The first of these is FTSE 250 pub group Greene King (LSE: GNK). Shares in this firm have fallen by about 35% over the last two years. Tough trading conditions and rising costs have put pressure on profits, which have fallen from £191m in 2015/16 to £163m in 2017/18.

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

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

Do the numbers add up?

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

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

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

High risk, big potential profit

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

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

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

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

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

Worth a punt?

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

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

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

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

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

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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.

Owing to its colossal capital expenditure — keeping the country’s electricity grid can’t be done on the cheap, of course — the FTSE 100 business isn’t immune to the occasional earnings slip. Indeed, a 1% drop is forecast by the City for the year ending March 2019.

Still, the reliable nature of energy demand means that National Grid can look forward to solid earnings growth over a longer-term time horizon. To illustrate this point, the company is expected to roar back with an 8% bottom-line improvement in fiscal 2020. And this solid outlook, allied with its supreme cash flows, gives rise to expectations that its progressive dividend policy has much further to run.

Last year’s predicted 45.6p per share payment is anticipated to rise to 47p this year and to 48.3p next year. This means yields clock in at a formidable 5.5% and 5.7% for fiscal 2019 and 2020, respectively.

The fairest of them all?

Investors on the hunt for chunky dividends should also give Trinity Mirror (LSE: TNI) more than a cursory glance.

Brokers have been busy upgrading their earnings forecasts in recent weeks and, where a fractional earnings dip had been estimated for 2018, the City is now predicting a 1% profits rise instead. In addition, the tiny earnings upswing anticipated for next year has also received a shot in the arm and a meatier 7% advance is now likely, or so say the number crunchers.

These plumper estimates aren’t a surprise given that Trinity Mirror’s switch from print to digital publishing continues to power along nicely.

The London company announced this week that an 11% fall in like-for-like publishing print revenue between January 1 and April 29 caused comparable sales across its Publishing arm to drop 9% in the period. However, a 2% uptick in like-for-like digital publishing sales shows that the massive investment Trinity Mirror has made in digitalising the business is paying off.

And the acquisition of the Express and Star newspapers from Northern & Shell — should the deal sail past the scrutiny of the Competition and Markets Authority, of course — promises to give digital revenues another hefty shove. Like-for-like digital sales across these publishing assets leapt 40% year-on-year in the period ending April 29.

Those 7% + yields!

The good news for income chasers is that this bubbly earnings outlook, aligned with Trinity Mirror’s exceptional cash flows, is expected to keep propelling dividends skywards as well.

A 6.1p per share reward is predicted for 2018, up from 5.8p last year, and a 6.3p payment forecast for 2019. These figures create jumbo forward yields of 7.1% and 7.4%, respectively. Such projections are also looking pretty robust as well because they are covered by expected earnings around 6 times through to the conclusion of next year.

As my Foolish colleague Ian Pierce recently pointed out, the fall of the print market still casts a pall over the publishing giant’s profits outlook. But I would argue that a forward P/E ratio of 2.4 times more that factors in the threat created by this segment.

All things considered, I reckon Trinity Mirror, like National Grid (which also trades on a cheap forward P/E ratio of 14.7 times), is a white-hot dividend pick right now.

The post Should you buy this FTSE 100 dividend stock or this 7% yielder? appeared first on The Twelfth Magpie.

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• Are National Grid shares entering a new valuation era in the FTSE 100?

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.

Heading for trouble?

Shares of specialist logistics group Connect Group (LSE: CNCT) were down by 6% at 56p at the time of writing this morning, taking their total decline over the last year to 55%.

The company operates parcel group Tuffnells, while its Smiths News business has a 55% share of the UK newspaper distribution market. But Smiths is struggling with declining newspaper volumes, while Tuffnells generated a loss during the first half of the year.

This 16% yield should be cut

Connect’s revenue fell by 3.4% to £766.5m during the period, while operating profit dropped 37% to £12.4m. Earnings per share for the half year to 28 February fell by 42% to 3.1p.

This was just enough to cover the interim dividend, which was held unchanged at 3.1p. If this payout is maintained at the end of the year, then the stock would offer a forecast yield of 16% at current levels. But in my view this is very unlikely. I think the final dividend is almost certain to be cut, probably by at least 50%.

