Here, I’ll give my view on whether Standard Life could be a top Footsie bargain, and whether mid-cap Jupiter could also have investment appeal.

Valuation measures

Jupiter’s share price is little changed after its Q1 trading update. It said assets under management (AUM) increased £1.4bn to £44.1bn over the three months to 31 March. This was driven by positive market movements of £1.9bn, partly offset by a net £0.5bn of client withdrawals.

I mentioned reasonable earnings ratings and high yields, but I also find another measure of valuation useful for asset managers. This is market capitalisation as a percentage of AUM. I’ll come back to this after summarising some of the key earnings, dividend and AUM numbers in the table below.

* Based on consensus forecasts

As you can see, Standard Life is somewhat cheaper than Jupiter on P/E, as well as sporting a higher dividend yield. But what of market cap as a percentage of AUM?

My rule of thumb is that I won’t buy if it’s above 3%. This is a tip I picked up from, I think, Nick ‘Britain’s Warren Buffett’ Train. I’ve found it a decent yardstick for avoiding overpaying for an asset manager’s shares, and, conversely, for spotting a potentially undervalued stock.

Signs of overvaluation

While Jupiter’s P/E is not unreasonable and its high dividend yield is attractive, the pricing of 3.9% of AUM is a big red warning sign for me.

And the company also rings alarm bells on something else I use as a general barometer of overvaluation and danger. This is the level of ‘short’ interest in a stock — institutions (typically shrewd hedge funds) positioned to profit if a share price falls, and to lose money if it rises.

Jupiter wasn’t among the most heavily shorted stocks at the start of this year, but positions have increased so sharply that it’s become the fifth most bet-against stock on the London market. Personally, if owned Jupiter shares I’d be inclined to sell them and bank my profits.

Good risk/reward proposition

Standard Life looks an attractive investment on paper. The P/E of 14, dividend yield of 7.8% and pricing of 1.1% of AUM, suggest there could be good value here. There’s also very little short interest in the stock.

However, the company has struggled with fund outlows, and these would have been worse if Lloyds/Scottish Widows hadn’t been barred from withdrawing a £100bn mandate until the contract ends in 2022. Having said that, even if we were to knock the £100bn off Standard Life’s AUM, the stock would still look cheap at 1.4% of AUM.

Finally, the dividend may not be the safest. As things stand, though, the City consensus is for modest increases this year and next, as the company comes through a period of transition. On balance, I see a good risk/reward proposition, and rate the stock a ‘buy’.

The post Are the Standard Life share price and 7.8% yield a top FTSE 100 bargain? appeared first on The Twelfth Magpie.

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G A Chester 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.

But this scenario is not a surprise given the financial leviathan’s recent share price stampede — Standard Life’s stock value has advanced 16% over the past two months and hit two-year tops just shy of 450p late last week.

The company, which is due to merge with Aberdeen Asset Management imminently, announced today that assets under administration edged 1% higher between January and June to £361.9bn. This was despite the business enduring net outflows totalling £3.7bn in the period.

The asset manager saw fee-based revenues rise 5% in the first half, to £836m. And operating pre-tax profit advanced 6% year-on-year to £362m. “Standard Life has delivered a strong performance in the first half of 2017,” chief executive Keith Skeoch commented.

“We continue to see the benefits of targeted investments to further our diversification agenda, the success of our newer investment solutions and the ongoing focus on operational efficiency,” he added. “This has allowed us to grow assets, profits, cash flows and returns to shareholders.”

Merger adds extra star power

With the tie-up with Aberdeen Asset Management slated for completion in mid-August, Standard Life declared that “we are ready to accelerate the pace of strategic delivery as we open the next chapter of our transformation to a diversified world-class investment company.” The merger should give the enlarged entity greater scale and better diversification in what is an increasingly-competitive industry.

The City expects Standard Life to report earnings growth of 45% this year and 9% in 2018, resulting in a cheap forward P/E ratio of 14.9 times as well as a bargain PEG reading of 0.3. And the FTSE 100 giant also provides plenty for dividend chasers to shout about, the business sporting monster yields of 4.8% and 5.2% for this year and next.

