stobart group News | The Twelfth Magpie

I reckon these 2 FTSE 250 growth stocks are ready to take off

Harvey Jones — Wed, 29 May 2019 14:27:05 +0000

Stobart Group (LSE: STOB) still evokes cult lorry group Eddie Stobart but those days are over and it is now taking flight as the owner of London’s Southend Airport.

On the runway

The FTSE 250 group has climbed 10% at time of writing after its final results showed a 39% rise in total group revenues to £146.9m. Adjusted underlying EBITDA from its two main operating divisions, Aviation and Energy, jumped 75% to £24.1m. However, this didn’t stop it from swinging to a loss of £58.2m, down from a profit of £100m in the year to 28 February 2018.

Management pinned these losses on a number of factors, including airline marketing costs, appreciation from continuing operations, impairment charges, and discontinued operations. Clearly none of these were enough to worry investors.

Dividend cut

The Stobart Group share price is still down 50% over what has been a difficult year for the group, which included a messy boardroom battle as former chief executive Andrew Tinkler attempted to oust current chairman Iain Ferguson.

Long-term fan Royston Wild says it has also been hit by declining risk appetite, a slew of troubling market updates and delays in commissioning third-party energy plants at its Energy division. When he wrote that in January, the group yielded around 11%. The dividend has since been cut and the forecast yield is now 5.1%, with cover of just 0.8.

Ready for take-off

Stobart Group stock now trades at a pricey looking 32 times earnings, but the future looks brighter. Its prime focus is Southend Airport, less than an hour away from central London by train, with flights to more than 40 destinations boosted by a recent hook-up with Ryanair. It took 1.5m passengers last year, expects 2.5m this year and is aiming for 5m by 2023.

Earnings and profits could fly if it establishes itself as a rival to the main London hubs. City analysts expect earnings to rise 149% next year, and 45% the year after. It looks a tempting bet to me, even if its rail and civil engineering business needs an overhaul.

Look East

It’s been a tough year for the budget airline sector, with British carrier Flybmi, Icelandic-owned Wow and Berlin-based Germania all going bust in 2019. Ryanair’s stock is down a third after reporting its first loss since 2014 in February, while easyJet halved as drone disruption and high fuel costs triggered a half-year £275m loss.

FTSE 250 low-cost operator Wizz Air (LSE: WIZZ) has had a better time of it, its stock has fallen ‘just’ 10% in the last year. Brexit uncertainty, green taxes and fierce competition have hit profits forcing Wizz to lower its half-year net profit guidance to between €270m and €300m. Peter Stephens anticipates share price volatility but with long-term growth prospects.

Last call

However, in April it reported carrying 19% more passengers than the same month last year, to 3.28m, driven by a 17.6% increase in its capacity to 3.57m seats. Wizz also has exposure to faster-growing central and eastern European economies and is deploying its new Airbus 321ceo aircraft at a new base in Krakow, Poland.

The £2.29bn group is valued at 12.1 times forward earnings and prospects look brighter after a difficult year, as analysts pencil in 25% and 23% earnings growth over the next couple of years. We’ll find out more when Wizz publishes its final results on Friday.

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Why did Wizz Air shares just jump 10%?

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

Have £2k to spend? An unloved 11%-yielder I think could help you to retire early

Royston Wild — Mon, 14 Jan 2019 15:33:23 +0000

Things have been rocky over at Stobart Group (LSE: STOB) during the past few months. Its share price collapsed by more than a third since the start of October because of declining risk appetite and a slew of troubling market updates.

The support services business advised in September that “continued delays in the commissioning of third-party energy plants” at its Energy division means that results here will fall short of expectations in the “short term.” In addition, Stobart said that full-year results at its Rail division would also fall short of forecasts because of changes to the way it recognises revenue on long-term contracts.