Why I’d sell

This could be a great turnaround buy. Even if the dividend is reduced by 75% it would still be attractive at 4%. And the current forecast P/E of less than 5 leaves plenty of room for a re-rating.

However, I’m leaning towards selling my shares. I’m concerned that net debt of £83m could become a problem if profits fall further. And I also think that this investment probably falls into the ‘too hard’ category. I just don’t have the insight needed to understand what the firm can realistically achieve with its assets. So I’d rate the shares as a sell.

Making good progress?

Another company whose outlook I find hard to understand is newspaper publisher Trinity Mirror (LSE: TNI).

This stock trades on an even more extreme valuation than Connect Group. Adjusted earnings are expected to remain stable this year, but Trinity Mirror has a forecast P/E of 2.3 and a prospective yield of 7.1%.

Interestingly, this dividend does appear to be well supported by earnings, with a dividend cover ratio of 5.9 times. However, there’s a reason for this, as I’ll explain.

So what’s the problem?

The recent acquisition of Express Newspapers boosted investors’ hopes that this business may be able to return to growth.

But from a financial point of view, the big risk for shareholders is the pension scheme. At the end of 2017, Trinity Mirror had pension liabilities of about £1.9bn, and a pension deficit of £377m.

To try and reduce this deficit, Trinity Mirror has agreed to pay £43.8m each year into the pension for 10 years from 2018. Based on the group’s 2017 pre-tax profit of £122m, that’s around one third of annual profits.

This is why the dividend is so low, compared to earnings. Most available cash is being paid into the pension.

Chief executive Simon Fox is managing a difficult balancing act in order to keep everyone happy. But with newspaper sales continuing to fall, I’ve no idea whether he’ll be able to keep it up. That’s why I’m staying away from this special situation.

The post Two 7%+ yields I wouldn’t touch with a bargepole appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Roland Head owns shares of Connect 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.

Indeed, for 2017 the company reported revenue growth of 96% to $89.5m, up nearly 100% year-on-year thanks to higher oil prices and increased production. Adjusted earnings before interest tax depreciation and amortisation increased around 4,850% from $0.4m to $19.8m and net cash generated from operations increased tenfold to $30m.

At the end of the period, the firm reported $41.3m in cash and no debt, giving management plenty of financial headroom to pursue Amerisur’s planned development programme in 2018. The company is targeting 14 fully-funded exploration and development wells during 2018, as it looks to boost its oil reserves. Three wells targeted for development in the near term could yield as much as 25m barrels of oil, although, at this point, 25m is just a rough estimate.

Black gold 

Amerisur badly needs this additional resource. At the beginning of April, shares in the company slumped after it revealed reserves at its flagship Platanillo field had declined to just 12.8m barrels, down from 15.1m barrels in 2016, after production of 1.8m barrels of oil during the period. These numbers imply that the remaining life of the prospect is just seven years.

Still, the company is well funded to develop other wells, and that’s exactly what it plans to do in 2018. Not only should the shares benefit from additional exploration activity, but Amerisur will also undoubtedly benefit from higher oil prices and lower operating costs. 

The commissioning of the Oleoducto Binacional Amerisur pipeline, which allows the group to transport its oil through a pipe, rather than individually trucking each load, helped push down operating costs to $18.6/bbl in 2017, from $24.9/bbl in 2016. With oil at $60 and operating costs below $20/bbl, the firm is now booking a cash netback over $40/bbl, and as long as oil prices remain where they are today, this should continue throughout 2018. 

City analysts seem to agree. Consensus suggests earnings per share of 1.5p for 2018, giving a forward P/E of just 10 today.

Debt reduction 

As well as Amerisur, I’m also positive on the outlook for small-cap Trinity Exploration (LSE: TRIN). Trinity is another cash-rich producer which has value on its balance sheet, as well as in the ground. 

At the end of March 2018, Trinity’s cash balance had increased to $12.2m, up from $11.8m at year-end. Meanwhile, the group continued to reduce its outstanding liabilities under its agreement with the Board of Inland Revenue and Ministry of Energy and Energy Industries by $1.7m during the period to $4.2m.

