Certainly, considering the state of the rest of the UK retail industry. The fact that SCS is still growing, albeit slowly, at a time when many other UK retailers are struggling to survive is notable.

What’s more notable in my opinion, however, is the company’s cash generation. During the 26-week period the company generated £20.7m in cash from operations, up £2.5m year-on-year, or just under 14%. With cash flowing into the group’s bank accounts, SCS’s net cash balance at the end of January hit £62.5m, a staggering 70% of its market capitalisation at the time of writing. 

Cash cow

Few other companies have such a strong, cash-rich balance sheet, and that’s why I think this stock deserves a place in your ISA today.

Alongside today’s numbers, management also announced an increase in the group’s interim dividend of 3.8% to 5.5p. A similar full-year increase will give a total payout of 16.8p per share for 2019, offering a yield of 7.6% at the time of writing, according to my number crunching.

As the total dividend only cost the firm £6m last year, it looks as if SCS has more than enough capital to meet its dividend obligations for many years to come. 

Keeping your portfolio fit

One future income champion that I also think would be worth keeping an eye on is The Gym Group (LSE: GYM).

This company is still in growth mode. Today, it reported a 35.6% increase in revenue for the year to the end of December 2018. Adjusted profit before tax increased 19.4% to £14.4m. Off the back of this growth, management has announced an increase in the full-year dividend of 8.3% to 1.3p.

At the current share price, a distribution of 1.3p gives a dividend yield of 0.6%, which I don’t think is particularly attractive when the market average is above 3%. However, it’s the Gym Group’s future potential that really gets me excited.

Last year, the company generated just under £34m in cash flow from operations. Right now, all of this money and more is being reinvested back into the business. But the figures tell me that when management decides to take its foot off the growth pedal and start returning cash to investors, returns could soar.

Indeed, according to my research, the average profit margin on each of the Gym’s established locations is over 40% and return on capital — a measure of profitability for every £1 invested in the company — is above 30%.

In my opinion, these high levels of probability imply the company is a future dividend champion. With earnings set to expand another 38% in 2019, according to the City, it also appears as if the shares are undervalued on a group basis as they are currently dealing at a PEG ratio of 0.8.

The post Why I think this income stock yielding 7.6% deserves a place in your ISA appeared first on The Twelfth Magpie.

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

In an out-of-favour sector like retail now, I think the canny investor can find some stocks that have enormous potential to deliver investor returns going forward as valuations rebound and forward growth develops. Looking for the ‘strong survivors’ in the retail sector could be a good tactic to introduce significant growth into your retirement portfolio, so I’m looking at the FTSE 100’s clothing, footwear, accessories and home products retailer Next (LSE: NXT).

Migrating to online sales

The company has a formidable brand that most people recognise, but as with other retailers, the bricks-and-mortar-based business is struggling. We’ve become used to Next reporting declining sales figures for its shops, but that’s not the whole story. Unlike some retailers, it has a vibrant online business and click-generated sales have risen faster than shop sales have declined. Next is making a good job of migrating its business to online, a tactic that I reckon will help it survive and thrive in the years to come.

10 years ago, the shops business delivered around 67% of revenues and profits. In 2018, the directors expect sales from the shop estate to generate less than 50% of overall revenue and a mere 30% of profits. That means 70% of profits already come from the online business, which strikes me as a strong position to be in. As long as the store estate doesn’t start wiping out profits by generating losses, I think Next is well placed to deliver growth going forward. City analysts expect overall earning to move up 4% this year and 4% again next year, which is encouraging. I reckon Next is attractive and well worth your research time right now.

Meanwhile, furniture and flooring retailer SCS Group (LSE: SCS) is shooting up today on the release of the full-year results. The figures are good. Revenue rose 1.3% compared to the equivalent period last year, helped by the opening of a new store in Chelmsford during the period, which raises the store count to 101. Like-for-like revenue managed an increase of 0.2%, which suggests SCS is at least holding its own in the current harsh retail environment.