Diversification pays off

I believe RPS Group (LSE: RPS) is another stock in great shape to deliver phenomenal long-term earnings expansion.

But investors need not wait for the company to deliver stonking growth, with City brokers predicting a 25% bottom-line rise in 2017. And a further 12% swell is anticipated for next year.

RPS Group, like Standard Life, has been no stranger to rampant investor demand in recent sessions either, the stock charging to three-year peaks around 280p late last week. Despite this the firm still deals on a very-reasonable P/E ratio of 15.8 times, while it also sports a mega-low PEG ratio of 0.6.

Investor faith in the Oxfordshire firm was rewarded last week when it spoke of a 35% uptick in pre-tax profit during January-June, at £27.2m. Despite ongoing pressure in the oil and gas industry, RPS Group’s efforts to diverse its operations are paying off handsomely. And I am confident ongoing progress in this area, allied with stringent cost management, should keep sending earnings skywards.

The post 2 shares with red-hot growth prospects appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Aberdeen 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.

A proven cash machine

Life insurance group Standard Life (LSE: SL) has been trading since 1825. Such longevity isn’t a guarantee of future success, but I believe it’s a good indicator.

However, despite having been in business successfully for nearly 200 years, Standard Life isn’t resting on its laurels. The group recently announced plans for a merger with fellow Scottish group Aberdeen Asset Management.

Although I think Standard Life shares look attractive enough on their own, I believe the prospect of the two firms combining adds to the appeal of Standard Life. Aberdeen Asset Management has historically been a more profitable business, with an average return on equity since 2011 of 16.5%, compared to 9.5% for Standard Life.

The downside of Aberdeen’s business is that recent results suggest that it’s more heavily cyclical than Standard Life. Aberdeen is also under pressure to cut the costs of its active fund management model, in order to compete more effectively with low-cost passive funds.

I believe the Standard Life deal should help to address these risks by providing a lower-cost corporate environment for Aberdeen’s business. The overall effect — I hope — will be to improve the combined group’s cash generation and deliver more stable year-on-year profit growth. If I’m right, then future dividend growth should be strengthened by the deal.

Standard Life shares currently trade on a forecast P/E of 13.5, with a prospective yield of 5.6%. With further dividend growth expected over the next couple of years, buying at this level could make a lot of sense.

The best assets you can buy?

Historically, very few assets have proved safer than prime London property. Most of us lack the means to invest directly in such properties, but we can gain exposure through the stock market.

British Land Company (LSE: BLND) owns a £14.6bn portfolio of commercial property, mainly composed of large, well-located retail developments and London office space. The group had net assets of 919p per share at the end of March 2017, meaning that the current share price of 625p offers investors a chance to buy at a 32% discount to book value.

Of course, there is a reason for this. After a long period of growth, signs are emerging that the commercial property market could be slowing. British Land’s portfolio valuation fell by 1.4% last year.

In the short term, I think the shares might have further to fall. But for investors eyeing up a retirement, I believe British Land could be a smart buy. The group’s loan-to-value ratio is fairly modest, at 32%. The average unexpired lease length is nine years and the group’s weighted average debt maturity is 6.9 years.

What this suggests is that British Land’s cash flow should be fairly predictable for nearly a decade. On that basis, I believe the group’s forecast dividend yield of 4.7% looks appealing, regardless of the short-term outlook.

The post These Footsie dividends could help you retire early appeared first on The Twelfth Magpie.

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Roland Head owns shares of Standard Life. The Motley Fool UK has recommended Aberdeen 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.

Favourable trading conditions

Friday’s update from wealth manager Charles Stanley (LSE: CAY) showed that it is making encouraging progress in favourable operating conditions. Funds under management and administration increased by 5.7% versus the end of 2016, and were 17.1% higher than a year prior. Growth was also seen in the company’s discretionary and execution-only funds, which rose by 21.3% and 23.5% respectively when compared to a year ago. And while advisory dealing funds saw modest growth of 5.9%, the company’s overall performance has been upbeat.

