This 8%+ yielder could supercharge your retirement income

This big yielder could make you a mint. Click to find out how.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Ongoing work to turbocharge its position in the online publishing segment should deliver exceptional profits growth over at Reach (LSE: RCH).

As I mentioned previously, the acquisition of Northern & Shell’s Express and Star titles should prove a game-changer for the Docklands-based company. Just last month the firm — which was known as Trinity Mirror until the aforementioned acquisition — said that the purchase should support an 11% improvement in like-for-like revenues in the 26 weeks to July 1. Digital revenues at the Express and Star exploded 25% in the first fiscal half, it added.

Without the contribution of its newly-acquired titles sales, at Reach would have ducked 8%, it was noted.

The positive contribution of these digital operations is not the only cause for celebration, however. An improvement in national print advertising budgets has helped drive turnover in the past couple of months. What’s more, the publisher can also look to the significant cost synergies delivered by the tie-up with Northern & Shell’s old titles.

Yields leap to almost 9%

The pressures in the ad market are expected to cause earnings at Reach to flatline in 2018. But the City’s broker army does not expect this to prove a barrier to further strong dividend growth, so strong are the company’s cash flows.

Thus current forecasts point to a 6.1p per share dividend this year, up from 5.8p in the prior period and yielding a brilliant 8.5%.

The good news doesn’t stop here either. With profits expected to pound 10% higher in 2019, the full-year reward is predicted to rise to 6.4p. This means that the dividend rings in at an even more impressive 8.9%.

Usually companies with big dividend yields and dirt-cheap earnings multiples (in the case of Reach, it has a forward P/E ratio of 2 times) are considered no-go areas for investors.

As my colleague Roland Head previously pointed out, the discrepancy in this case can be caused by fears over the size of the firm’s pension deficit. However, predicted dividends over at Reach are protected between 5.9 times and 6.2 times by anticipated earnings through to the close of next year, leaving plenty of room for current projections to be met.

Throw Reach’s undemanding valuations, massive dividend yields and recovering revenues into the mix, and I reckon the company is a pretty compelling selection for income chasers today.

The 6%+  yielder

I also reckon Go-Ahead Group (LSE: GOG) should be attracting the glances of dividend investors today.

The number crunchers are predicting that the FTSE 250 business will pay a 120.3p per share dividend in the year to July 2019, matching the anticipated reward for the prior year. This figure yields a huge 6.6%.

While the market is expecting the company to endure a 20% earnings slip in the current year, I reckon this could be due for upgrades when the firm releases full-year financials on September 6. In May it advised that profits should exceed prior expectations when it reports for fiscal 2019, driven by efficiency improvements.

While there is some uncertainty facing its UK rail operations in the medium term, this is baked into Go-Ahead’s low forward P/E ratio of 9.9 times. Besides, I reckon the prospect of surging international contracts in the years to come makes the transport titan a compelling selection today.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

View of Tower Bridge in Autumn
Investing Articles

Why wait? I’d buy FTSE 100 shares now before the next stock market rally!

Our writer explains why he'd snap up what he sees as bargain FTSE 100 shares now rather than waiting in…

Read more »

Investing Articles

Is it time for me to change my tune about Rolls-Royce shares?

This Fool has steered clear of buying Rolls-Royce shares. But after its recent performance, he's reconsidering his stance. Here's why.

Read more »

Investing Articles

Aviva share price: 3 reasons to consider buying for 2024

The Aviva share price is still lower then when I bought some nearly a decade ago. Here's why I'm thinking…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

These 2 shares could bank me £328 a month in second income

Jon Smith runs through two FTSE stocks that have above-average dividend yields that could pay out a generous second income…

Read more »

Stack of one pound coins falling over
Investing Articles

This passive income plan is simple – but could earn me thousands!

Christopher Ruane explains how putting a fiver a day to work in the stock market might help him earn thousands…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on

After record profits, are Lloyds shares a buy, sell, or hold?

As Lloyds pulls in pre-tax profits of £7.5bn, boosts its dividend, and continues to repurchase shares, are the company’s shares…

Read more »

Investing Articles

NatWest shares: is a once-in-a-lifetime opportunity on the way?

Should investors get ready for a unique opportunity as the UK government plans to sell off its NatWest shares later…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

3 charts that indicate this FTSE 100 stock is a once-in-a-decade passive income opportunity

The dividend yield on Unilever shares is at a 10-year high. And Stephen Wright also sees positive signs for the…

Read more »