These figures indicate to me that Trinity is on track to becoming a substantial cash cow. With liabilities falling, and the cash balance rising, the company is set to be debt-free by the end of the year. This cash flow should allow the group to scale up exploration drilling; something management is already working on. 

Commenting on today’s results, CEO Bruce Dingwall announced “the company has scaled up operations with the recommencement of drilling” providing “further scope for the company to build on the upward production trajectory.“

Overall, as the year progresses with further drilling activity and cash generation, I believe shares in Trinity could have much further to go.

The post Are these 2 small-cap value stocks worth buying this April? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Amerisur Resources. 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 with a hearty 5.5% dividend yield still on offer, an underlying business that is still profitable, and solid growth opportunities, should contrarian investors take a chance on Inmarsat?

I would urge caution. On one hand, the group still makes a fairly compelling investment case as its revenue is growing, up 5.4% last year to $1,400m. And its largest segment, maritime solutions, may finally be turning a corner with Q4 sales returning to year-on-year growth. Furthermore, over the medium term its pan-European satellite broadband solutions for aircraft is a potential goldmine if air passengers fork over gobs of cash to stay connected during their flights.

However, there are also plenty of red flags. For one, margins are compressing as management ups investment in the aviation division in anticipation of future growth. Of course, this could work out wonderfully, but competitors have launched a lawsuit against the tender that awarded Inmarsat this contract, it’s far from clear whether future demand will ever meet lofty expectations, and the cash-intensive nature of this division means it needed to cut cash outflows elsewhere to pay for it, which led to the dividend cut.

Then there is the group’s high and rising net debt, which increased to $2,078m at year-end as net cash flows turned negative to the tune of $166m. This net debt is still only 2.8 times EBITDA, but with profits moving backwards and cash outflows increasing, Inmarsat had better hope its big bet on European in-flight WiFi pays off. This may yet turn out to be the case, but with plenty of red flags and a non-bargain valuation of 14 times forward earnings, I’m giving Inmarsat a wide berth for now.

Can management turns these rags into riches? 

A more interesting high-yield option for contrarians may be newspaper publisher Trinity Mirror (LSE: TNI). The group currently offers investors a massive 7% dividend yield that is covered nearly four times by earnings.

Of course, there is the minor problem of print newspaper readership stuck in terminal decline. And Trinity Mirror hasn’t been, and probably never will, be able to solve that one.

That said, management has found a way to keep its papers highly profitable even as revenue careens downwards. And the key is snapping up other newspapers and ruthlessly cutting costs, which boosted operating margins to a respectable 20% last year.

Its most recent deal was the £127m purchase of the owner of the Daily Express. Management expects it can slash operating costs at the newly acquired papers by some £20m a year, which in addition to the £35m in EBITDA they already generate, could make the deal another great one.

These sorts of deals won’t stop revenue falling as advertisers continue to move online, but if management can figure out how to monetise its market-leading 33.4m unique monthly online visitors, it could actually return to growth as newspaper revenue shrinks. There’s still a long way to go, but for investors who believe Trinity Mirror’s high-grade management team can pull off another coup, its shares could be a bargain at under 3 times forward earnings.

The post One 7%+ dividend yield I love and one high-yield falling knife I’d avoid appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Ian Pierce 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.

While market conditions remain extremely tricky for the likes of Trinity Mirror (LSE: TNI), I believe stock investors may want to take a look given the pace at which the publisher’s digitalisation programme is progressing.

The publishing group was making headlines on Monday after announcing that revenues slipped 13% in 2017 to £623.2m, a result that pushed adjusted pre-tax profit 8% lower to £122.5m. The company attributed this to the “weak print trading environment.”

Despite this, its financial strength still enabled it to hike the full-year dividend to 5.8p per share last year from 5.45p in 2016. It expects the balance sheet to keep on improving, and in a promising omen for future dividends advised: “The strong cash flows generated by the group provide resilience and financial flexibility to invest in the business, to grow dividends and over time meet pension obligations.”

Eye-popping yields

City brokers certainly expect Trinity Mirror — which is about to rebadge itself as Reach following the acquisition of Express Newspapers last month — to maintain its progressive dividend policy even though further earnings dips are predicted.

