I reckon that what marks out the best investors from the rest is successfully finding reliable dividends. Here are three big payers with results coming up in February:
Soft and fluffy
Shares in home furnishings retailer Dunelm Group (LSE: DNLM) have lost 25% in the past 12 months. But they’ve still almost trebled over ten years, and I think what we’ve seen is the common reaction when a growth share starts to slow. Dunelm has posted strong earnings rises for a number of years, but there’s a 7% EPS fall forecast for the year to June 2017, and that’s enough to send a lot of short-termers running for the hills.
A trading update in January reported a further decline in the homewares market, and it helped nudge the shares down a bit further, but the firm did say “we believe that we are continuing to outperform the market as a whole“, and year-on-year sales growth is up 2.8% for the half.
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I think what the bears are missing is that Dunelm has been steadily building up its dividend, and is maturing into what I see as a very nice income investment. Dividends are progressive, growing ahead of inflation, and are very well covered by earnings. With a 3.8% yield predicted for the year to June 2017 and 4.2% the year after, I’ll be keenly awaiting first-half results on 8 February.
Emerging markets
I’ve had my eye on Ashmore Group (LSE: ASHM) for some time now, seeing what I think is a bargain in this emerging markets investing specialist. By the end of November the shares had tumbled, but they’ve stabilized since then, and though a forward P/E of 17 might look a little demanding, I think a dividend yield of 5.8% tips Ashmore into ‘buy’ territory.
First-half figures should be released on 9 February, and we’re set to see a fall in assets under management of $2.4bn, with investment performance contributing $1.7bn of that drop. But part of that was down to the strengthening dollar and fallout from the US election, and chief executive Mark Coombs told us that asset prices actually strengthened in December, adding that “accelerating GDP growth, and low allocations all support the expectation of further strong performance in 2017″.
The risk is that the barely-covered dividend might not be maintained, but Ashmore generates a lot of cash, and I can see the company wanting to keep the payments going — I’ll be looking for cash flow and dividend news on the ninth.
Property income
Income from property rental can be lucrative, often more so if it’s commercial property. It’s risky going it alone, but investing in a Real Estate Investment Trust (REIT) can be far safer.
One I’ve been looking at is Primary Health Properties (LSE: PHP), which invests in the healthcare property market — and that’s a very safe one. The company had a portfolio worth £1.2bn at the half-year results stage at 30 June, and it’s acquired a few more properties since then — and 99.7% of its properties are let, which is a very good figure.
The firm’s loan-to-value ratio stood at a little over 50%, so it’s not saddled with too much debt and yet there’s enough gearing there to enhance profits relatively safely.
Oh, and there’s the dividend — set to yield 4.7% for the year just ended, with results due on 16 February, and forecast to rise to 5% by 2018.
