You only have to look to the popularity of Game of Thrones or the never-ending stream of Marvel comics movies to understand just how much pop culture has come to embrace nerd culture. And just as consumers at large have found their inner nerd, I think income investors should learn to love tabletop gaming figure maker Games Workshop (LSE: GAW) and its 5.7% yielding dividend.
Games Workshop is the owner of the rights to the Warhammer and Warhammer 40K fantasy worlds that are fleshed out through books, video games, and the core tabletop games. Over the decades the company has built up an incredibly loyal fan base that buys these figures both online and at 460 retail locations scattered across the globe.
And a recent overhaul to the core products appears to have been enthusiastically embraced as constant currency sales rose 13.3% year-on-year in H1 to £62.7m. In the same period, operating profits rose a whopping 122% to £13.8m.
While this double-digit growth is very welcome for income investors, the main attractions should be the core group of loyal fans who buy the company’s new releases year after year. As long as the company continues to engage positively with these customers, it can rely on fairly reliable revenue streams over the long term.
Also attractive is the fact that the company currently pays out the vast majority of its earnings to shareholders since it has little need for big capital investments. In H1 this meant a 25p dividend for shareholders on earnings per share of 34p. With a 5.7% yield, a forward P/E ratio of only 11.7 and a very loyal customer base I believe Games Workshop is a share income investors will find easy to love.
A more mainstream money-spinner
A more conventional income option is industrial property REIT Hansteen Holdings (LSE: HSTN). The company’s shares currently offer up a 5% yield based on last year’s dividends, but should be in for a hefty special dividend in the coming quarters. This is because Hansteen has just sold its entire German and Dutch portfolio for €1.28bn. Net of debt payback and tax, this should leave some £650m to play with and investors should expect a good chunk of this to be returned to them.
But even after selling off its holdings in these two countries, the company is left with significant property in the UK and smaller portfolios in Belgium and France. The remaining assets in the UK are still quite attractive as they’re throwing off an 8.1% yield and have an ultra low vacancy rate of 7.7%.
One thing to keep an eye on is that the value of the company’s UK property is only £676m. This relatively small size combined with the asset sales in Europe suggest to me and other analysts that management could be setting itself up for a sale. If they can haggle for a premium similar to the 6% negotiated on the sale of German and Dutch assets, investors should be quite happy. And if there is no sale, investors will still have a hefty 5%-plus dividend yield. Either way there’s no reason to complain.