Following on from this, the FTSE 250 firm interims revealed that, while revenues rose 21.4% in the six months to August to £151.3m, it had slipped to an after tax loss of £17.5m. This was mainly because of the huge investment it’s making to transform London Southend Airport into a major aviation hub.

Dividends down

To cap things off, Stobart declared a month ago that it was planning to trim the fourth-quarter dividend to 1.5p per share, meaning a full-year dividend of 15p will be paid out in the fiscal year to February 2019, versus 16.5p in the previous period.

The company has long relied on the sale of non-core assets to fund its explosive dividends, and it has £149m worth of these entities left to get off its books. However, a recent capital review suggested to the firm that the funds created by further disposals should be used “primarily to invest in value-creating opportunities based on sustainable operating cash generation and to maintain a strong balance sheet.”

I’ve long championed the FTSE 250 company, chiefly on the back of its barnstorming dividend prospects, so this latest revelation drives a Stobart-liveried lorry through a huge part of my investment thesis.

Still a great buy

That said, I still consider the business to be a brilliant buy for long-term investors, and particularly as investment on operations at Southend blasts passenger numbers higher.

Aviation capacity is famously, and woefully, inadequate in the South East of England, and Stobart is putting itself in a prime position to capitalise on this by aggressively investing on routes. Traveller numbers at its base on the so-called Essex Riviera boomed 37% between March and August to 838,742. And with Ryanair and easyJet boosting their operations there, passenger numbers are on course to hit the 2.5m milestone in the 2019 calendar year, before marching to 5m by 2022.

The outlook for the airport has been a little less sure of late following the travails of domestic airline Flybe. But Stobart has helped to allay concerns, buying the embattled flyer as part of a joint venture with Virgin Atlantic late last week.

Reflecting the airport’s rising star, Stobart is predicted by City analysts to flip back from a predicted 84% earnings slide this year with a 96% bottom-line surge in fiscal 2020. And this leaves the services star dealing on a bargain-basement, sub-1 PEG reading of 0.3 for the forthcoming period.

What’s more, while dividends may have been dialled down a bit more recently, payouts are expected to remain on the right side of generous and yields sit above 11% through this period. I think Stobart could make you a fortune by the time you come to retire and it remains a hot buy for me.

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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.

Why I’d buy this 8%-yielding, dividend-growing stock right now

Kevin Godbold — Wed, 24 Oct 2018 13:00:41 +0000

In September, my Foolish colleague Royston Wild wrote about Stobart Group (LSE: STOB), the aviation, energy, civil engineering and Infrastructure business, and said he was “expecting another robust set of numbers when interim results are released on October 24.”

Well, the day has arrived, and the figures are pretty good, as he expected. Revenue moved 21% higher than the equivalent period last year, and pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA) rose more than 10% to £17m. The directors pushed up the total interim dividend for the period by 20%, suggesting their confidence in the outlook.

An evolving story

Stobart cast off its famous lorry business as a standalone operation in 2014 and retained a passive investment in the new firm from that point. Since then, with the company focused on aviation, energy and infrastructure, progress has been impressive. Revenue has grown around 140% since 2014, the dividend has shot up 200%, and the share price has risen more than 50%.

The company is using a pro-forma figure to show the underlying progress of the business.That’s because last year’s headline figures were flattered by a profit of almost £124m, received from the partial disposal of Eddie Stobart Logistics. When the lorry business floated on the FTSE AIM market last year, Stobart Group reduced its holding, but still retains some shares in the operation.

Today, Stobart Group has identified its two “major growth divisions” as Aviation and Energy, where pro-forma underlying EBITDA grew almost 15% and 90%, respectively, during the period. The energy division is a biomass fuel provider, sourcing, processing, and transporting waste wood and other waste-derived fuels for third-party biomass plants across the UK. And the aviation division owns and operates London Southend Airport, operating flights under franchise agreements for other airlines, and ground handling operations at airports. There’s also a rail division that undertakes rail and non-rail civil engineering projects.