Profitable growth

Encouragingly, SCS managed to squeeze decent profits from its sales and its earnings per share increased by a healthy-looking 14%, and the directors expressed their confidence in the outlook by pushing up the total dividend for the year by just over 10%. Chief executive David Knight pointed out in the results statement that SCS continued to grow despite “a prolonged period of economic uncertainty and challenging trading conditions,” which challenges my previous assumption that big-ticket items such as furniture would be most vulnerable during challenging trading periods.

One of the things I like most about SCS is its debt-free balance sheet and the more-than £48m pile of cash and advance payments it is sitting on. The firm listed on the stock market during 2015 and the shares have struggled to make progress beyond the listing price close to 200p. However, I reckon the company is poised to do well for investors from where it is now.

The post £1,000 to invest? Next and this resilient retailer could drive up your retirement portfolio appeared first on The Twelfth Magpie.

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Kevin Godbold 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.

Despite this disappointment, I believe this out-of-favour chain of trendy bars could still be a compelling buy for value investors. Here, I’ll examine the issues and give my verdict on this stock.

I’ll also consider a 7%-yield consumer stock that could be worth a closer look.

More excuses – what’s gone wrong?

In a trading update this morning, Revolution Bars complained of “challenging and volatile trading conditions” during the half-year to 9 June. Although new openings lifted total sales by 7.3%, like-for-like sales were 1.7% lower. This suggests that sales at some older bars are falling.

Unusually, the company managed to blame both cold weather and hot weather for lower levels of “late-night week-end trading”. But sites with outdoor seating areas are said to have performed well during the recent hot weather. So the problem may be that customers chose pubs with beer gardens instead of stuffy indoor venues.

Management also believe that the “prolonged absence of a CEO” and the distraction caused by last year’s two failed takeover bids have also contributed to the poor performance.

The good news is that Rev Bar’s aptly-named new chief executive, Rob Pitcher, is due to start work on 25 June. And the company is already moving ahead with other operational improvements. A new staff scheduling system has been rolled out and improvements are planned to marketing and to the group’s underperforming food business.

New profit guidance

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) are now expected to be below market expectations and in line with last year’s figure of £15.1m.

What does this mean for the stock’s valuation? Well, last year’s adjusted EBITDA translated into adjusted earnings of 14.2p per share. The last-seen share price of 139p puts the stock on a forecast P/E of about 10 for the year ending 1 July.

The group has very little debt, so I’d imagine that the forecast dividend will be left unchanged, at 5.2p. This gives the stock a prospective yield of around 3.8%, which is reasonably high for a small-cap growth stock.

What could go wrong?

It’s always important to consider what could go wrong when buying a stock. In this case I can see several potential problems.

The first is that this profit warning may not be the firm’s last. Like-for-like sales only rose by 0.4% during the first half of the year and by 1.5% last year. These figures suggest to me that when you consider the effect of inflation, LFL sales volumes were flat at best last year and may already have been falling during the first half of the current year.

Although food sales should offer potential for growth, a number of casual dining chains are suffering from over-expansion at the moment. Pubs chains offering food have admitted that conditions are very competitive. Can Revolution Bars really outperform in such an environment?

The group’s decision to continue rolling out new bars has meant that although underlying cash flow is quite good, the company has needed to borrow cash to afford both capital expenditure and dividend payments. Arguably this means the dividend is being funded with borrowed cash. Given that net debt was just £4.5m at the end of the first half, I’m not too concerned about this yet. But I would be concerned if net debt continues to rise.

Buy, sell or hold?

Revolution Bars’ rollout has been promising, but hasn’t quite delivered on expectations. However, the firm is taking steps to correct problems and address areas where it’s underperforming.

Incoming chief executive Pitcher has 25 years’ experience in the hospitality sector. His previous role was as a divisional director at pub group Mitchells & Butlers, where he was responsible for food-led brands Toby Carvery, Harvester and Stonehouse.