A 1% earnings-per-share reversal is predicted for 2018, yet this is not expected to prove a barrier to the print powerhouse raising the dividend to 6p. As a consequence share pickers can enjoy a 7.7% yield.

The good news does not end here, either, a predicted 6.4p per share for 2019 delivering an 8.2% yield.

The Square Mile is expecting Trinity Mirror’s turnaround strategy to result in a modest 1% earnings rebound next year. And given the rate at which digital revenues are growing (like-for-like publishing digital revenues jumped 7% last year), allied with the the success of its cost-cutting exercises, I expect profits to beat a strong and sustained northwards path.

A forward P/E ratio of 2.3 times, allied to its gargantuan yields, makes Trinity Mirror worth a serious look in my opinion.

Fun in the sun

While you’re here I’d like to bring your attention to another potentially-explosive income star that could make you a fortune in the years ahead: On The Beach Group (LSE: OTB).

The online holiday giant hiked the dividend to 2.8p per share in the year to September 2017 from 2.2p in the prior period, and City analysts are expecting stratospheric earnings growth to keep driving shareholder rewards skywards.

And so in fiscal 2018, helped by a predicted 25% profits advance, the dividend is expected to rise to 3.6p per share. Moreover, for the following year, a 4.7p dividend is predicted, supported by an estimated 22% earnings improvement.

While subsequent yields may stand at just 0.6% and 0.8% for this year and next respectively, the rate at which On The Beach is likely to hike dividends beyond the medium term should make investors sit up and take notice. Holiday bookings are likely to keep moving online at a strong pace, and On The Beach’s superior platforms are likely to see it continue grabbing share from its competitors.

A forward P/E ratio of 26.1 times clearly isn’t much to shout about. But a corresponding PEG of 1 suggests On The Beach is actually a bargain based on current earnings projections.

The post Should you pile into this 8% yielder today? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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.

It plans to purchase Northern & Shell’s publishing assets for a total purchase price of £126.7m. This is made up of an initial cash consideration of £47.7m, deferred cash consideration of £59m payable between 2020 and 2023, and the balance of £20m to be made through the issue to the seller of 25.8m new ordinary shares.

In addition to the total consideration, Trinity Mirror will make a one-off cash payment of £41.2m to the Northern & Shell Pension Schemes. A recovery plan through to 2027 has also been agreed, with total payments of £29.2m.

Purchase rationale

Trinity Mirror believes that the purchase of the assets, which include the Daily Express and Star, will improve its print and digital editorial propositions. This will be done through a fall in duplication, as well as through the sharing of content. It is also hoped that the combination will provide advertisers with a large, high quality audience which includes a combined digital audience of 234m monthly unique browsers.

There are also expected to be annualised cost synergies of £20m by 2020, with a significant amount of them set to be achieved in 2019. The deal is due to be materially earnings enhancing in the first full year of ownership, while a more robust revenue mix could allow higher cash flows to be generated over the medium term.

The acquisition is also expected to create a more resilient entity. Circulation revenue is forecast to represent nearly half of the enlarged company’s revenue, which places less reliance on print advertising. This seems to be a positive outcome, since the opportunity for growth in digital advertising may prove to be greater than for print advertising in future years.

Investment potential

Alongside its announcement of the acquisition, Trinity Mirror also released a trading update on Friday. It showed that the company is on track to deliver performance in 2018 that is in line with expectations. It also expects to report adjusted results for 2017 which are marginally ahead of consensus forecasts.

The company has, of course, endured a rather mixed recent period. Like many publishing groups, it has found the transition towards a more online-focused business model to be challenging. As such, its financial performance has come under pressure at times in recent years. So too has its share price. It is down 42% in the last five years and has been on a downward trend in recent months.

Due to its disappointing share price performance, the company now trades on a price-to-earnings (P/E) ratio of just 2. This suggests that it offers a wide margin of safety and could deliver improving share price performance in future. While today’s acquisition may not be a game-changer for the stock, it could prove to be a positive catalyst on its overall performance in the long run.

The post Is Trinity Mirror plc a buy after surging on £200m Express and Star deal? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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

Growing out of a slump

Trinity is suffering from declining newspaper circulation volumes. Declining sales volumes mean that papers are less attractive to advertisers and the group’s chief income stream, advertising revenue, has been steadily declining for some time now.