Positive outlook

Looking forward, Stobart said in the report it has made “strong commercial progress” in its core operating businesses during the period, which are both “well-invested and set for significant growth.”

However, the share price has been weak lately, and I reckon that could be because of general stock-market sogginess, the fact that the firm posted a headline loss today, and because the company is in the news because it has sued its former chief executive for alleged wrongdoing. A judge is due to start overseeing a trial at the High Court in London on November 12.

However, City analysts following the firm are expecting robust growth in revenue of more than 25% per year for the next two years, and a bounce-back in profits next year. Chief executive Warwick Brady is optimistic and said that after investing in infrastructure, the firm is “well placed to accelerate our commercial growth plans and demonstrate the value of the Group’s excellent operating businesses.”

I reckon the firm is out of favour with investors but, for me, the dividend is worth collecting while I wait for the waters to clear and for earnings to pick up their pace.

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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.

These 4 FTSE 250 dividend shares could provide an income for life

Royston Wild — Sat, 29 Sep 2018 08:08:00 +0000

In a recent article, I ran the rule over three exceptional FTSE 100 income shares that could provide a very handsome second income stream. This time, I’ve delved into London’s second tier share index to find four more stocks that could help you to make a fortune.

A tasty selection

Dividend yields at Britvic may not be the biggest on the market — the readings for the years to September 2018 and 2019 stand at 3.4% and 3.7%, respectively — but those seeking reliable payout growth year after year can do a lot worse that to buy into the drinks leviathan.

Consumer spending may sometimes be volatile, but fast moving consumer goods (FMCG) manufacturers with star labels are better equipped to ride out such troubles. Britvic certainly falls into this category, thanks to its much-loved brands such as Robinsons, J2O and Pepsi, products that have helped earnings continue rising in recent years despite broader economic pressures in some of its markets.

Another brand beauty

AG Barr is another FTSE 250 share whose revered drinks labels such as Irn Bru are also expected to keep driving profits northwards for the foreseeable future.

The popularity of these labels was laid bare in latest financials this week in which AG Barr declared that revenues rose 5.5% in the six months to July, to £136.9m. This was despite a multitude of problems in the period, namely the “Soft Drinks Industry Levy implementation, reformulation, extremes of weather and CO²shortages, in addition to a dynamic consumer, customer and macro-economic environment.”

A 2.2% yield for the year to January 2019 may look a little low, but the probability of strong and sustained dividend growth still makes it a great pick, in my opinion.

Box clever

Having said that, those on the hunt for giant yields today may want to consider buying into Tritax Big Box instead.

Under real estate investment trust rules, the business is told to pay out 90% of profits to its shareholders in the form of dividends. In an era where the fast-growing internet shopping phenomenon is driving demand for so-called big box logistics facilities, chances are that Tritax Big Box should continue building dividends year after year.

For the current fiscal year, the 12 months to December, this results in a chubby 4.6%. I’m convinced that Tritax Big Box’s best days are ahead, and I’m backing it to pay handsome returns to its shareholders in the years to come.

The 7%+ yielder

The final share I’m looking at is the biggest yielder of all: Stobart Group, a FTSE 250 stock that boasts an 7.4% dividend yield for the 12 months to February 2019.

The business disappointed investors this week with news that its rail and energy divisions have underperformed in the year to date. The update didn’t prompt intense selling activity by the market, and I’m not surprised. After all, the support services giant’s long-term profits outlook remains robust.

Indeed, Stobart’s latest statement underlined the brilliant profits picture for its aviation division in particular, as passenger numbers passing through London Southend Airport jumped 37% year-on-year from March to August. And the gangs of travellers are set to increase once Ryanair pitches up at the aviation base in the spring, and easyJet expands its operations there.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Britvic. The Motley Fool UK has recommended AG Barr and Tritax Big Box REIT. 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 brilliant 6%+ yielder that I’d buy before October (and one that I’d sell)

Royston Wild — Fri, 21 Sep 2018 07:00:20 +0000

The last 12 months has proved to be something of a nightmare for loyal investors in Walker Greenback (LSE: WGB). The share price has shrunk by around three-quarters in the period amid a series of disappointing market updates.

