-term initiatives such as reduced marketing, but the impact of Covid-19 nonetheless remains relatively low.

Better still, the dividend stock currently yields 4.6%, covered 1.6 times by earnings. Quilter is standing by its payout. Let’s hope that will continue.

Another to help you get rich and retire early

I’ve been meaning to highlight FTSE 100 pharmaceutical giant AstraZeneca (LSE: AZN) for weeks. You would expect this top dividend stock to perform well in a market crash, especially one triggered by a health issue, but its performance has been notably impressive.

The AstraZeneca share price is a rarity right now, as it has actually climbed during the crisis, trading 3.5% higher than its January peak. Its strong performance has been helped by plans to test its blood cancer drug Calquence as a treatment for Covid-19, although as always, please do not pin all your hopes on a single breakthrough.

Most investors are looking for bargain buys at the moment. However there is a strong case for balancing them with a couple of solid, enduring businesses paying reliable dividends. If you buy today and hold for the long term, top dividend stocks like Quilter and AstraZeneca could help you build wealth and quit the rat race.

The post I’d buy these 2 rock solid dividend stocks in an ISA to get rich and retire early appeared first on The Twelfth Magpie.

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

AJ Bell

Investment platform AJ Bell (LSE: AJB) attracted plenty of attention when floated almost exactly a year ago, on 7 December 2018. It jumped 25% on the day and was up 60% within six months, only to retreat when key shareholder Invesco banked some of its profits. 

The AJ Bell share price is down 14% over the past six months, and dropped 5% this morning, despite posting record profits in the first full year since its IPO. Yet today’s figures showed revenues up a healthy 17% to £104.9m, with profit before tax at 33% to £37.7m, fractionally above expectations.

The £1.59bn group attracted another 34,154 retail customers, increasing the total 17% to 232,066, with a 95.4% retention rate. Assets under administration rose 13% to £52.3bn.

Chief executive Andy Bell said the group’s strong balance sheet allowed it to increase the total dividend for the year 31% to 4.83p, adding that “structural growth drivers for investment platforms in the UK remain strong”.

I’m a bit mystified by the grumpy stock market response as these results look pretty solid to me. Maybe it’s because these numbers were flagged up in October’s year-end trading update, and investors wanted that little bit more?

The AJ Bell dividend yield is low at just 0.83%, so this is a growth stock rather than an income play. It still has a long way to go to catch up with FTSE 100 listed Hargreaves Lansdown. However, as a smaller operator its growth prospects may be brighter than its £8.57bn rival.

Quilter

Or should you consider FTSE 250-listed Quilter (LSE: QLT), the business formerly known as Old Mutual Wealth Management?

Its IPO in June 2018 didn’t go as well as AJ Bell’s, the stock falling sharply soon after, but the Quilter share price has recovered from that initial disappointment and is up 18% measured over 12 months. It is now the bigger operation, with a market cap of £2.84bn, and has a greater focus on offering personal financial advice, rather than fighting it out with the big investment platforms for mass-market execution-only business.

Last year, Quilter reported a 4% decline in assets under management, but October’s update showed a 9% rise to £118.7bn this year. That was despite a 12% year-on-year drop in third-quarter gross sales to £3bn, while it also suffered net client cash outflows, mostly due to previously notified investment manager departures within Quilter Cheviot.

The group trades at 14.4 times forward earnings, but those earnings are forecast to drop 20% this year, and rise just 2% in what could be a difficult 2020 for markets generally. Quilter offers a higher yield than AJ Bell at 3.2%, covered twice.

Both these stocks are a good way to play rising demand for pensions and investments management. However, their progress may hang on how stock markets perform over the months and years ahead

The post £2k to invest? I think these 2 FTSE 250 growth stocks are worth a look appeared first on The Twelfth Magpie.

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

The producer and owner of the now-world-famous Peppa Pig brand, Entertainment One has gone from strength to strength over the past five years. Since 2013, adjusted earnings per share have nearly doubled, rising from just 13.1p in 2013 to 25p for the fiscal year ended 31 March 2019, smashing City growth projections, (analysts had pencilled in adjusted earnings per share of 24.2 for 2019). 

Explosive growth 

Fiscal 2019 was a particularly impressive year of growth at the firm. According to Entertainment One’s full-year release, underlying group earnings before interest, tax, depreciation and amortisation (EBITDA) rose 21% during the 12 months to the end of March, “driven by strong growth in Family & Brands and higher margins in Film, Television & Music.“

On top of this, the group’s EBITDA margin for the period increased 5.1% to 21%. All of the above combined to help management report a 30% year-on-year increase in earnings per share for the year. 

