Have £2,000 to invest? An unknown but amazing growth stock with a fast-rising dividend

Royston Wild looks at a little-known dividend star that could make you a mint.

| 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.

The Vitec Group (LSE: VTC) isn’t one of those companies you’ve likely heard of, although chances are you’ve viewed the world through the lens of one of its cutting-edge products.

The business, you see, is an expert in the manufacture of broadcasting cameras and their associated hardware, not to mention the development of photography equipment for the general public. And the small-cap continues to make exceptional progress in both areas.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

Half-year results released in August showed group revenues boomed 11.2% during the six months to June, to £183.3m, and this gave adjusted pre-tax profit a whopping 24.4% year-on-year boost, the bottom line ringing in at a record £24.5m for the period.

It shouldn’t shock readers, therefore, that City analysts expect earnings to keep growing by double-digit percentages. An 18% rise is anticipated for 2018, and although a more modest 7% advance is predicted for 2019, I can see this figure being upgraded significantly as the months roll on.

There are a couple of reason why profits have stomped higher at Vitec in recent history. The steady stream of market-leading, premium-priced products that have been rolled out in recent months and years continue to strike a chord with its customers, the firm commenting in its latest release that a “significant number of market-leading new products launched at end of 2017 are selling well.”

Flash photography

You see, Vitec has its finger on the pulse of the latest trends which govern how broadcasters, independent content creators and photographers go about their business. For example, new products that have been developed in fast-growing areas like sports broadcasting and out-of-studio transmissions have simply flown off the metaphorical shelves.

The business isn’t just content to deliver exceptional organic sales, though, and it remains busy on the acquisition trail to keep profits bulging. Sating its well-publicised hunger for “carefully-targeted acquisitions in core and adjacent niche markets” Vitec splashed out on Rycote Microphone Holdings just last week for a fee that could eventually rise to £8.5m. The Stroud-based company manufactures noise reduction equipment for the audio capture market, giving Vitec the chance to sell complementary products to its clients.

And thankfully, the company has plenty of financial firepower to keep growing the size of the group. It is massively cash-generative and its debt pile continues to shrink, its net debt-to-adjusted EBITDA ratio falling to a meagre 0.7 times as of June from 0.9 times a year earlier.

A genuine dividend bargain

Its ability to kick out shedloads of cash, allied with its solid growth outlook means that City analysts are confident that Vitec can keep on raising the dividend at quite a pace. And so last year’s 30.5p per share reward is anticipated to step to 33.3p in 2018 and 35.4p in 2019, forward figures that yield a chunky 2.4% and 2.5% respectively.

A prospective P/E ratio of 16.9 times may not suggest that Vitec offers scintillating value for money. Its corresponding PEG reading of 0.9, below the accepted bargain threshold of 1, does however. And I reckon this low rating leaves plenty of room for further share price strength, its market value having already risen more than 40% over the past 12 months alone. I’d happily buy the camera colossus and hold it for years to come.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

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.

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 considered, so you should consider taking independent financial advice.

More on Investing Articles

Female florist with Down's syndrome working in small business
Investing Articles

2 promising penny stocks to buy on the dip

As stock markets continue to correct, I am hunting for oversold penny stocks that I think could help turbocharge my…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

I wouldn’t buy Bitcoin today. FTSE value stocks look much better value to me

Now looks like a promising time to buy UK value stocks, while Bitcoin still looks far too risky for me.

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The Rolls-Royce share price is below 85p. Here’s what I’m doing!

The Rolls-Royce share price has suffered this year. Trading for below 85p, this Fool decides whether this is an opportunity…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

4 dividend stocks to buy as inflation soars!

I'm hunting for the best dividend stock to invest in as global inflation soars. Here are several high-dividend-yield shares that…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

UK shares to buy now: 3 big fallers I’d snap up

Our writer thinks this trio of strong business performers could be attractive UK shares to buy now for his portfolio.

Read more »

Lady researching stocks
Investing Articles

Could a falling stock market help me get rich?

When the stock market falls, what does it mean for our writer's portfolio? Here's why it could be an opportunity.

Read more »

Hand holding pound notes
Investing Articles

Should I buy these two 12%-yielding dividend shares for my Stocks and Shares ISA?

Do these double-digit dividend yielders offer our author the right balance of risk and reward for his Stocks and Shares…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 reasons to buy Lloyds shares at 43p

Our writer outlines three factors that make him bullish on Lloyds shares, as well as one noteworthy risk facing the…

Read more »