Trading performance is unlikely to have got any better since the home furnishings firm updated shareholders during August. Indeed, I am expecting slew of fresh horrors when it releases half year numbers on October 10.

More nerve-racking releases

Last month the AIM quoted company declared that “trading in the half year continues to reflect the difficult marketplace,” with sales of its branded products having dropped 5.7% during the six months to July.

The West London firm had also shocked the market with a fresh profit warning just a week earlier, warning at the time that “new information on the potential profit contribution from [a] large licensing agreement” would see full-year profit before tax “fall materially short of the board’s expectations,” at between £9.5m and £10m.

As if this wasn’t enough, Walker Greenbank advised it was viewing the critical autumn period “with renewed caution” as trading troubles had intensified in July following a brief improvement, with orders in the year-to-date slumping below expectations.

Cheap but chilling

The question now is whether the low, low forward P/E ratio of 6.1 times now fully bakes-in the probable scale of any further problems. I believe not, and expect additional frightful commentary in the months ahead. The City is currently predicting a 27% earnings slide in the 12 months to January 2019, a figure I can see being downgraded (along with the expected 3% earnings rise in fiscal 2020).

A jumbo prospective dividend yield of 6.3% through to the end of next year isn’t enough to draw me in either. I see additional scope for Walker Greenbank’s share price to slide some more.

Yields rise to around 8%

In fact, I reckon Walker Greenbank shareholders may want to consider selling the business before that potentially-disastrous trading update and snap up some shares in Stobart Group (LSE: STOB) instead.

The boardroom shenanigans at the FTSE 250 firm have continued to dominate the financial newswires and overshadowed fresh news of strong trading at the support services business. I’m expecting another robust set of numbers when interim results are released on October 24.

In July, Stobart confirmed that it remains on track to hit the 5m-passenger-per-year landmark at London Southend airport by 2022, as well as its objective of freighting more than 3m tonnes of renewable energy fuel each year by this date. What’s more, it also repeated its goal of “realising value through disposal of our non-operating assets to support the dividend.”

Reflecting this drive to bolster the balance sheet, the City believes Stobart will be able to lift the dividend to 18.5p per share in the year to February 2019, despite an anticipated 84% profits fall. Moreover, the projected 96% earnings rebound predicted for fiscal 2020 supports estimates of a 19.1p reward.

These anticipated windfalls produce meaty yields of 7.6% and 7.9% respectively. And I am tipping yields at Stobart to remain impressive as the company makes good progress on its growth plans.

A forward P/E ratio of 45.7 times is expensive on paper, but in my opinion the firm is worth every penny.

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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.

4 sizzling FTSE 250 dividend stocks yielding up to 8%

Royston Wild — Thu, 21 Jun 2018 08:00:15 +0000

The FTSE 250 is jam-packed with exceptional dividend shares. Stobart Group (LSE: STOB), which has trebled the annual dividend over the course of the past three years, is one such stock investors need to check out on the back of its stunning yields.

Payout growth is expected to slow markedly this year, an anticipated 18.5p per share dividend predicted for the 12 months ending February 2019, up slightly from the 18p reward forked out last time around. However, the yield still stands at a formidable 7.3%.

And things get even better for fiscal 2020, the anticipated 19.1p dividend nudging the yield to 7.5%.

In years gone by, Stobart has been able to light a fire under dividends thanks to a flurry of asset sales. And while further disposals may just be around the corner, this is not the only reason to believe the support services business will have the financial firepower to keep offering knockout dividend yields.

I have spoken before about the exceptional earnings potential afforded by its role as operator of London Southend airport. Its outlook received an additional shot in the arm last week after it was announced Irish low-cost carrier Ryanair would be opening a base at the site with a view to launching maiden flights from the summer of 2019. Needless to say I remain bullish about Stobart’s possibilities here.

