Reach (LSE: RCH) is a share that rebadged itself last March following the acquisition of Northern and Shell’s Express and Star powerhouse newspaper titles, thus putting the era of Trinity Mirror on the bonfire.

In times gone by I have celebrated the exceptional sales opportunities afforded by this acquisition, and I’m pleased to say that latest trading details released last month vindicated the rationale of the move. Group turnover boomed 23% during the fourth quarter thanks to the contribution of its new blockbuster titles, and as an added bonus, Reach advised that synergy savings from the deal will have clocked in at £3m versus the £2m forecast as recently as October.

Consequently the publisher declared that full-year performance will barge past market expectations.

Reach now has the bit between its teeth and I’m expecting City predictions of a 5% earnings rise, and a 5% dip, in 2019 and 2020 respectively to be upgraded in the weeks and months to come.

Big, big dividends

Another cause for celebration is the rate at which the business is churning out cash, a quality that it estimated would push net debt to £55m as of the close of 2018 from £81m just six months earlier and which underpins predictions of big dividends in the near term and beyond. Reach is anticipated to lift the expected 6.1p per share total dividend for last year to 6.4p this year and to 6.7p in 2020, figures that yield a staggering 10.3% and 10.8% respectively.

It also trades on a forward P/E ratio of 1.6 times. Of course the newspaper market remains under extreme pressure, but I believe that this valuation is much too cheap and suggests that the market remains far too cautious. In fact, I reckon this low rating gives plenty of scope for Reach to extend December’s perky share price performance as we move through 2019 as the top line picks up a head of steam.

Another big yielder

Those seeking brilliant income shares off the beaten path may also want to give Watkin Jones (LSE: WJG) a close look today.

The student accommodation play is in an increasingly robust position to capitalise on the inward flow of university attendees to the UK as it ramps up building activity. In the fiscal year to September 2018, it completed 10 student accommodation developments comprising a total of 3,415 beds. And it has taken steps to reinforce its build pipeline for the next few years with four development sites with a total of 2,189 beds already having been secured.

And Watkin Jones has plenty of financial strength to keep the construction work rolling, as well as to keep paying out above-average dividends.

City analysts agree, at least on the latter point, and predict that the dividend will rise to 8p per share in fiscal 2019 from an anticipated 7.3p  for last year, supported by an anticipated 7% earnings rise and yielding a chubby 3.8%. And there’s additional good news for next year, an estimated 9% profits bounce giving rise to an expected 8.7p dividend and a subsequent 4.1% yield.

I believe that Watkin Jones, like Reach is a great share to buy and to squirrel away for the years ahead, and particularly so today given its cheap forward P/E ratio of 13.2 times.

The post These dirt-cheap dividend heroes yield as much as 10.8%! I bet you’ve never even heard of them 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 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 first of these is FTSE 250 pub group Greene King (LSE: GNK). Shares in this firm have fallen by about 35% over the last two years. Tough trading conditions and rising costs have put pressure on profits, which have fallen from £191m in 2015/16 to £163m in 2017/18.

You might be thinking that this isn’t exactly a major disaster. I agree. Although profits have slipped, the group’s business has remained stable. Greene King generated an attractive operating margin of almost 15% during the year to 29 April.

A long hot summer and England’s successful World Cup campaign gave beer sales a welcome boost. Like-for-like sales rose by 2.8% during the 18 weeks to 2 September, ahead of market growth of 1.2%. The firm’s own-branded pubs performed even better, with like-for-like sales up by 5.5%.

Do the numbers add up?

I’ve previously discussed my concerns about the group’s 6.9% dividend yield. But I’m becoming more optimistic about its ability to maintain this payout.

Plans are underway to refinance debt, which should lower borrowing fees. The company also says it’s on track to deliver cost savings of £30m-£35m this year. This should help to offset expected cost inflation of £45m-£50m.

If profits stabilise as expected, I think Greene King could be worth buying at current levels. The shares trade on a forecast P/E of 7.6, with a prospective yield of 6.9%. I think this could be a good opportunity to lock in an attractive income.

High risk, big potential profit

In my view, the worst that’s likely to happen to Greene King shareholders is a dividend cut. But investors in newspaper group Reach (LSE: RCH) face a far more uncertain future.

Formerly known as Trinity Mirror, the group owns titles including the Daily Mirror, Sunday Mirror, the Express and OK! magazine. Although the business is profitable and generates plenty of cash, Reach shares currently trade on a forecast P/E of just 1.8, with a prospective yield of 9.2%.

There are two reasons for this extreme valuation. The first is that print newspaper circulation and advertising revenue continue to collapse. The company issued a trading update today revealing that revenue from printed newspaper sales fell by 4% during the third quarter. Revenue from print advertising also fell 20%.

The group’s second problem is that it has a large pension deficit, which was recently reported to be £297m.

The pension probably wouldn’t be a big problem if this business was growing. But it’s not. Newspaper sales and ad revenue are falling relentlessly. Hopes for rising profits depend on generating £20m of cost savings by combining the Daily Star and Express operations with those of the Mirror.

Worth a punt?

Reach’s digital publishing revenue rose by 7% during the third quarter, while revenue from digital ads was 12% higher.

If chief executive Simon Fox can manage the decline of the print newspaper business and build a profitable digital publishing operation, Reach shares really could be absurdly cheap at current levels.

The problem I have is that most newspapers still seem to be struggling with the shift online. I don’t know whether Reach’s red-top tabloids will be among the eventual winners.

I’m tempted by this special situation, but I’m going to stay on the sidelines for now.

The post This FTSE 250 7% dividend stock and this 9%-yielder could be absurdly cheap right now appeared first on The Twelfth Magpie.