Clearly, Charles Stanley has benefitted from favourable trading conditions. Share prices across the globe have enjoyed one of their best starts to a calendar year in some time. Now though, the outlook is changing and there is a reasonable chance that further share price falls could be ahead. As such, the forecast growth rate in the company’s bottom line of 74% this year and 37% next year could be downgraded if operating conditions deteriorate.

Despite this, the company seems to be a worthwhile investment at the present time. It has a price-to-earnings growth (PEG) ratio of just 0.2, which indicates that it offers a wide margin of safety. Therefore, even if the favourable operating conditions of recent months fade in future, its share price could still rise.

Upbeat outlook

Also offering high growth potential at a very reasonable price is diversified financial services company Standard Life (LSE: SL). It is expected to record a rise in its earnings of 57% this year, followed by further growth of 7% next year. As well as high growth, it also offers a range of products and services and operates in a number of geographies. This could reduce its overall risk profile and lead to a more robust earnings profile in the long run.

Despite this upbeat outlook, Standard Life trades on a PEG ratio of just 1.7. This indicates that its share price could rise significantly and still leave it trading at fair value. Given the uncertainty in global financial markets, such a wide margin of safety could prove to be a useful ally for long-term investors.

As well as a low valuation and high growth prospects, Standard Life also has strong dividend growth potential. It currently yields 5.9% from a dividend which is covered 1.4 times by profit. This suggests a sustained rise in dividends could lie ahead, which may cause the company’s shares to become increasingly popular at a time when inflation is edging higher.

The post 2 bargain basement growth stocks I’d buy in May appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Standard Life. 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 financial goliath sources around half of profits from the life insurance sector, but is looking increasingly towards the asset management industry to deliver future growth.

Some have raised eyebrows at its decision to link with Aberdeen, with severe economic turbulence in developing markets more recently prompting investors to pull their cash out of the Scottish business en masse. But I reckon Standard Life’s merger  could pay off as, over a longer time horizon, the combination of booming population levels and rising personal wealth levels makes Asia an attractive destination for forward-thinking investors.

Besides, Standard Life and Aberdeen have identified £200m worth of cost synergies (to be achieved by 2020) which should give earnings another encouraging kick.

Plenty of upside

And in the meantime, City analysts expect Standard Life to put to bed the extreme earnings volatility of recent years.

For 2017 an expected 57% earnings charge is predicted, building on the 39% rise enjoyed last year. And the insurer is expected to keep the momentum up with a 7% bottom-line uptick in 2018.

Current Square Mile forecasts make Standard Life exceptional value for money too, a forward P/E ratio of 12.3 times falling comfortably below the FTSE 100 forward average of 15 times.

But it is Standard Life’s dividend profile that should really attract investors, in my opinion. A predicted 21.4p per share dividend for this year yields a staggering 5.9%, while an anticipated 23p reward for 2018 drives the yield to 6.4%.

With the Aberdeen merger set to boost Standard Life’s product range considerably, and with it future earnings growth, I expect the enlarged group to deliver stunning investor returns in the years ahead.

A wise investment

I also believe Hargreaves Lansdown (LSE: HL) is a hot growth bet as savers seek to protect themselves from rising inflation.

You see, with the increasing cost of living steadily eroding the value of cash, those stashing away for a rainy day are increasingly seeking alternatives to the rock-bottom interest rates offered on bog-standard savings accounts. And Hargreaves Lansdown’s broad range of services puts it at the front of the queue for those looking to invest wisely.

So just like Standard Life, Hargreaves Lansdown is also expected to enjoy handsome earnings growth during the medium-term at least, City analysts forecasting expansion of 15% and 13% in 2017 and 2018 respectively.