Still, despite these pressures, Trinity remains profitable and highly cash generative. Since the end of 2011, the company has reduced net debt from £211m to approximately £22m and initiated a dividend in 2014 for the first time since the financial crisis. Analysts believe the firm can earn 34.5p per share, and 2017 and 34p in 2018 as earnings from the group’s online properties begin to pick up the slack from traditional income streams.  

As part of management’s drive to stave off the decline, it is also currently in talks to acquire certain assets of Northern & Shell, the owner of the Daily Express. Current speculation suggests that the company could offer £127m for these assets with the consideration paid over several years. It’s likely any merger would result in substantial synergies between the two entities, improving Trinity’s outlook, although it would have to receive the approval of its pension fund trustees before getting the green light. The group currently has a pension deficit of around £400m. 

Deep value 

Even though the outlook for Trinity is mixed, I believe that the shares are an attractive prospect because of the group’s rock-bottom valuation.

Indeed, at the time of writing the shares trade at of forward P/E of just 2 and yield 8.7%. This valuation indicates that Trinity is priced for the worst case scenario and any improvement in trading could lead to a substantial re-rating of the shares. That’s why I think this is one of the best value Investments around.

Refocusing 

Trinity is one of my favourite value investments and Eckoh (LSE: ECK) is one of my favourite growth stocks. 

This company offers payment software for call centres, and over the past six years, its revenue has more than tripled as customers flock to its offering. However, despite revenue growth, profits have been unpredictable, which is why management decided to restructure the business. A trading update published today hints that these efforts are beginning to pay off. 

Management’s decision to focus on large strategic accounts has resulted in six substantial UK contract wins occurring in the second half of its fiscal year across multiple service offerings. According to the trading update, one of these contracts is with “one of the UK’s largest mobile network providers.“

These contracts should mean the company is now well on its way to hitting analyst forecasts for growth. Currently, the City is expecting the group to report a net profit of £4m for fiscal 2018, rising to £5m for fiscal 2019. These forecasts translate into earnings per share of 1.6p and 2p respectively giving a 2019 P/E of 20.7 and a PEG ratio of 0.9.

The post 1 value stock and 1 growth stock on my watchlist appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Rupert Hargreaves owns no 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.

When I’m asked which dividend stocks I like best for the long term, I’ll typically choose FTSE 100 ones.

But it’s the end of the year, and that’s always a good time to take an different look, so here are three alternatives that I think could be very good payers in the years to come.

Recovering miner

Mining and commodities superstar Glencore (LSE: GLEN) has been through such tough times that some were even thinking the unthinkable — that a company as big as this might even go bust.

The commodities cycle can be tough, and the latest one was close to being a killer. But Glencore has come bouncing back, and is scheduled to return to profit this year with a pre-tax forecast of £5.2bn — and that would rise to £5.8bn on 2018 forecasts.

At the interim stage this year, the company reported a 68% rise in EBITDA over the same period a year previously — and, crucially, net debt came down by a further $1.6bn to $13.9bn since the end of 2016.

Commodities prices are on the upswing, Glencore’s cash is starting to flow again — and the dividend is set to come back. Admittedly the predicted 2017 yield is a modest 2.4%, but that would almost double to 3.9% on 2018 forecasts — and it would be more than twice covered.

On forward P/E multiples of only around 12, Glencore could be one of the dividend stars of 2018.

Where there’s bricks…

I’ve been bullish on the UK’s housebuilding companies for years, and though the sector’s recent meteoric growth is sure to slow, I’m still seeing a big bag of bargain stocks paying seriously handsome dividends.

Today I’m dipping into the FTSE 250 and picking Bovis Homes Group (LSE: BVS). I really don’t care that the big recovery is slackening off or that some folks are panicking about the UK property market in the wake of the Brexit vote, for one simple reason — we’re still in the midst of a chronic housing shortage, and short-term shenanigans aren’t going to change that.

In its most recent update in November, Bovis told us it expects “to have a net cash position of at least £100 million as at 31 December 2017” as trading is in line with expectations and its market remains strong — the company’s targeted completions for 2017 were fully sold at the time.