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

Newsflow from the publishing giant has been a little less celebratory since then. While revenues rose 11% during the six months to June 2018, to £353.8m, it swung to a statutory pre-tax loss of £113.5m from a profit of £38m a year earlier, it advised in July.

 This bottom line smack was caused by Reach booking a £150m impairment charge on its regional titles, a move that it said “reflects the more challenging than expected trading environment for local advertising.”

These troubles are reflected in broker estimates that are suggestive of a 1% earnings fall in 2018. Still, Reach is predicted to start bouncing back immediately with a 3% bottom line advance next year.

And it isn’t difficult to see why. Not only does its digital-led growth strategy offer plenty to get excited about from 2019 onwards, but it is also making huge strides when it comes to stripping out costs. It remains on  track to deliver £18m worth of structural cost savings this year alone, £3m ahead of target.

8% yields!

This bright earnings picture is not reflected in Reach’s dirt-cheap forward P/E ratio of 2.1 times, in my opinion. Indeed, this figure, which comes nowhere near the widely-accepted bargain benchmark of 10 times, makes it a steal right now.

The share should be on the radar of all value-minded dividend investors, I feel. Thanks to its promising long-term outlook, Reach lifted the interim payout 5% year-on-year to 2.37p per share, and prompted it to confirm dividend further hikes by at least this percentage for the foreseeable future.

This leads to City predictions that the small-cap will raise the full-year dividend in 2018 to 6.1p per share from 5.8p in 2017, meaning share pickers can enjoy an 8.3% yield. The good news doesn’t end here either. Next year, a 6.4p reward is predicted, a number that drives the yield to 8.7%.

More stunning value

The newspaper giant isn’t the only 8% yielder trading far too cheaply, in my opinion.

Take Marston’s (LSE: MARS), for example. It goes without saying that the tough economic environment has clouded the outlook for many of Britain’s listed publicans. That said, this smallcap stock has shown marvellous resilience while many of its rivals have struggled.

Indeed, sales performance has picked up in the second half of the fiscal year. In the 42 weeks to July 21, like-for-like sales were up 0.3%, with comparable revenues rising 0.9% in the most recent 16 weeks, thanks in part to the good weather and the FIFA World Cup. And in the 12 weeks since April, a month which was beset with bad weather, like-for-like sales rose 2%.

Marston’s is expected to endure a 2% earnings reversal in the year to September 2018, but helped by ongoing expansion it is expected to fire back with a 5% rise next year. This means that the firm carries a forward P/E ratio of just 6.8 times, and also that dividends should continue rising as well.

Last year’s 7.5p per share reward is anticipated to rise to 7.6p this year and to 7.8p in fiscal 2019, projections that create mountainous yields of 8.1% and 8.3% respectively. The pub operator is worth a serious look at current prices, in my opinion.

The post 2 cheap, 8%-yielding dividend stocks to buy right now 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 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.

As I mentioned previously, the acquisition of Northern & Shell’s Express and Star titles should prove a game-changer for the Docklands-based company. Just last month the firm — which was known as Trinity Mirror until the aforementioned acquisition — said that the purchase should support an 11% improvement in like-for-like revenues in the 26 weeks to July 1. Digital revenues at the Express and Star exploded 25% in the first fiscal half, it added.

Without the contribution of its newly-acquired titles sales, at Reach would have ducked 8%, it was noted.

The positive contribution of these digital operations is not the only cause for celebration, however. An improvement in national print advertising budgets has helped drive turnover in the past couple of months. What’s more, the publisher can also look to the significant cost synergies delivered by the tie-up with Northern & Shell’s old titles.

Yields leap to almost 9%

The pressures in the ad market are expected to cause earnings at Reach to flatline in 2018. But the City’s broker army does not expect this to prove a barrier to further strong dividend growth, so strong are the company’s cash flows.

Thus current forecasts point to a 6.1p per share dividend this year, up from 5.8p in the prior period and yielding a brilliant 8.5%.

The good news doesn’t stop here either. With profits expected to pound 10% higher in 2019, the full-year reward is predicted to rise to 6.4p. This means that the dividend rings in at an even more impressive 8.9%.

Usually companies with big dividend yields and dirt-cheap earnings multiples (in the case of Reach, it has a forward P/E ratio of 2 times) are considered no-go areas for investors.

As my colleague Roland Head previously pointed out, the discrepancy in this case can be caused by fears over the size of the firm’s pension deficit. However, predicted dividends over at Reach are protected between 5.9 times and 6.2 times by anticipated earnings through to the close of next year, leaving plenty of room for current projections to be met.

Throw Reach’s undemanding valuations, massive dividend yields and recovering revenues into the mix, and I reckon the company is a pretty compelling selection for income chasers today.

The 6%+  yielder

I also reckon Go-Ahead Group (LSE: GOG) should be attracting the glances of dividend investors today.

The number crunchers are predicting that the FTSE 250 business will pay a 120.3p per share dividend in the year to July 2019, matching the anticipated reward for the prior year. This figure yields a huge 6.6%.

While the market is expecting the company to endure a 20% earnings slip in the current year, I reckon this could be due for upgrades when the firm releases full-year financials on September 6. In May it advised that profits should exceed prior expectations when it reports for fiscal 2019, driven by efficiency improvements.

While there is some uncertainty facing its UK rail operations in the medium term, this is baked into Go-Ahead’s low forward P/E ratio of 9.9 times. Besides, I reckon the prospect of surging international contracts in the years to come makes the transport titan a compelling selection today.

The post This 8%+ yielder could supercharge your retirement income appeared first on The Twelfth Magpie.

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• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Royston Wild 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.