With this in mind, here are what I believe to be three of the best penny stocks to buy now.

Growth-focused penny stock

Trading at just under a pound, as I type, is Record (LSE: REC). This is a business that tries to reduce the impact of currency movements on institutional clients’ investment portfolios. 

Unfortunately, Record’s recent move to invest for growth has been at the expense of a “short-term decrease in profitability.” However, the firm is still cash-generative and boasts a healthy balance sheet. The payment of a special dividend smacks of confidence too. 

Speaking of which, Record started its new financial year in April with its highest recorded Assets Under Management Equivalents (AUME). It’s also been developing new products, including the recently-launched Emerging Market Sustainable Finance Fund.

Aside from this, Record also scores well on the quality metrics, such as returns on capital and margins. These are high, relative to the market in general, and go some way to making up for industry risks, such as regulatory hurdles. Nevertheless, the latter still has the potential to knock the share price.

On a P/E of a little less than 20 for FY22, I think Record could be a good stock for me to buy now. 

Recovering well

Also featuring in my selection of the best penny stocks to buy now is retailer Topps Tiles (LSE: TPT). Unsurprisingly, this is a company that really suffered at the hands of the pandemic. However, the tide has clearly turned.

Last month’s update said the company’s retail business had “performed well” in Q3, helped by the reopening of stores in April. Topps went on to say it expected to benefit from “high levels of consumer demand” going forward as the home improvement boom continues. A return to sales growth at its Commercial business is also expected.

Of course, hindsight shows that March 2020 was the time to pile in. The shares have multi-bagged since then. However, a P/E of under 15 now still doesn’t feel unreasonable for a debt-free company with an encouraging outlook. That said, its cyclical nature coupled with warnings that Covid-19 could get worse before it gets better makes this a cautious rather than automatic buy.

Ahead of expectations

A final pick is EKF Diagnostics (LSE: EKF). For under a pound a share, I can buy inmto a company that achieved record sales and profits in 2020.

According to May’s AGM statement, this form has carried on into 2021, thanks to “a very meaningful recovery in trading.” EKF’s core business “performed more strongly than expected” in Q1, again thanks to ongoing demand for sample collection devices generated by the pandemic. Indeed, the company now believes that full-year numbers are likely to be “comfortably ahead of already upgraded management expectations.” 

Naturally, all this hasn’t gone unnoticed by the market. In the last year, EKF’s stock jumped by 72% in value and now trades on a forecast P/E of 28. Unfortunately, this high valuation could mean the share price falls heavily if the company disappoints.

With a solid growth strategy and balance sheet, however, I’d still buy EKF today.

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Paul Summers 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.

First up is FTSE 100 dividend titan Legal & General Group (LSE: LGEN). Shares in this savings and insurance firm have fallen by 11% so far this year, broadly in line with the wider market. I think this stock has the potential to be one of today’s top big-cap dividend buys. Here’s why.

Good value, positive outlook

In my view, the easiest way to get rich from stocks is to buy good, cheap companies. Legal & General certainly looks cheap. The firm’s shares currently trade on 8 times 2018 forecast earnings.

A valuation like this sometimes indicates that earnings are expected to fall. But that’s not the case here. Broker earnings forecasts for 2018 have risen by 20% over the last year. Forecasts for 2019 have risen by a similar amount, and suggest that earnings will rise by 7% next year.

Highly profitable, quality business?

We’ve seen that Legal & General is cheap. Is it a good business too? The firm’s profit margins certainly suggest so. Return on equity — a key measure of profit for financial firms — has averaged 18% over the last six years. These high returns have fuelled the group’s growth and provided cash for generous shareholder returns.

Dividend growth + high yield

Legal & General’s dividend payout has doubled since 2012, providing an inflation-beating income for long-term holders. Although dividend growth is now expected to slow, this year’s payout is still expected to rise by about 6.5%. That’s more than double the rate of inflation.

The firm’s distributions are covered by surplus cash, too. Last year’s payout cost about £910m. This was comfortably covered by the £1.352bn of surplus cash, released from the group’s operations over the same period.

I’d buy, but here’s a second choice

I rate Legal & General as a buy. But if you want to generate a generous yield from financial stocks, there are some alternatives.