And I believe the investment manager is a wise stock selection despite an elevated forward P/E multiple of 31.5 times. Over the long term I believe Hargreaves Lansdown should prove a profitable growth share returns as private investor activity keeps on surging (assets under administration stood at a record $70bn as of December), helped by the structural opportunities created by an ageing populace.

The post 2 FTSE 100 growth giants that could help you retire rich appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Aberdeen Asset Management and 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.

What does dismay me is the low level of income on his fund, which yields just 3.3% a year. That is less than you would get on a standard FTSE 100 tracker, with the index yielding 3.66% in March. The fund also has an annual management charge of 0.75%, and although that is deducted from capital rather than income, it further erodes your return. You can get a far higher rate of income, without any ongoing charges (aside from your dealing platform’s quarterly fee), by investing directly in a number of top FTSE 100 companies. The following two thrash Woodford’s yield.

Setting Standard

Many of us still think of Standard Life (LSE: SL) as an insurer, but it has been quietly turning itself into a fund management house. And it has done so just in time to escape the worst of the fallout over the government’s pension freedom reforms, which hammered sales of industry cash cow annuities.

Its proposed merger with Aberdeen Asset Management will continue the process to make it the UK’s largest asset manager with more than £660bn in AUM. Aberdeen has been hit hard by its emerging markets focus, as that once hot investment sector turned ice cold, but it brings the benefits of diversification to Standard Life.

Feel the yield

It should also distract attention Standard Life’s outsize Global Absolute Return Strategies fund, beloved of financial advisers, a £25bn behemoth that has become too big for its own boots, returning a measly 14.2% over the past five years. The merger should also generate around £200m in annual cost savings.

What really excites me about Standard Life is the yield, which is currently a forecast 6%, covered 1.4 times. By the end of 2018, City analysts reckon it could hit 6.5%, almost twice Woodford’s return, thanks to its progressive dividend policy. Standard Life also has exciting growth prospects, with forecast earnings per share (EPS) growth of 57% this year, and 7% in 2018. As with any individual stock, there are risks: recent share price performance has been patchy and it trades at a pricey 19.03 times earnings. But the sky-high yield wins it for me.

Hold on tight

By contrast, global bank HSBC Holdings (LSE: HSBC) has had a storming year, its share price rising 55% in the last 12 months. Despite that, the dividend yield is also mind-blowing, at a forecast 6.3%. The bank has rebounded strongly from its recent troubles yet its valuation is far from toppy, at a forecast 12.9 times earnings.

2016 was a tough year for the company, which incurred a number of one-off charges, including a $3.2bn goodwill writedown in the European private bank and transformation costs of $3.1bn. As a result, reported profits fell 62.3% to $7.1bn, disappointing markets, even though adjusted half-year profits before tax (allowing for exceptional items) were a healthy $19.3bn. Dividend progression may be in short supply in the immediate future, but few will complain given today’s blistering yield.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended HSBC Holdings. 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 to the proposed deal itself, there will be no cash changing hands, much to the chagrin of Aberdeen shareholders who have seen the value of their holding shrink by more than 35% since hitting highs in April 2015. The deal will instead be all-share, with Standard Life shareholders owning 66.7% of the combined company. For Aberdeen shareholders this would work out to 0.757 new Standard Life shares per Aberdeen share currently owned.

A stroke of genius or folly?

While I generally have a sceptical attitude towards mega-mergers or colossal acquisitions, this deal does on the face of it make considerable sense. Aberdeen’s share price has been hammered over the past two years due to 15 straight quarters of net outflows from its funds, which are heavily skewed towards Asian and emerging market equities that have fallen out of favour with investors. This has put pressure on profits and dividends, but combining with the relatively healthier Standard Life would relieve some of this pressure in the short term.

For Standard Life the deal would considerably bulk up its fund management operations as it tries to shift itself away from a pure life insurer to more of a fund manager. Both businesses will be highly complementary as well, with Aberdeen’s core expertise in emerging market equities and Standard Life’s in fixed income.