Revolution’s bars focus on premium drinks, so are heavily dependent on consumer spending remaining strong. A recession could hit the group hard. But if the economy remains stable, my view is that this company does offer a potential buying opportunity.

After all, it wasn’t long ago that Revolution received a cash bid worth 203p per share. With the shares trading at around 140p, I’d rate the stock as a speculative turnaround buy.

A retailer with a 7% yield

Another stock that’s performed well during this long period of cheap credit and low unemployment is furnishings and floorings retailer ScS Group (LSE: SCS). Even more than Revolution Bars, this is an extremely cyclical business. Sales could collapse if cheap credit dries up or if the economy goes into recession.

For now, trading remains fairly good. Revenue rose by 4.9% to £333m last year while earnings rose by about 8% to 23.5p per share. Analysts expect the firm to report revenue growth of about 5% and earnings growth of around 2% for the current year, which ends on 29 July. On 21 March, management confirmed that trading for the year to date was in-line with expectations.

The company ended last year with net cash of £40m and no debt. Although some of this cash represents advance payments from customers, the group’s net cash position suggests to me that it could survive a downturn in sales more easily than rival DFS Furniture, which has substantial borrowings.

The group’s strong cash generation and lack of debt also means it’s able to pay generous dividends. This year’s forecast payout of 15.9p per share represents a forward dividend yield of 7%.

One to buy?

Like Revolution Bars, I believe ScS should continue to do well if the UK economy remains stable. I don’t have a strong view on the outlook for the economy, but I’d rate this stock as one of the more attractive options in this sector.

If you’re looking for a high-yield income stock with some growth potential, ScS could be worth considering.

The post 2 super dividend growth stocks that could smash the FTSE 100 this year 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.

Over the past year, shares in XLM Media (LSE: XLM) have powered ahead as the company has smashed expectations. 

Indeed, at the end of November, in a post-first-half trading update, the marketing services firm announced to investors that adjusted earnings before interest, tax, depreciation and amortisation for the full year will be “materially ahead” of current expectations following a few strong months. 

Organic growth has been complemented with acquisitions, and today the firm announced yet another deal as part of its long-term growth plan. Specifically, the company has acquired some leading Finnish gambling-related informational websites from Good Game Ltd for a total cash consideration of up to €15m. These sites reportedly “provide visitors with useful information such as reviews of online casino websites, comparison of promotions offered by different brands and information on payment solutions.” And it seems to have paid a fair price of around nine times EBITDA. XLM itself is trading at a multiple of over 10 times EBITDA. Management expects the deal to be immediately earnings enhancing. 

From strength to strength 

This deal should lead to yet more earnings upgrades for it. Over the past few months, City analysts have consistently upgraded their outlooks for the company as it has gone from strength to strength. Right now, analysts are expecting the firm to report earnings of 11.3p per share for 2017, up from just 10p at the beginning of the year. If XLM hits this projection, then the group will have grown pre-tax profit threefold in five years. And analysts believe that this can continue with growth of 10% or more per annum pencilled in for the next three years. 

Based on XLM’s historical performance, I believe these figures will turn out to be conservative, and shareholders could be in for a much faster expansion in the years ahead. With this being the case, I believe that the group’s valuation of 17.8 times forward earnings seems appropriate. There’s also a yield of 3% on offer for investors. 

Beating expectations

As well as XLM, I believe that you might regret not buying furniture retailer SCS (LSE: SCS) as the firm goes from strength to strength. Over the past five years, it has nearly quadrupled net profit as revenue has risen by a third. 

Even though there have been some concerns about the group’s ability to maintain its growth rate as inflation rises and the UK consumer pulls back on spending, so far this slowdown has not materialised. 

In a trading statement published at the end of November, ahead of the group’s AGM, management reported that SCS had made an excellent start to the financial year, with “like-for-like order intake up 2.9% for the 16 weeks ended 18 November 2017, and two-year like-for-like orders up 8%.” City analysts are expecting little to no earnings growth for the company for the year, but in my view, this looks conservative based on SCS’s revenue growth. 