The boardroom upheaval at the firm may be pretty unedifying as the fallout surrounding the departure of former chief executive Andrew Tinkler this month worsens. But I prefer to concentrate on the brilliant growth strategy of the company’s Aviation and Energy divisions, which make it worthy of its princely forward P/E ratio of 48.1 times.

Motoring along nicely

Those seeking giant yields for less may want to have a look at Hastings Group (LSE: HSTG) instead.

The car insurance colossus has a bright earnings outlook thanks to the rate at which it is pulling customers away from its major competitors. This quality helped the number of in-force policies climb 10% in the 12 months to March, to 2.67m, a result that helped gross written premiums surge 16% to £942.2m.

Hastings’ last financial update put its share of the motor insurance market at 7.4%, up 70 basis points from a year earlier. And the company is investing heavily to bulk up its workforce and improve its online platform to keep the customer grab in business.

Handsome earnings growth has allowed Hastings, like Stobart, to lift dividends at an excellent pace over the past three years (up 473% during the period, in fact). And an expected continuation of this trend through to the close of next year underpins predictions of extra payout expansion. Last year’s 12.6p per share reward is predicted to rise to 14.1p in 2018 and 17.8p for 2019, meaning yields stand at 5.5% and 7% for these respective years.

Intense competition may be discouraging many from investing in the motor insurance sector right now. But Hastings has proved itself more than capable of thriving in this environment, and thus it deserves a higher forward P/E ratio than its current reading of 11.5 times, I believe.

Greetings goliath

Card Factory (LSE: CARD) is suffering from the effects of constrained consumer spending power at the moment and this is reflected in its ultra-low prospective P/E ratio of 10.6 times.

I reckon this is a very-appealing level upon which to pile into the cards and balloons retailer, though. Although like-for-like sales fell 0.4% during the three months to April, this was still a pretty respectable result given the tough comparatives of a year earlier, and especially in the current environment.

Once the current stormclouds abate I am confident that Card Factory’s store expansion programme — it plans to add another 40 shops to its existing UK estate of 925 during the current fiscal year alone — should deliver brilliant profits and thus dividend expansion.

In the meantime, City analysts are forecasting dividends of 15.5p and 16.5p in the years to January 2019 and 2020 respectively, figures that yield a staggering 7.9% and 8.4%. Earnings might be lumpy for a little while but Card Factory’s cash flows should prove robust enough to keep payouts rolling northwards.

Another 8% yielder!

Bovis Homes Group (LSE: BVS) is another dividend hero trading far too cheaply at current prices right now.

It’s fair to say that conditions have become much, much tougher for the housebuilders since the EU referendum as the political and economic maelstrom has intensified.

Still, while demand has undoubtedly softened (and certainly so over the past 12 months) the outlook for the likes of Bovis remains strong as, quite simply, there are not enough homes to go around, a scenario that is keeping purchases of new-build properties pretty robust. Indeed, the average private sales rate per site per week is up 6% to 0.52 during the period spanning January 1-May 23, it announced recently.

While the builders may struggle to command the same sort of prices for their homes in this environment, there is certainly no barrier to the business still recording strong earnings growth — indeed, City analysts are actually forecasting double-digit earnings expansion through to the close of 2019.

And the number crunchers are expecting Bovis to honour its commitment to pay special dividends as a result. Consequently, a reward of 101.8p per share is anticipated for 2018, and a payment of 102.6p for 2019. This means the FTSE 250 star sports giant yields of 8.4% and 8.5% for these respective periods.

At current prices, Bovis can be picked up on a forward P/E ratio of 12.7 times. This, allied with the prospect of the firm serving up market-mashing yields long into the future, makes the business a splendid pick for both value and income investors today.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of Card Factory. 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.

