I believe that these two FTSE 250 dividend dynamos could well explode during July. Here’s why.
Silver star
Hochschild Mining (LSE: HOC) may not be the flavour of the month right now, the stock sinking in June on the back of deteriorating silver values.
But I remain bullish on the company’s long-term earnings prospects despite the current weakness in commodity values as I believe the broad collection of geopolitical and macroeconomic troubles swirling around should support demand for so-called store-of-value assets like precious metals.
And in the meantime, I believe second-quarter production results scheduled for July 18 could give Hochschild’s beleaguered share price some fresh zip. The digger declared last time out that “better than expected contributions from Inmaculada and Pallancata” helped total attributable production swell to a record first-quarter total of 9.8m silver equivalent ounces, up 14% year-on-year.
Another solid result for Q2 could prompt a re-rating of the stock should the firm upgrade its full-year target of 38m attributable silver equivalent ounces.
City analysts are expecting earnings at Hochschild to detonate in the medium term, and this supports expectations of surging dividends. Last year’s payout of around 3.35 US cents per share is anticipated to rise to 3.5 cents this year and again to 4.5 cents next year.
Subsequent yields may stand at a handy-if-unspectacular 1.4% and 1.8% for 2018 and 2019 respectively. That said, the rate at which Hochschild is likely to continue growing dividends still makes it an excellent pick for income seekers today, on the back of its excellent profits outlook and fast-improving balance sheet (net debt fell 45% in 2017 to $102.8m).
The BIG yielder
Hochschild’s elevated forward P/E ratio of 31 times wouldn’t deter me from investing today, although this may prove to be rich for many investors.
Some classic value-seekers may be more interested in recruitment specialist Hays (LSE: HAS) instead, a stock which deals on a P/E ratio bang on the accepted value benchmark of 15 times (and below) for the new year beginning July.
This multiple is created by a predicted 9% earnings advance and follows a forecast 14% bottom-line improvement for the 12 months ending June 2018. What’s more, these estimates lead to predictions of even more special dividends being forked out.
Thus fiscal 2017’s 7.47p per share total payout is anticipated to rise to 7.88p in the closing period, and again to 9.6p in fiscal 2019, the latter prediction leading to a smashing 5.3% dividend yield.
As I noted when chronicling Hays’ most recent trading statement in April, the FTSE 250 giant continues to make terrific progress in foreign markets. In the first quarter, its international businesses (collectively responsible for in excess of three-quarters of total net fees) saw those net fees rise 15% year-on-year, despite tough comparatives.
I reckon another strong financial statement in the coming weeks — fourth-quarter numbers are slated for July 13 — could provide Hays’ share price with a solid boost.