What’s more, as well as strong revenue growth, its shares are cheap. Current projections have the shares trading at a forward P/E of 9.5 and supporting a dividend yield of 6.8%. The payout is covered 1.5 times by earnings per share, so for the time being, it looks pretty secure. The firm has more than £40m of net cash on the balance sheet as well. 

The post 2 high-growth stocks you may regret not buying appeared first on The Twelfth Magpie.

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Rupert Hargreaves does not own any 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.

But I’m a firm believer in looking for bargains in sectors when they’re in a cyclical or economic downturn, which is when share prices tend to be lower, than when things are going swimmingly well and shares are expensive. And I think I’m seeing that with ScS.

The dividend is perhaps the most obvious attraction, with a yield of around 8.5% forecast for this year and next. One possible downside is that it wouldn’t be that well covered at around 1.6 times — but we’re looking at a retail operation here and not a company with massive capital reinvestment needed every year for growth.

Cheap shares

The shares are also on a P/E of under eight, which seems low. And I see a very good chance of a re-rating within the medium term, and those who buy now could lock in a very nice effective dividend yield and also enjoy some capital gains.

At full-year results time, ScS reported cash of £40.1m and no debt, so there’s no pressure on that front, and the dividend was actually lifted slightly to 9.8p per share, with the company expressing confidence in its outlook.

And at its AGM Wednesday, the company revealed a 2.9% increase in like-for-like order intake for the 16 weeks to 18 November, together with “two-year like-for-like orders up 8%.“

ScS also reckons it should be able to take advantage of opportunities in the uncertain economic climate, and it appears to have the liquidity to do so.

Medical prospect

Integrated Diagnostics Holdings (LSE: IDHC) has given investors a rocky ride over the past few years, and its share price is down from flotation in May 2015. But the long share price slide started to turn around this year, and from a low in February we’ve seen an 80% rise to today’s $4.25. 

The firm, which provides medical diagnostics services in Egypt, Jordan and Sudan, released a third-quarter update on Wednesday, telling of a 30% rise in revenue for the nine months, including a 41% spike in Q3. And apparently, “revenues and patient volumes accelerated meaningfully in the months that followed the holy month [of Ramadan] and subsequent holiday feast“.

CEO Dr Hend El-Sherbini said that the results “point toward the close of another strong operational and financial year for the group.”

At the moment it’s hard to put much meaning on ratios as the firm is still very much in its early growth phase, though we’re looking at a forward P/E ratio of around 30. But there is a maiden dividend predicted for the current year, which is encouraging, together with a couple of years of strong earnings per share growth.

Of course, the company’s location is a big factor, with Egypt being its biggest market. That country’s economy has been troubled, though Wednesday’s update did tell us there are signs that it is “turning the economic corner” and reckoned that the firm has strength through its brand equity, solid supplier relationships, and asset-light model.

Like all growth candidates in their early stages, this is risky, but I think it has attractive potential.

The post 2 top small-cap stocks I’d buy in December appeared first on The Twelfth Magpie.

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Alan Oscroft 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.

However, today shares in the firm have jumped by 7.3% in early deals after it published an upbeat set of results for the year ended 29 July 2017, somewhat allaying concerns about the state of the UK consumer market. 

Improving outlook 

For the first six months of the year, gross sales expanded 4.4%, and revenue improved 4.9%. Operating profit rose 8.8% year-on-year and earnings per share for the period grew from 21.8p to 23.5p. As well as the uptick in sales, SCS reported free cash flow for the year of £23.6m and a net cash balance at year end of £40.1m.

As well as the positive historical trading performance, more importantly, the company reported today that trading for the nine weeks to September 30 had continued to show a positive trend with sales order intake up 3% on a like-for-like basis. 