I’d buy this FTSE 100 takeover target AND this 7.7% yielder today

Royston Wild — Mon, 14 May 2018 12:45:51 +0000

Having long been a fan of Smurfit Kappa (LSE: SKG), it comes as little surprise to me that the paper-based packaging powerhouse has come into the crosshairs of a potential suitor.

The FTSE 100 goliath has been approached by International Paper in recent months and has rejected two takeover offers thus far, the last of which at the back end of March valued Smurfit Kappa’s shares at around €37.54 apiece.

The Dublin company said at its AGM earlier in May that its US rival’s proposals had been “unanimously rejected… on the basis that they entirely fail to value the Group’s true intrinsic business worth and prospects.” This is unlikely to be the end of the matter, however, and all signs point to Smurfit Kappa’s resolve being tested again.

Profits jumping

Latest trading details also released this month underline why the Footsie firm is the apple of International Paper’s eye. It reported a 22% uplift in earnings before interest, tax, depreciation and amortisation (EBITDA) during January-March, to €340m, while its EBITDA margin jumped 2.7% in the quarter to 15.7%.

And trading has remained robust since. “Trading in the second quarter remains very encouraging,” it commented, before adding: “We are excited about our prospects in the short, medium and long-term and expect our 2018 EBITDA to be materially better than 2017.”

This confidence shouldn’t come as a shock as a supply shortage in Smurfit Kappa’s major markets maintains strong volumes and ever-improving margins.

The packaging giant hasn’t had the best of it in recent years as rising input costs have weighed. However, with the company having cracked the problem of how to pass these extra expenses on, the business is expected to bounce back with profits rises of 28% and 3% in 2018 and 2019 respectively.

And these forecasts make Smurfit Kappa exceptional value for money, the firm sporting a forward P/E ratio of 14.6 times as well as a corresponding sub-1 PEG reading of 0.5. What’s more, chunky dividend yields of 2.6% and 2.7% for 2018 and 2019 respectively provide an extra sweetener.

The 7%+ yielder

While I think there’s plenty to get stuck into over at Smurfit Kappa, those seeking chunkier near-term dividends may want to give Stobart Group (LSE: STOB) some attention.

Thanks to the financial fruits of its long-running disposal problem the FTSE 250 firm has been able to offer share pickers yields that smash those of the broader competition, with dividends having trebled during the past five years.

And with additional asset sales in the offing, Stobart is predicted to lift the dividend again in the year to February 2019, to 18.5p per share, even though earnings are predicted to dip 84% year-on-year. This means investors can enjoy a colossal 7.7% yield.

Moreover, with profits expected to rebound 96% in fiscal 2020, the dividend should increase again to 19.1p, in turn nudging the yield to 8%.

A forward P/E ratio of 45.1 times may appear too toppy for many. But I reckon the rampant progress Stobart’s aviation and energy divisions are making means it is worth such a premium, while those mountainous dividends offset much of the pain as well.

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Legal & General Group isn’t the only Neil Woodford dividend stock yielding over 5%

Edward Sheldon, CFA — Thu, 10 May 2018 09:45:03 +0000

Today, I’m looking at two dividend stocks that are owned by Britain’s best known portfolio manager, Neil Woodford. Both stocks currently yield over 5%. Could these stocks help you boost your dividend income stream?

Legal & General Group

Woodford is clearly bullish on the prospects for Legal & General (LSE: LGEN), as at the end of March, the company was the third-largest holding in his Equity Income fund with a weight of 4.9%. Personally, I share his enthusiasm towards the stock, as I believe it’s one of the best dividend stocks in the FTSE 100 index today.

Legal & General is a well-managed company with significant expertise in retirement solutions, investment management and insurance. I particularly like the prospects of its retirement solutions arm. The company has specific expertise in the ‘bulk annuity’ market, specialising in taking defined benefit pension schemes off the balance sheets of corporate clients in exchange for a premium. The market for this, both in the UK and the US, is massive, and LGEN looks well placed to capitalise. Last year, it completed £3.4bn worth of UK pension transactions.