With the ordinary dividend expected to rise by 20% in 2018 to yield better than 4%, and special dividends of around 134p per share set to be paid in the three years to 2020, why wouldn’t you buy?

There’s still life in it

Perhaps my most contrarian pick is Trinity Mirror (LSE: TNI), the newspaper group that has been given up as dead for years — but the company itself apparently hasn’t heard the rumours of its demise, and keeps on churning out profits.

We have a couple of flat years for EPS forecast, but as I pointed out when I last examined the company, most of the great British public are still taking newspapers to work rather than carrying Kindles and the like. And they still will — despite the lure of online everything, a disposable roll of paper that only costs pennies retains an enormous attraction.

With the shares punished on P/E ratings of only around two, forecast dividend yields are up to 8%. The company itself thinks its shares are so cheap it’s hoovering them up itself.

The post My top 3 dividend stocks for 2018 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.

An extreme turnaround?

Newspaper group Trinity Mirror (LSE: TNI) owns the Daily Mirror and a raft of regional papers. But the group is struggling to deal with the shift from print publishing to online.

Because of its uncertain future, the shares currently trade on a forecast P/E of just 2.1, with a prospective yield of 7.9%. Is this a true bargain, or a short cut to investing disaster?

No surprises today

A trading update on Friday suggests that the company is holding its own, at least for now. Full-year profits are expected to be in line with expectations. This seems to confirm analysts’ forecasts for earnings of 34.3p per share.

However, the shift away from print shows no sign of slowing. Trinity confirmed that like-for-like group revenue is expected to fall by 9% during the fourth quarter. Print advertising sales are expected to be down by 21%, while circulation revenue is expected to fall 7%.

Although Trinity Mirror’s net debt has fallen to a level that no longer concerns me, the group’s £406m pension deficit is a risk. The company has now agreed to pay £44m per year into its pension scheme for the next 10 years, up from £36m previously.

A two-part plan

Chief executive Simon Fox has cut costs relentlessly and continues to do so. Online growth is also strong, with revenue from online advertising expected to rise by 20% during the final quarter.

The second part of Mr Fox’s plan is more ambitious. He is in talks to acquire publishing rival Northern & Shell, whose titles include the Daily Express, Daily Star, and OK! Magazine.

By combining the two groups’ operations, Mr Fox would hope to cut out a big chunk of costs. Together with online growth, this could create a viable long-term business.

Risk and potential reward both seem high to me here. I’m still undecided about whether to invest.

A simpler choice

One turnaround stock which looks more straightforward is Bovis Homes Group (LSE: BVS). New chief executive Greg Fitzgerald appears to be doing a good job of rebuilding profits after a difficult period where sales — and build quality — fell below expectations.

Mr Fitzgerald now expects the group to end 2017 with net cash of at least £100m and to deliver “a significant improvement in profits for FY 2018”.

City analysts’ consensus forecasts suggest that this will result in earnings of 91.9p per share in 2018, putting the stock on a forecast P/E of 12.3. However, what’s more interesting is that analysts seem to expect Bovis to start returning surplus cash to shareholders next year.

Forecasts I’ve seen suggest a total dividend payout of 98.4p per share in 2018, giving a forecast yield of 8.7%. Based on the group’s recent cash generation, this looks affordable to me.

Although the outlook for the housing market is unclear, new house sales appear to remain strong. Mr Fitzgerald also has the opportunity to increase profit margins to industry-average levels, which could boost profits even if sales are flat.

In my view, Bovis Homes could be an attractive buy at current levels.

The post These unloved 8%+ yielders could help you retire a millionaire appeared first on The Twelfth Magpie.

More reading

• Could Andy Burnham boost this beaten-up FTSE 250 stock that’s crashed 80% in 20 months?
• What could an Andy Burnham government mean for these FTSE 250 stocks?
• How could ‘Prime Minister’ Andy Burnham boost these FTSE 100 and FTSE 250 shares?
• Down 81% in 2 years, is this beaten-down FTSE 250 stock now in bargain territory?
• Having fallen up to 60.9%! Are these dirt cheap bargain UK shares to buy?

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.