A plan for the future  

Looking several years out the thesis behind the deal also passes the eye test. Active managers have been punished in recent years by the shift towards passive investing and an increased awareness on fees from investors of all stripes from mom and pop retail investors to massive pension funds and Warren Buffett.

This has put incredible downward pressure on fees across the industry and although this deal wouldn’t completely alleviate this problem, it will allow the combined firm to protect its margins through cost-cutting. Analysts reckon that around 10% of the combined company’s 9,000 strong workforce could be shown the door.

Job cuts, efficiencies of scale and being able to offer prospective investors a wider range of in-house fund options is just what both companies need to compete against American giants like Blackrock in this new cut-throat environment. It’s still uncertain whether this deal alone will be enough for the combined Standard Aberdeen to thrive in the tough years ahead. But it definitely improves their odds.

With both firms’ shares trading relatively cheaply at under 14 times consensus forward earnings, investors who have a more bullish view than I on the fate of active managers may find this an interesting point to begin a stake in either company.

The Motley Fool’s method for making a million

The post What do Aberdeen Asset Management plc and Standard Life plc merger talks mean for investors? appeared first on The Twelfth Magpie.

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

One of the market’s secret dividend stocks reported its results for 2016 this morning, and the figures make for good reading. The stock, which currently supports a forward dividend yield (based on City estimates) of 5.8%, has struggled to gain ground over the past year thanks to concerns about the fallout from Brexit on financial services and headwinds buffeting the asset management sector. 

Nonetheless, the figures out today from insurer Standard Life (LSE: SL) show that not only is the company managing to navigate these headwinds, but the firm is also growing steadily. 

Steady growth 

For 2016, Standard’s pre-tax operating profit rose 9% to £723m, beating City estimates of £684m. Assets under administration increased 16% to £357bn, up from £307.4bn at the end of 2015. Analysts were expecting the company to report an AUM figure of around £335bn. Earnings per share expanded 13% to 29.5p from 26.1p in the year-ago period, once again ahead of consensus estimates. Free cash flow generation for the year rose 9% to £502m. 

Of the back of these impressive figures, management has decided to increase the firm’s final dividend payout for the year by 8.9% to 13.4p bringing the full-year payout to 19.8p, up 8% year-on-year.  

Alongside today’s results, management also noted that the company is already seeing the benefits of Standard’s drive to improve its asset management offering and expansion into India. Further geographical expansion is planned. At the end of last year, Standard increased its stake in Indian insurance firm HDFC Life. It aims to combine it with New Delhi-based insurer Max Life to create a significant player in the Indian private life insurance business. 

Unloved 

Standard is using its existing asset management base to expand into emerging markets, and at the same time, the firm is improving its offering here for customers in the UK. 

For some reason, the market seems to be ignoring this growth and its record of creating value for shareholders. Indeed, based on today’s figures, shares in Standard are currently trading at a trailing twelve month P/E of 12.7. Prior to today’s numbers, City analysts had been expecting the firm to report earnings per share of 28.8p for 2017, but now this figure looks seriously out of date.

If we assume Standard can repeat its 2016 performance during 2017 and grow earnings per share by 10% or more, the group could report earnings of 32.5p per share for 2017, indicating a forward P/E of 11.5, a relatively low multiple for a business reporting a double-digit growth rate.  

The bottom line 

Overall, after today’s results, it’s clear that Standard is one of the FTSE 100’s most under-appreciated dividend stocks. The company has blown City estimates out of the water for 2016 and the shares look cheap compared to Standard’s projected growth rate. What’s more, the shares support a dividend yield of 5.8% on a forward basis, which is 1.7 times above the FTSE 100 average. 

The post Results from this ‘secret’ income stock prove why it is a dividend champion appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns shares of Standard Life. 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.

A solid income play

When it comes to identifying the most popular income stocks, Vodafone (LSE: VOD) is likely to be towards the top of most people’s lists. It’s considered by many investors to be a quasi-utility, such is the dependable nature of its business. However, this is a far cry from Vodafone’s image when it first started business. Back then, it was a growth play which was focused on dominating the global mobile market. Once it had achieved international growth however, it began to reward its investors through higher dividends.