I believe that these figures show SCS’s outlook is not as dim as many analysts have speculated, and despite Brexit uncertainty, customers are still attracted to the business’s offering. And that’s why I believe that the shares could be a great income investment at current levels. Based on today’s numbers, shares in SCS are trading at a highly attractive historic P/E of 7.4, and support a dividend yield of 9.1%, 2.4 times more than the market average. 

Nonetheless, there’s still a risk that a Brexit-inspired consumer slowdown could weigh on SCS in the near future. That said, the company’s low valuation indicates to me that there’s already plenty of bad news baked into the shares here, and any positive surprises could result in a re-rating higher. 

Dividend set to double 

Homebuilder Bovis (LSE: BVS) has put in a stronger performance than SCS this year. The company’s shares are up 37% year-to-date excluding dividends, thanks to tailwinds from the government’s help-to-buy scheme. News that this scheme may be extended helped the shares add another 4% yesterday and even after these gains, I believe that the shares still look attractive. 

Over the past five years, thanks to rising home prices, sales volumes and widening margins, Bovis’s earnings per share have more than doubled as pre-tax profit has tripled. Over the same period, the firm’s dividend to investors has increased fourfold, and it looks as if this is just the start. 

Cash cow 

During August Bovis reported its results for the first half of the year. Operating profit jumped 18% year-on-year, but more importantly for dividend investors, net debt was reported at £8m, compared to £59m a year ago. Based on this trend, it looks as if the company will be nursing a healthy net cash position within the next two years and City forecasts are calling for the company to pay a special dividend as a result. 

Based on current forecasts, shares in Bovis support a dividend yield of 4.2%. Next year, however, analysts have pencilled in a prospective dividend payout of 80.3p per share for a dividend yield of 7.3%. To me, that looks to be a dividend yield worthy of further research. 

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Rupert Hargreaves does not own any 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.

One of these stocks is on my personal watch list, because I think there’s a chance that the group’s management may pull off a surprise turnaround.

An uncomfortable position

Sales rose by 14% to £165.9m at sofa retailer SCS Group (LSE: SCS) during the six months to 28 January. But the group’s share price has fallen and is down by 7% so far this year, putting the stock on a miserly forecast P/E of 7.1 for 2016/17.

This gradual decline has also resulted in the group’s forecast dividend yield rising to a staggering 9.5%.

One reason for this is that ScS is heavily cyclical. While consumers may continue to buy food and clothes during a recession, they generally stop buying new sofas. ScS Group’s annual revenue has risen by 52% to £317.3m since 2012 and profits have followed. But there are signs this strong run of growth is coming to an end.

The group’s adjusted earnings are expected to rise by just 2% to 22p per share this year. This forecast has been cut by 0.45p per share over the last three months. Any further reduction would leave ScS at risk of reporting a fall in profits.

In my view, the stock’s current valuation is pricing-in the likelihood that consumer spending could fall, dragging down the group’s profits.

A second concern is that ScS’s balance sheet may not be as strong as it appears. Although the group reported a net cash balance of £36.8m at the end of February, ScS receives payment for sofas sold up to two months before the firm pays its own suppliers. If sales slowed, then I believe the group’s cash balance would fall fast as supplier payments became due.

Although the 9.5% yield is tempting, I’m going to continue to steer clear of ScS.

This could be a buy

Shares of women’s value clothing retailer Bonmarche Holdings (LSE: BON) rose by 3% on Wednesday, after the struggling group issued a cautiously optimistic year-end trading statement.

Adjusted pre-tax profit for the year ending 1 April is now expected to be between £6m and £7m, towards the upper end of the £5m to £7m range quoted in September last year.

Chief executive Helen Connolly appears to have slowed the decline in sales and turned around the group’s disappointing online operation. Online sales rose by 14.8% during the final quarter of the year, compared to a 1.8% increase for the full-year period.

