I spend a whole heap of time scouring the FTSE 250 for top-notch dividend shares to present to you. I always go in looking for stocks that investors will feel comfortable enough to buy and hold for a minimum of about five years, but there’s plenty out there whose bright futures extend far beyond such a timeframe.
Take Dechra Pharmaceuticals (LSE: DPH), for example. It’s fallen seriously out of favour in recent weeks amid concerns of rising competition in the animal healthcare segment, the company reporting in early September that “the veterinary market is seeing faster change than at any time in its history.”
Medicines demand for comfort and agricultural animals is heading through the roof, as underlined by Dechra reporting another double-digit-percentage revenues rise (at constant currencies) last month.
And I think that you can rely on the healthcare mammoth (which has spent a fortune to boost its geographical handprint and bolster its drugs pipeline through shrewd acquisitions) to keep impressing, despite the increased competition thanks to its fizzy M&A programme. Indeed, earlier this month, Dechra shelled out £37.8m on Laboratorios Vencofarma do Brasil, a specialist in developing products for livestock care in the fast-growing regions of South America.
It’s no surprise, to me at least, to see City brokers forecasting another hefty earnings rise in the current year, the 12 months to June 2019. A 12% increase is predicted and this leads to expectations that dividends will keep rising at an impressive rate, too — last year’s payout of 25.5p per share is forecast to rise to 28.2p, resulting in a yield of 1.2%.
This reading, or Dechra’s forward P/E ratio of 26.5 times, may not suit all investors. In my opinion, though, the probability that it will keep delivering strong profits and dividend growth in the years — nay, decades — ahead still makes it a terrific share to stock up on today.
Out of fashion
The investment community has fallen out of love with Superdry (LSE: SDRY) too, on account of less-than-impressive financials last time out.
The fashion brand declared earlier in October that unusually hot weather in Europe and the US has dented demand for its autumn/winter clothing lines and that, as a result, full-year profits would take a hit to the tune of £10m.
Stock pickers have been a little too quick to cast Superdry adrift, though, as its long-term profits outlook remains exceptional. It is investing vast sums in its product lines to increase the range of highly-desirable items that it supplies, while it also continues to spend heavily on expanding its global store network and improving its increasingly-critical online channel.
Like Dechra, Superdry is no stranger to lifting the dividend at a solid pace, and although a 6% profits drop is forecast for the year to April 2019, the annual ordinary payout is predicted to grow to 33p per share from 31.2p last year, resulting in a chunky 4.1% yield. Further special dividends may also be in the offing given the rate at which Superdry is churning out cash.
At current prices Superdry trades on a forward P/E ratio of just 9.2 times, and this makes it too good to miss in my opinion.
