A top FTSE 250 dividend stock I’d buy and hold for the next decade

Royston Wild scours the FTSE 250 (INDEXFTSE: MCX) for terrific income shares to buy now and hold for an age.

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In a recent article I scoured the FTSE 100 for terrific income shares that could provide you with a healthy income over the coming years.

Switch down to London’s second-tier share index and you can find plenty of income heroes here too. Indeed, the dividend star that I discuss here is in great shape to deliver titanic shareholder rewards over the next 10 years at least: I’m speaking about recruitment giant Hays (LSE: HAS).

Overseas units hitting record highs

Hays is a share that I have been championing for years on account of its brilliance in overseas markets. And I’m delighted to say that the FTSE 250 business is still going from strength to strength.

Full-year trading details released last week showed net fees sped 12% higher on a like-for-like basis during the 12 months to June, to £1.07bn, a result that powered pre-tax profit 17% higher to £238.5m. And this was thanks in part to net fees in Germany hitting record tops of £276m in the year, up 16% on an underlying basis and now making it Hays’ largest single market (responsible for more than a third of operating profits).

Net fees in Australia blew 14% higher on a comparable basis in fiscal 2018, while in Hays’ other overseas territories, these jumped 17% on a comparable basis. In total the company reported record net fees in 22 of its markets across the globe, progress that is more than offsetting the impact of difficult conditions in its former core territory of the UK and Ireland (net fees here rose 2% in the period).

The results reflect in part the huge amounts the recruiter has been investing in its people and its systems, Hays increasing its worldwide office count by seven as well as extending around 20 of its existing offices.

And the business isn’t done yet — it plans to hike its total headcount by a further 3% to 5% in the current quarter alone, with growth targeted specifically in its growth regions like Germany, France and the US.

Stunning yields, brilliant value

Reflecting its bright earnings outlook and strong balance sheet — operating cash flow rose 12% last year to £243.5m — the firm elected to hike the ordinary dividend to 3.81p per share, up 18% year-on-year, and to raise the special dividend by an identical percentage to 5p.

And unsurprisingly, City analysts are predicting further progress in the current fiscal year, a 9.8p per share reward currently anticipated and a figure that yields an impressive 5.1%.

The number crunchers anticipate a 7% earnings rise this year. And I suspect I’m not alone in thinking that profits should continue their long march northwards in the years ahead as Hays bulks up its global operations. I believe that a forward P/E ratio of 15.9 times represents great value considering the company’s brilliant growth credentials.

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.

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