Like-for-like store sales remained negative during the period, falling by 2.4% during the 13 weeks to 25 March. However, this compares well with the results seen during the first half of the year, when like-for-like store sales fell by 8.6%.

There was no word today on whether Bonmarché’s 7.1p per share dividend is likely to be cut this year. I think there’s a reasonable chance of a cut, but I’m also attracted by the apparent turnaround in sales performance. If this continues into the current year, then I believe Bonmarché could be of interest to value investors.

The post One 9% dividend I’d buy, and one I’d avoid appeared first on The Twelfth Magpie.

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Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

So far, DFS has proved resilient since last June’s Brexit vote. The furnishings play announced in February that sales during the six months to January grew at a solid 7%, prompting it to keep its guidance for the full year unchanged.

But retail indicators have become more worrying recently, as Britons buckle down against a backcloth of rising inflation and expectations of toughening economic conditions as we move through 2017.

Sitting uncomfortably

Latest Office of National Statistics numbers, for instance, showed total retail revenues fall 1.4% during the quarter to February, the largest three-month drop since 2010.

And patchy updates from DFS’s competitors in recent months, warning of slowing sales and the likelihood of tough trading conditions persisting, should come as concern to share pickers.

SCS Group advised last week that “trading in February was challenging, largely driven by reduced footfall,” although it added that “we have seen an improvement since the start of March.” And Dunelm Mill warned last month that “market conditions remain challenging” as it also advised of a 1.6% fall in like-for-like sales during July-December.

DFS itself cautioned last month that “in 2017 the retailing of furniture in the UK faces an increased risk of a market slowdown given the uncertain outlook for consumer confidence.” And I believe a similarly cautious statement this week could send investors heading for the hills.

The City expects DFS to suffer a 53% earnings fall in the year to July 2017. And while the number crunchers expect the business to keep the divided locked at 11p per share this year — a figure that yields 4.5% — I believe the dangers associated with the sofa giant far outweigh the potential of such a lucrative reward, and reckon these forecasts could be subject to downgrades as the year progresses.

Commodities cloud

A troubling outlook for commodity prices would also encourage me to cash-in on Rio Tinto (LSE: RIO).

The mining colossus has seen its share price slip to ten-week lows in Monday trading, as President Trump’s failure to get his Obamacare-replacement written into law has cast doubts over the reality of his other proposed policies, and especially the promise of huge infrastructure spending.

However, political developments across The Pond are not the only reason for concern — demand indicators from commodities collector China also remains less than reassuring. Indeed, iron ore prices are currently in free fall, as signs of massive material oversupply in the Asian powerhouse’s ports grow.

These poor fundamentals cast a cloud over City predictions that Rio Tinto will enjoy a 66% earnings uplift in 2017, and thus raise the dividend per share from 170 US cents to 268.5 US cents. I reckon cautious share selectors should give the digger short shrift.

The post 2 dividend stocks I’d sell right now appeared first on The Twelfth Magpie.

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• The only FTSE 100 stock I own right now

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

In today’s low-interest-rate environment dividends are even more important as they can give a new lease of life to your savings. So, here are three of my favourite dividend stocks for 2017. 

Slow and steady 

Furniture and flooring group SCS (LSE: SCS) may not be the most exciting company around, but it is an income champion. 

Indeed, for the year ending 31 July 2016, City analysts expect the company to pay a dividend to shareholders of 14.5p per share, which equates to a yield of 8.5% at current prices. The shares currently trade at a forward P/E of 7.9 and the payout is covered 1.5 times by earnings per share.

Unfortunately, analysts aren’t expecting any fireworks from the group this year. Earnings per share growth of zero is pencilled-in for the year ending 31 July. Still, SCS’s low valuation and 8.5% dividend yield appear to make up for the lack of growth. 

Putting shareholders first 

Shares in DX Group (LSE: DX) lost around 75% of their value last year when the company warned on profits and ever since the shares have struggled to return to their former glory. Nonetheless, even though DX’s earnings per share have fallen by 50% since 2015, the company’s dividend payout of 2.5p is still covered twice by earnings per share indicating that the payout is safe for the time being. 