And it doesn’t look as if this production powerhouse is going to slow down any time soon. It recently sealed the acquisition of Audio Network, which it describes as “one of the world’s largest independent creators and publishers of original, high-quality music for use in film, television, advertising and digital media.“

Management believes this business will help the group expand its existing music division as well as bringing “high margin, recurring revenues and significant cash generation to the group.” 

Considering all of the above, I reckon Entertainment One will smash the City’s growth targets for the company over the next 12 months. Analysts have pencilled in earnings growth of 13.6% to 27.5p for fiscal 2020. But after growth of 30% in 2019, this seems to me to be understating the firm’s potential. With that being the case, I think shares in the global entertainment business might be worth snapping up for your portfolio today. 

Long term potential 

Another FTSE 250 growth stock that’s recently caught my eye is wealth management business Quilter (LSE: QLT). There’s lots to like about this enterprise, in my opinion.

Formerly Old Mutual Wealth Management Ltd, Quilter is one of the UK’s largest wealth managers and a great way to play the rising demand for long-term savings and pension management.

Indeed, clients seem to be flocking to the group’s offering. It recently reported that net client cash flow, the difference between money received from and returned to customers for the year to the end of December, hit £4.7bn, growth of 5% during the reported period.

This inflow is all the more impressive considering the volatility that dogged global markets towards the end of 2018. Despite these inflows, thanks to market volatility, assets under management declined by 4% over the year. 

Still, despite this setback, I believe Quilter is well-placed for growth over the long-term. Analysts are expecting earnings growth of nearly 8% this year and 15% in 2020, putting the stock on a forward P/E of just 12.

That’s not a bad price to pay for a business with earnings growing at a double-digit rate. Income seekers can also look forward to a 3.6% dividend yield. 

The post I don’t think you can ignore these two FTSE 250 growth champions appeared first on The Twelfth Magpie.

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• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

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

Recurring income 

Man has two primary revenue streams. Firstly, annual management fees charged based on the value of assets under management. Second, performance fees, which are only charged when the firm’s investment funds produce a certain level of performance. 

Unfortunately, due to market volatility, City analysts believe these performance fees, which make up around 25% of revenue, are likely to come in below target this year. As a result, analysts are forecasting a 14% decline in earnings per share (EPS) for 2018, as some of the decline in performance fees will be offset by higher management fee income. A few weeks ago, the company reported that assets under management had risen to a record $114bn, thanks to a surge of inflows. 

Still, even though profits are set to decline, I’m attracted to this company because the shares are changing hands for just 11.7 times forward earnings, and a dividend yield of 6.3% is on offer.  On top of the dividend yield, the group is also buying back stock. Including the buyback cash return, the total shareholder yield is just under 7%, according to market data provider Morningstar. This hefty cash return is enough to convince me that Man could be the perfect stock to hold instead of a cash ISA.

Unloved newbie

Another income play you might want to consider is Quilter (LSE: QLT). It’s only been a public company for a few months, and was formerly Old Mutual Wealth Management Ltd, attached to the Old Mutual group.

It might be untested as a public entity, but it certainly seems to have what clients want. Today, Quilter reported a net client cash flow of £1.1bn for the third quarter of 2018, and £4.1bn year-to-date, an increase of 5% on opening assets under administration. Even though third quarter flows were down slightly year-on-year, I still rate this as a positive performance, particularly as peers such as Hargreaves Lansdown have recently warned that it’s getting tough to attract new clients in the current market environment. 

Unlike so many other IPOs, Quilter came to the market with a relatively modest valuation. Based on growth estimates, the stock is trading at a forward P/E of just 10.7 for 2018. Analysts are also expecting management to announce a dividend yield of around 5p per share (around 50% of EPS), giving a dividend yield of 4.3% in the near term.

Usually, I tend to stay away from companies that have just hit the market. With Quilter, however, I’m willing to make an exception, because it’s already made a name for itself with £118bn of assets under administration. 

As the company builds a reputation as an independent entity over the next few years, I think there could be healthy returns on offer for investors.

The post I’m confident this FTSE 250 dividend play with a 7% yield can crush the income from a cash ISA appeared first on The Twelfth Magpie.

More reading

• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.