Today it seems to be moving back towards a stock focused on growth, rather than simply being a solid dividend payer. Evidence of this can be seen in its major investment in Europe, both in terms of acquisitions and infrastructure. It’s also diversifying its product range and could gain from cross-selling opportunities. This new strategy is set to deliver growth in earnings of 20% next year and 28% the year after, which could boost Vodafone’s yield from the current level of 6.4%.

Of course, just because Vodafone is set to record higher growth doesn’t mean it’s now higher risk. It remains a well-diversified business with a sound balance sheet and strong cash flow. Therefore, it looks set to become even more popular among investors in 2017.

Rapid dividend growth

The growth rate of Standard Life‘s (LSE: SL) dividend in the last four years has been impressive. It has risen by 7.7% per annum, which is clearly ahead of inflation. Even if inflation rises to around 3% or 4% this year, Standard Life’s earnings growth forecast of 9% this year and 8% next mean its shareholder payouts should offer real-terms growth for the company’s investors. This could cause the company’s shares to become increasingly popular, especially since it has a payout ratio of over 1.3.

As one of the highest-yielding shares in the FTSE 100, Standard Life appears to be an excellent income choice. Its yield of 6.1% is around 2.5% higher than that of the wider index. It trades on a price-to-earnings growth (PEG) ratio of just 1.4, which indicates it also offers strong capital gain prospects. And with a sound strategy and diverse business model, it looks set to become increasingly popular among yield-hungry investors as the year goes on.

The post 2 FTSE 100 dividend stocks to consider buying before it’s too late appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Standard Life and Vodafone. 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 think this fresh weakness represents a fresh buying opportunity. Not only is National Grid one of the biggest yielders out there, but I believe the increasingly-fraught economic outlook for British from this year onwards could prompt fresh waves of safe-haven purchasing.

Besides, the international bias enjoyed by vast swathes of the FTSE 100 (INDEXFTSE: UKX) may offer scant consolation should the political turbulence washing across the globe continue in the near-to-medium term.

For the year to March 2017 National Grid is expected to pay a 44.4p per share dividend, up from 43.34p last year, thereby yielding 4.8%.

And the payout is predicted to move to 45.6p in 2018, shoving the yield up to an even-rosier 5%.

Financial firework

Like all the Footsie giants described in this article, expectations of steady earnings growth at Standard Life (LSE: SL) this year and next are expected to feed into increasingly-tasty dividends.

The insurer has long offered market-mashingyields as demand for its products have taken off worldwide. Indeed, Standard Life saw assets under administration shoot 7%, to £328m, between January-June, the company announced in its latest financial update.

And Standard Life’s strategy of creating strength through diversification, as well as entering hot growth markets like India, promises to keep earnings on an upward slant.

The City has consequently chalked in dividends of 21.2p and 22.8p per share for 2017 and 2018 respectively, yielding 6.1% and 6.6% and up from a predicted 19.7p in 2016.

Tobacco titan

While market demand for Imperial Brands (LSE: IMB) has picked up more recently — the stock was last dealing at levels not seen since early November — the cigarette giant still carries ultra-low valuations for both growth and income seekers.

Looking at just dividends, the business is predicted to pay a reward of 173.2p per share in the year to September 2017, yielding 4.7% and up from 155.2p in 2016. And the dividend is expected to step to 188.1p in 2018, resulting in an eye-popping 5.1% yield.

While cigarette volumes across the globe continue to fall, Imperial Brands is able to navigate the subsequent sales strain through huge investment in market-leading cartons like West and Davidoff. The company saw volumes of these so-called ‘Growth Brands’ rattle 4.3% higher last year.

Added to this, the London company is also broadening its presence in huge growth markets like the US and China to keep the top line growing. And with Imperial Brands also embracing fast-growing, next-generation products like e-cigarettes and caffeine strips, I reckon the firm should keep offering exceptional investor returns long into the future.

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