A dividend payout of 2.5p per share equates to a dividend yield of 13.9% at current prices. What’s more, just like SCS, shares in DX trade at a highly attractive valuation. City analysts are projecting group earnings per share of 4.8p for the year ending 30 June 2017, meaning that the shares currently trade at a forward P/E of 3.8. 

Cloudy outlook 

Legal services group NAHL (LSE: NAH) will be glad to have put 2016 behind it. Concerns about the company’s business model knocked 47% off the share price during 2016 as investors fled the stock. However, City analysts aren’t predicting doom for the firm any time soon. 

For the year ending 31, December 2016 analysts are expecting the group to report earnings per share growth of 16% although these gains are expected to disappear next year. For the year ending 31, December 2017 earnings per share are projected to fall 21% back to the level reported for 2015. Analysts are also expecting management to reduce the company’s dividend payout in line with declining earnings. From a payout of 19.2p for 2016, analysts have pencilled-in a full-year dividend payout of 15.9p per share for NAHL during 2017, down 17.2% year-on-year but still equal to a dividend yield of 11.8%. 

Further, NAHL’s shares currently trade at a forward P/E of only 5.7, which is cheap even considering the market’s concerns about the company’s outlook. 

The post These 8%+ yields are some of my top dividend buys for 2017 appeared first on The Twelfth Magpie.

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

But I do not believe this is reason enough for canny share pickers to hang onto the stock, and reckon this week’s trading update (slated for Tuesday, October 4th) could prompt the start of a comedown.

ScS announced back in August that like-for-like sales orders had leapt 14.8% during the 12 months to July 2016. And dispelling fears over the immediate impact of the Brexit vote, chief executive David Knight commented that “trading was strong throughout the EU referendum campaign and has continued since the vote with progress on a like-for-like basis in all retail categories.”

Still, the retail landscape in Britain remains far from stable, and the Confederation of British Industry and British Retail Consortium both put out worrying reports on consumer spending in September.

Meanwhile, the strength of ScS’s recent share price rise could see the stock succumb to heavy profit-booking should signs of sales weakness manifest themselves in this week’s release.

A saving grace for ScS might be its cheap ‘paper’ valuation — a prospective earnings multiple of 8.7 times falls well short of the FTSE 100 average of 15 times. But I would not bank on this, as investors remain fearful over the full impact of Brexit on the economy.

Time to check out?

The steady stream of disappointing data coming from Britain’s supermarkets would convince me to sell out of Tesco (LSE: TSCO) before this week’s interims (scheduled for Wednesday, 5 October).

The company underlined the fierce competitiveness in the UK’s grocery sector in June, its update advising of a mere 0.3% uptick in like-for-like sales during March-May. Chief executive Dave Lewis again cited “a challenging market with sustained deflation” as the reason for  yet another sales slowdown — Tesco saw underlying sales rise by a healthier 0.9% during the prior quarter.

The Cheshunt chain is not alone in struggling to maintain any sort of momentum at the tills, however, and fellow ‘Big Four’ operator Sainsbury’s endured a 1.1% decline in like-for-like sales in the 16 weeks to September 16th, it advised last week, worsening from the 0.8% fall in the previous three months.

The country’s traditional supermarkets are still chasing white rabbits, slashing prices week after week in order keep up with discounters Aldi and Lidl. Indeed, Morrisons and Asda announced further rounds of price cutting within a few days of each other just last month. But these measures are clearly having little effect in transforming their respective sales performances, and are instead heaping pressure on already-tight margins.

I fully expect Tesco to put out another collar-yanking trading update this week. And with the firm dealing on a huge forward P/E rating of 27 times, I reckon there is plenty of space for a hefty share price reversal.

The post I would sell these 2 retail mammoths before this week’s updates! appeared first on The Twelfth Magpie.

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