One small-cap that may be of interest, is currency-hedging specialist Record (LSE: REC). This £60m firm helps manage its clients’ exposure to exchange rates. It’s highly specialist and has proved very profitable in recent years.

According to half-year figures released today, Record generated an operating margin of 32% during the six months to 30 September. This impressive figure is consistent with the firm’s profit margins in recent years, so there’s no reason to think it’s not sustainable.

A cash machine

These high margins mean that Record generates a lot of cash. The group had net cash of £12.9m at the end of September, or £22.7m including longer-term money market investments.

The only problem I can see with Record is that it’s struggled to deliver much growth over the last couple of years. There’s no sign of this changing just yet, either.

Today’s half-year results show assets under management are broadly unchanged, at $61.8bn. An increase in client numbers between April and September is set to be reversed during the second half of the year.

Record looks cheap to me, with a price/earnings ratio of 12 and a dividend yield of 8%. But I wouldn’t expect too much growth. I’d buy for income only.

The post This FTSE 100 dividend stock yields almost 7%, here are 3 reasons why I’d buy 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.

Record in a spin

Record was on a bit of a roll until this morning. Most of the growth over the last year has now been wiped out in an hour. Such is investing…

Assets under management equivalents dipped 2.7% from $63.9bn on 31 December to $62.2bn, three calendar months later. Expressed in sterling, AUME fell 6.3%, from £47.3bn to £44.3bn. They were lacklustre last year as well.

Record lost one $1.7bn passive hedging mandate in the quarter, but was awarded another worth $2.2bn, maintaining client numbers at 60. Similarly, global stock market and exchange rate movements largely balanced each other out, although US dynamic hedging clients saw negative returns, as the US dollar weakened against a weighted basket of hedged currencies. Emerging market performance was also negative.

Slipped disk

Record earned no performance fees in the quarter. Chief executive James Wood-Collins warned that moves to minimise costs and add value for clients could also reduce total passive hedging management fee revenues by 10% in the year to 31 March 2019. However, he reckons that fee losses should balance out in the longer run. 

There is little for investors to celebrate today, plus the added worry over fees. Long-sighted investors might see this as a buying opportunity, with City forecasters pencilling in steady earnings per share (EPS) growth over the next three years. Meanwhile, the forecast yield of 6.6% is generous, although cover is thin at exactly 1. Record trades at a forecast 15.3 times earnings. That makes it strictly for brave bargain hunters.

Slipping Standard

FTSE 100 listed Standard Life Aberdeen (LSE: SLA) is down 15% in the last six months, following the loss of £109bn of Scottish and Lloyds Banking Group assets under management. The loss represents just 5% of revenues, so the negative reaction may have been overdone, and much of it could be made up by cost-cutting following the recent £11bn merger. Aberdeen Standard still remains one of the UK’s largest asset managers and pension providers.

February’s move to sell the group’s insurance arm to Phoenix for £3.2bn was better news, injecting cash and freeing up capital, while the assets will remain under SLA’s management. It could even pick up more from elsewhere in the Phoenix portfolio – a win-win if it happens.

Rising from the ashes

Standard Life Aberdeen’s full-year 2017 profits dipped slightly despite a decent investment performance, which is a worry giving strong stock market growth over the time. However, management still lifted the full-year dividend by 7.5% to 21.30p a share. Standard Life Aberdeen’s forecast yield is now a whopping 6.2%, covered 1.3 times.

The stock’s forward valuation is a slightly discounted 13.2 times earnings but analysts are predicting a 5% drop in EPS this year, so expect further share-price choppiness. I feel the long-term outlook is brighter than today’s numbers might suggest, especially for those seeking a sturdy ‘buy and hold’ income stream.

The post Standard Life shares and this turnaround stock offer 6% dividends at a bargain price 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 recommended Standard Life Aberdeen. 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.

Record (LSE: REC) found itself trekking higher in Friday business following the release of bubbly third-quarter trading details.

The stock was trading 3% higher after news that assets under management equivalents (or AUME) swelled 4.4% during the final quarter of 2017, to stand at $63.9bn as of the close of December.

Record saw net client AUME flows boost the total by $1.4bn during October-December, while positive movements in financial markets bolstered aggregate AUME by a further $1.4bn. A $900m reverse attributed to adverse foreign exchange movements was not enough to take the shine off the results.

