A look at the top of the optimizer in DividendMax reveals some interesting names that merit investigation. Many of the high yielders such as Resolution, Admiral, Carillion, SSE and TalkTalk have already been covered as a dividend of the week, but due to the dynamic nature of the optimizer new names are emerging all of the time and merit investigation. Two stocks in particular caught my eye and both appear to have good dividend cover for the high yield. They are two stocks in completely different sectors, neither of which is in particular favour right now.
The first company is Kier Group, which has a 12 month trading range of 1099p to 1449p and is currently trading at 1145p. Its turnover is nearly 4 times its market cap and it trades on a PE of around 8.5x. It has a solid dividend track record and has not made a cut for some time. It has increased the dividend 5 times in the past 6 years and maintained the interim dividend at 21.5p. The final results are expected on the 12th September where another maintained dividend or even a very small increase can be expected. There is little doubt that Kier are operating in a difficult sector right now, but this is more than priced into the shares.
The second company is Bloomsbury Publishing, who published the Harry Potter series. It has safely negotiated the move from physical books to eBooks and looks set to grow its business into the new world of publishing by exploiting global opportunities including the widening use of the English language and the appetite for eBooks as the hardware for such material increases in quality and quantity. It is trading at under 10x forecast earnings and in the middle of its trading range for the past year of 102p to 146p. It currently stands at 123p. Its dividend track record is excellent and has increased for the past 5 years. It goes ex-dividend for 4.56p on the 28th August; not a bad yield just from the final dividend.
Both of these stocks are interesting but I believe that Bloomsbury has come through the difficulties posed by the internet and the ebook challenge and has embraced new technology positively. It has approximately 15% of its market Cap in cash and has been making acquisitions of prestigious titles over the years, one example being Wisden, the cricketers Almanack.
Although, it clearly faces further challenges, Bloomsbury has used the Harry Potter money wisely to build a diversified publishing group and embrace new trends. It has a strong balance sheet and some interesting new titles due in the current year. Dividend of the week is Bloomsbury Publishing.