From a dividend-investing perspective, it has considerable appeal. The company has established a strong dividend track record over the last eight years, lifting its payout from 4.75p per share for FY2010 to 15.35p per share for FY2017 and City analysts expect the payout to keep growing in the years ahead. At present, analysts forecast a dividend of 16.3p for this year which equates to a yield of 5.8% at the current share price.

Yet despite Legal & General’s attractive prospects, its valuation remains low. Currently, the shares can be picked up on a forward P/E of just 10.3. That’s a bargain, in my opinion.

Stobart Group

Another dividend stock that Neil Woodford owns is Stobart Group (LSE: STOB). This is an infrastructure and support services business. It owns and manages a range of key infrastructure sites and operates business divisions that deliver critical support services to the energy, aviation and rail sectors. At the end of March, it was the 14th-largest holding in his Equity Income portfolio with a weight of 2.2%, indicating that the fund manager is bullish on its prospects.

Stobart this morning released full-year results for the period ending 28 February. Revenue jumped 87% to £242m, driven by the acquisition of Stobart Air, while underlying EBITDA soared from £34.4m to £135.2m, boosted by the sale of Eddie Stobart Logistics. The group declared a dividend of 18p per share, which at the current price, translates to a yield of a huge 7.3%. Is Stobart worth buying for its high yield then?

One thing to note about the dividend, is that the high current payout is related to asset disposals. The group has said it is planning to use property asset disposals to support the dividend until 2022, at which point the payout should be supported by income from its aviation, energy and rail operations.

While City analysts do expect another large payout next year, personally, I’d be a little hesitant about investing in Stobart for its dividends right now. I prefer to see more sustainable payouts that are well covered by earnings and operating cash flow, as opposed to those supported by asset disposals. As a result, if picking a 5%+ dividend stock today, I’d choose Legal & General over Stobart.

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Edward Sheldon owns shares in Legal & General Group. 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.

2 dividend giants to buy before the ISA deadline

Royston Wild — Sun, 11 Mar 2018 11:00:23 +0000

Today I’m looking at two dividend greats to consider stashing in your stocks and shares ISA before the 2017/18 cut-off date.

Bullion beauty

As I’ve argued before, in the current climate, having exposure to gold through mining stocks could be a very wise decision.

You may well have insurance on your car, your house, your life. So why not extend this to your shares portfolio? Bullion is considered the ultimate ‘store of value’ asset so that, if everything else goes to hell in a handcart, investors can avoid having to suffer a total washout.

Gold has fallen out of favour more recently and the World Gold Council announced recently that global gold-backed exchange traded funds (ETFs) held 2,393.4 tonnes of the metal as of the end of February, down 5.1 tonnes month-on-month.

But there remains plenty of macroeconomic and geopolitical uncertainty to keep precious metals well bought in the medium term at least. Donald Trump’s efforts to start a global trade war have helped gold to vault back above the $1,330 per ounce marker in recent days, and who would rule out further gains as the turbulence in the White House rumbles on, the Brexit standoff between Britain and the EU continues, and fears of frothy share markets persist?

There are several decent gold stocks that investors can buy, but for dividend chasers, Centamin (LSE: CEY) may be considered the best of the bunch.

Supported by a predicted 40% earnings rise in 2018 the Egypt-focused business is expected to pay a dividend of 9.4 US cents per share, resulting in a meaty 4.6% yield. And although a 4% profits drop is estimated for next year, the payout is expected to edge to 10.8 cents, a projection that creates a giant 5.2% yield.

If realised, this year’s projected dividend would be the second time in a row that Centamin has cut the dividend, the company having sliced 2017’s reward to 12.5 cents from 15.5 cents a year earlier. However, with costs stabilising and production rising — output of 580,000 ounces is predicted for 2018, up 6.5% from last year’s levels — I expect dividends to rise again in the not-too-distant future.