Celebrating the solid quarter four performance chief executive James Wood-Collins said: “This quarter saw further growth in AUME and in client numbers, with growth in particular from existing client mandates as well as new business.” The asset manager had 60 clients on its books at the close of the year versus 59 three months earlier.

And the Record head painted a positive picture looking ahead, commenting: “Volatility in currency markets linked to political and economic uncertainty continues to create opportunities for engagement with existing and potential clients on risk management, return-seeking and combined strategies.”

6% yields? Yes please

City analysts agree that there remain plenty of opportunities for Record to exploit looking ahead, and they have pencilled in earnings expansion of 7% and 6% in the years to March 2018 and 2019 respectively.

These forecasts leave the business dealing on a forward P/E ratio of 13.9 times too, great value under most circumstances but particularly so given Record’s exceptional momentum.

However, great profits growth is not the only thing that shareholders can look forward to as Record offers up market-mashing dividend yields too. This year a predicted 2.7p per share reward yields a large 6.3%. And the dial moves to 6.7% for next year thanks to an anticipated 2.9p dividend.

Build a fortune

Retirement property builder McCarthy & Stone (LSE: MCS) offers plenty for share pickers to sink their teeth into as well.

Possible changes to leasehold legislation in the UK to address the ground rent scandal is casting a cloud over the business right now. Having said that however, the City does not expect this to issue to stop earnings from galloping into the distance — far from it, in fact. Bottom-line rises of 16% and 23% are currently being forecast for the years to August 2018 and 2019.

Such predictions of rampant profits growth feed through to expectations of sprightly dividend growth as well. An anticipated reward of 5.5p for fiscal 2018 yields 3.8%, and a projected 6.4p dividend for the next period yields 4.4%.

What’s more, investors can put their faith in these estimates becoming reality, McCarthy & Stone’s dividend coverage standing at a bulky 2.9 times and 3.1 times for this year and next.

The Bournemouth business reported back in the autumn that forward sales were up 11% year-on-year as of November 10, at £277m, underlining the brilliant earnings possibilities afforded by the country’s ageing population. I reckon a forward P/E ratio of 9.1 times represents unmissable value, particularly as McCarthy & Stone is taking steps to supercharge  build rates to capitalise on this positive structural backcloth.

The post Why I believe this 6% yielder could make you a fortune 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.

Repeating figures first published several weeks ago in a trading update, Record reported that assets under management rose to $61.2bn from $58.2bn at the end of March, although in sterling terms, AUM declined to £45.6bn from £46.6bn. 

Still, despite the lacklustre AUM performance, pre-tax profit increased marginally to £3.8m from £3.6m in the prior year period, as revenue expanded to £12.2m from £10.7m. 

Off the back of these upbeat figures, management has declared a dividend of 1.15p, up 39% year-on-year.

Commenting on the figures, CEO James Wood-Collins said: “Overall it was encouraging to maintain revenues at levels consistent with the second half of last year despite the remaining UK-based Dynamic hedging clients deciding either to switch to lower-margin Passive hedging or to terminate their mandates during the period.“

Growth slowing, cash returns rising 

For the past few years, Record has been going through a transition. As the company’s clients have become more conscious of cost, they’ve been switching to lower-cost (and lower-margin) passive hedging strategies helping the firm grow AUM. But profits have come under pressure. 

Nonetheless, overall profits have been ticking higher, and the company has been returning any excess cash to investors. 

The interim dividend hike follows a £10m tender offer for shares earlier in the year. Based on today’s payout rise, the shares currently support a dividend yield of 5.5%, with the payout covered 1.2 times by earnings per share, and backstopped by a debt-free cash-rich balance sheet. 

Even if growth remains sluggish in the years ahead, as an income stock that has a record of returning excess funds to shareholders, Record deserves a place on your watchlist. 

Boring but essential 

As well as Record, I’m keeping an eye on fast-growing administrator Equiniti (LSE: EQN). 

Its business of managing the administrative side of pensions and investments is exceptionally boring, but it’s essential. The group’s size and experience mean that it dominates the market. Management is buying other similar businesses where the company can use its expertise to lower costs and improve margins. 

As Equiniti already has the processes in place, it can cut costs and improve margins quickly at the acquired businesses.

For example, the group is currently planning the $227m cash acquisition of Wells Fargo‘s share registration services business, which is expected to be earnings accretive in the first year. By stripping out duplicate functions, management expects $10m of cost synergies. 

At first glance, shares in Equiniti might seem expensive, as they trade at a forward P/E of 20.1. However, considering how one-of-a-kind this company is, it deserves a high valuation. Increasing growth acquisitions should help drive earnings rises over the years, ahead and when the company decides to dial back its expansion, dividends should follow. The stock currently yields only 1.5%. 

The post 2 hidden growth & income stocks that could still make you a million appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of Equiniti. 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.

Stuck

Small-cap stock Record, which offers hedging strategies to reduce the impact of currency movements on client investment portfolios, saw group assets under management up 2.2% in dollar terms to $61.2bn. However, they actually fell 1.1% in sterling terms to £45.6bn. While UK-based clients benefited from dynamic hedging, which protected currency gains made following sterling’s changes in the six months after the EU referendum. However, persistent sterling weakness has hit returns and cash flows, so the group’s remaining UK-based dynamic hedging clients either converted their mandates to passive hedging or terminated their contracts.

Chief executive James Wood-Collins said assets under management were now at their highest ever level in dollar terms, while Record now has a foothold in the Swiss market after opening an office in Zürich. However, the group has also had to bear the cost of boosting employee numbers to improve client service, plus the cost of introducing MiFID II, as well as possible mandate losses.

Currency swinger

Wood-Collins anticipates further currency volatility, due to political and economic uncertainty, but said this should provide opportunities to engage with existing and new clients. “We remain confident of making further progress in the second half of the financial year.” However, the report is relatively downbeat compared to recent missives. In June, Record posted double-digit growth in full-year revenues and earnings, which allowed management to boost its dividend payout and deliver a special payment for the period.

Yet City analysts remain bullish, forecasting 15% earnings per share (EPS) growth in the year to 31 March 2018, followed by 6% in 2019. It also offers an attractive forecast yield of 6.9%, while trading at a less than demanding 14.7 times earnings. Today’s dip could be a buying opportunity.

Home and hearth

Domestic shale explorer UK Oil & Gas Investments (LSE: UKOG) is up 330% over the last six months, but down 30% over the last month. Are you prepared for this level of volatility?

The AIM-listed company invests primarily in oil and gas assets located in the Weald Basin in southern England. How its share price performs largely depends on news flow from drilling sites such as Broadford Bridge, Markwells Wood, Baxter’s Copse and Horse Hill Portland. The share price has been knocked by operational issues at Broadford Bridge, but the company continues to investigate, carrying out extended flow testing after receiving approval for a 12-month planning extension.

Big dipper

You need to scrutinise its drilling updates to work out the group’s prospects for tapping into the rumoured 100bn barrels of oil lying under the region. These things are hard enough for the company to gauge, let alone outsiders, so you will need to take a view, or what some people might call a gamble.

Today’s entry price is 5.45p, roughly half its 52-week high of 11p, but far higher than its low of 0.83p. Risky, but also exciting.

The post Why I would buy UK Oil & Gas Investments plc and this hot growth stock today appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK 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.

Still reasonably priced

Those already holding shares in £98m cap specialist currency manager Record (LSE: REC) will have enjoyed the superb 85% rise in its share price over the last year. Thanks to ongoing political uncertainty and its impact on currency markets, it seems logical to expect more upside ahead for the Windsor-based firm. In its last trading update, it reported having just under $60bn of assets under management equivalents at the end of June — a 2.9% increase on the $58.2bn it had in March. 

Despite recent good form, Record’s stock still looks reasonably priced on 15 times earnings for the current year based on EPS growth estimates of 14%. The latter leaves it on a price-to-earnings growth (PEG) ratio of 1.72, again suggesting that the stock isn’t overpriced. This begins to look an even better deal when you consider the consistently high operating margins and returns on capital the company has been able to generate for a number of years.  

Income hunters may also be drawn to the stock for the forecast 5.4% yield. Analysts are now expecting this to rise even higher — to 5.9% — in the 2018/19 financial year, assuming the company is able to continue growing revenue and profits.

With another trading update due in October, now might be a great time to take a closer look at Record.

Well positioned

Another stock that deserves more attention is Liontrust Asset Management (LSE: LIO). Over the last year, it has also put in a stellar performance, climbing 39% to just under the £5 mark. Even so, the shares still look fairly cheap, trading as they do on 13 times forecast earnings for the 2017/18 financial year.