Keep on trucking

Stobart Group (LSE: STOB) is another big-paying dividend share investors need to check out today.

A stream of asset disposals has provided the financial firepower for the infrastructure and support services star to light a fire under dividends in recent times, and with profits expected to keep booming through to the end of next year, City analysts are expecting Stobart to keep on paying plentiful rewards.

An 18p per share payment is forecast for both of the years to February 2019 and 2020, up from an estimated 17.5p for the year just passed. And as a result, share pickers can enjoy a monster 7.6% yield through to the close of next year.

The FTSE 250 firm may not be the toast of value chasers, however, thanks to its gigantic forward P/E multiple of 63.7 times. Still, I would argue that Stobart’s ambitious plans for its Energy division, allied with the ambitious plans it has for London Luton Airport, makes it worthy of consideration despite its eye-watering rating.

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2 FTSE 250 dividend stocks yielding 7%+ that I’d buy with £2,000 today

Alan Oscroft — Thu, 08 Mar 2018 16:30:19 +0000

Companies often make positive noises about dividends that might be under pressure, but it’s rare that we get what amounts to almost a five-year guarantee. But that’s what we appear to have from Stobart Group (LSE: STOB), with its forecast dividends set to yield 7.4% this year and 7.7% next.

That’s despite a drop in EPS on the cards this year, and predicted earnings not coming close to covering the projected payouts.

In a trading update Thursday, Stobart said: “Its strategy is to use disposals from its Infrastructure and Investment divisions to support the dividend to 2022, at which point the dividend will be supported through income from its growing operating divisions; Aviation, Energy and Rail.“

The company, which has gone through significant restructuring since its early trucking days, now owns and operates London Southend and Carlisle Lake District Airports — and it’s seen a 25% rise in passengers at Southend during the year.

Volume targets for its Energy division are expected to be achieved during 2018, and the company says it is “on track to deliver EBITDA targets on rail and civil engineering projects,” which will help support its aviation business.

Airline expansion

On top of that, Stobart has revealed an interest in troubled airline Flybe Group, and while there’s been no firm move towards an acquisition yet, Stobart has confirmed it is considering bidding for the company as part of a consortium. Flybe shares climbed by around 25% when the news emerged.

If you buy Stobart shares now, you’ll be buying into a long-term story that’s really only just getting started and might well have a very rosy future ahead of it. Current valuations are hard to quantify, but there’s unlikely to be any shortage of cash, and the firm’s faith in its dividend is reassuring.

I see Stobart as a buy-and-forget stock right now.

Oversold

When I look at Bovis Homes Group (LSE: BVS), I see another big dividend payer whose shares appear to be unfairly overlooked.

Bovis did go through a bad patch and lost a fair bit of customer confidence, but under a new boss and the implementation of a turnaround plan, we’re looking at forecasts for a return to earnings growth this year after two years of falls. Analysts are predicting a 37% EPS gain for the current year, with a further 16% pencilled in for 2019.

With 2017 results, delivered on 1 March, chief executive Greg Fitzgerald said: “In 2018, we will deliver a controlled increase in volume, continue to build upon our high level of customer service, drive profitability, and complete our balance sheet optimisation.“

And though the firm saw a fall in profits, the average selling price rose by 7%, and year-end net cash soared by 275% to £144.9m.

Dividend

Crucially, the dividend was lifted 6% to 47.5p per share, for a yield of 4.1% on the current share price of around the 1,170p level.

And in 2018, the company will be embarking on a plan to return total special dividends of £180m over the three years to 2020. That’s equivalent to around 134p per share, and should boost income very nicely in 2018 and beyond.

The total forecast for this year of 98p would provide a yield of 8.4%, rising to 8.8% if 2019 predictions come good.

P/E multiples dropping to around 10 look too cheap for a company generating these levels of cash and paying such big dividends.

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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.