Recent results from the independent fund management group go some way to explaining this run of form. In the year to the end of March, Liontrust recorded a 15% rise in revenue (to £51m) and 18% increase in adjusted pre-tax profit (to £17.2m). At the end of the reporting period, it had £6.5bn of assets under management — 36% more than at the end of the previous year. The subsequent acquisition of Alliance Trust Investments Limited at the start of April added another £2.5bn to this figure. By mid-June, total assets under management had climbed to just over £9.3bn.

In addition to highlighting a seventh successive year of positive net inflows, CEO John Ions was bullish on Liontrust’s outlook, stating that the company is “well positioned to move forward in a competitive and demanding environment”. Chairman Adrian Collins also reflected that recent political events had served as a reminder that the need for sound financial advice is likely to become even more important as people grow increasingly anxious over having sufficient savings for their retirement or achieving their financial goals.

Like Record, Liontrust is no slouch when it comes to returning cash to shareholders. Last year’s 15p per share payout is expected to rise to 18.5p in the current year, equating to a yield of 3.7%. What’s more, analysts are already pencilling in a further 14% hike in the 2018/19 financial year, leaving Liontrust yielding with a really-rather-attractive 4.2%.

The post 2 ‘secret’ small-cap stocks offering value, growth and income 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 Liontrust Asset Management. 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.

Ethernity — which develops and delivers data processing technology spanning the telecom, mobile, security and data centre markets — announced that revenues slipped to $988,995 between January and June from $1,309,138 a year earlier.

However, a change to the sales mix helped profits rise “due to the different product mix within the revenues, where design wins and royalty revenues attracts a near 100% margin,” the Israeli company, which only gained admission to the AIM market in June, said. EBITDA surged to $441,292 from $278,504 in the corresponding 2016 half.

As well as noting an improvement to its revenues mix, Ethernity also lauded the three contracts it had signed in the period in the highly-lucrative SD-WAN, g.fast and 5G NLOS wireless markets.

So chief executive David Levi struck a bullish tone looking ahead, commenting: “With the significant push towards the use of Field-Programmable Gate Array (FPGA) for network function acceleration, we are very excited about the future. The new funding within the company, resulting from the IPO is allowing Ethernity to make the necessary investment to build our sales and marketing function, as well as to increase our R&D capabilities. ”

On the march

The City expects earnings to boom at Ethernity in the medium term at least, and this is no surprise — after all, the rapidly-increasing data volumes that need to be processed and sorted provide terrific sales opportunities for the business. And the serious glances the firm’s technology is garnering from major telecoms providers is particularly encouraging.

So the number crunchers expect earnings to move to 3.8p per share in the current period, and again to 7.6p in 2018. While current numbers create a lofty forward P/E ratio of 46.7 times, I reckon this is fair value given the tech giant’s terrific sales outlook.

Currency colossus

The number crunchers also expect Record (LSE: RED) to dole out meaty profits growth in the near term and beyond.

This year the currency manager is expected to deliver a 16% earnings improvement, and an extra 6% rise is pencilled in for the 12 months to March 2019.

And such forecasts make Record splendid value for money in my opinion. It boasts a prospective P/E rating of 14.3 times — comfortably below the widely-considered value yardstick of 15 times — in addition to a corresponding sub-1 PEG ratio of 0.9.

As an added bonus, the Windsor firm also delivers knockout dividend yields for this year and next, these clocking in at 5.7% and 5.9% respectively.

Record saw total assets under management climb to a record $59.9m as of June, up from $58.2m three months earlier. And I am confident that new business should continue to surge at the money master thanks to its broad and diversified product suite.

The post 2 ‘under the radar’ growth stocks that could make you brilliantly rich 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?

Neither Royston Wild nor The Motley Fool UK have a 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.

Cash from cash

Specialist currency manager Record (LSE: REC) is offering both at the moment, with last year’s 4.3% dividend yield set to rise to 5.9% and then 6.2% over the next two years. And those uplifts are way ahead of inflation — a 32.5% hike for the year to March 2018, followed by a further 5.7% boost the year after.

Friday’s first-quarter update lent confidence to those expectations too, with the firm’s assets under management equivalents up 2.9% to $59.9bn (from $58.2bn on 31 March). In sterling terms that translated to a 1% fall from £46.6bn to £46.1bn, but that still seems fair considering the erratic nature of the pound.

Inflows

Chief executive James Wood-Collins told us of inflows of $0.6bn from existing clients during the quarter, and spoke of the uncertainty that continues to impact the world’s currency markets — and that’s what makes people edgy and require the services of firms like Record.

That attractive dividend policy is only one way in which Record has been returning cash to shareholders, with a £10m tender offer to buy up shares at a premium having taken place this month — and it was oversubscribed.

The shares are currently at 43.75p, having gained 77% over the past 12 months, and that puts them on a forward P/E of 13.2 on 2018 forecasts, dropping to 12.6 for 2019. 

That looks cheap to me, and if these mooted dividends materialise, I can see investor sentiment strengthening and demand for the shares growing — so there could be a nice growth opportunity here too.

Strongly progressive

By comparison, the 2.3% dividend yield expected from Homeserve (LSE: HSV) this year might not look that tempting, but its key attraction is its inflation-busting rises. The 15.3p paid out for the year ended March 2017 represented a 20% leap from the year before, and analysts are expecting rises of 9.4% this year and 8.7% next.

The supplier of emergency plumbing and electricity services has said it “intends to adopt a progressive dividend policy and targets a dividend cover in the range 1.75 to two times over the medium term.” And with the past three years of EPS rises predicted to continue with growth of 14% and 11% over the next two years, I see the dividend as reliable.

Friday’s update spoke of “continued strong growth in the current financial year,” with seasonal business being weighted more towards the second half.

North American performance looks good, with 2.5m new households added, partly due to 24 new partnership deals. At the same time, UK and European business looks to be on target.

Growth too

Acquisition and expansion into the home repairs and improvements market is part of Homeserve’s strategy, and I see that as a rather exciting new market — it could potentially be a lot bigger than today’s emergency services business.

And that’s what makes Homeserve even better than a just progressive dividend candidate — we’re looking at a long-term growth share too. Granted, the next two years’ PEG ratios aren’t superbly attractive at 1.6 and 1.9, but I’d say they’re plenty good enough for a nice growth/income combination.

P/E multiples of a bit over 20 might look high, but I can see those coming down significantly over the next few years.

The post 2 top income stocks to help you to financial independence 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?
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Homeserve. 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.

High yield

Updating the market on Wednesday was currency management provider Record (LSE: REC). It announced a tender offer to return up to £10m to its shareholders via the purchase of a maximum of just over 22m ordinary shares which represent 10% of the share capital of the company. Each investor in the company is entitled to tender up to 10% of their shareholding at the tender price of 0.4479p per share. There is the potential for a greater proportion to be tendered by an individual investor, depending on the number of shares tendered by other shareholders in total.

As well as the return of capital to investors, Record also has a healthy dividend yield of 5.1%. This is expected to reach as much as 7.2% next year as dividend growth of over 40% is forecast in 2018. This has the potential to significantly improve investor sentiment in the company, and it could lead to a higher share price in future.

With Record trading on a price-to-earnings growth (PEG) ratio of 1.8, it seems to offer attractive value for money for the long term. Certainly, it is a smaller company which carries significant risks and volatility due in part to its area of operations. However, for investors seeking a high yield, it could be worth a closer look.

Dividend growth

Also offering a bright future from an income perspective is fellow financial services company Frenkel Topping Group (LSE: FEN). The provider of financial services advice is expected to return to strong profit growth over the next couple of years, with its bottom line due to rise by 37% in the next financial year. This means higher dividends could be on the cards, while its PEG ratio of 0.3 remains highly enticing even after a share price rise of 38% in the last year.

Although the company’s dividend yield currently stands at just 1.8%, dividend growth is expected to be around 25% per annum during the next two years. This is expected to push the company’s yield to as much as 2.7% by 2018. But even then, Frenkel Topping’s dividend is set to be covered 3.1 times by profit. This suggests that further rapid dividend growth could be on the horizon, which may make the stock even more attractive.

Given this potential, now could be the right time to buy it ahead of inflation-beating income prospects. While its yield may be relatively low today, it could easily surpass inflation over the medium term.

The post 2 super income shares I’d buy right now 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?

Peter Stephens has no position in any 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.