With the FTSE 100 flipping either side of the 7,000 level and growth still an uncertain prospect, it’s no surprise that many investors are looking for high-yielding dividends these days. The FTSE’s top index has a number of great candidates, but what about some smaller companies? I’ve been looking over the FTSE 250, and and there are some intriguing possibilities there too:
Ladbrokes (LSE: LAD) shares are down 22% over the past 12 months to 107p, and that’s lifted the forecast dividend yield for 2015 to 7.3%. The danger is that earnings have been falling and the dividend would be barely covered by forecast EPS, but there is a recovery in EPS on the cards for 2016. And with the firm saying it’s focusing on “…growing internationally and further improving our digital offer“, are there good long-term dividend prospects here? I think there could be.
Shares in insurer Esure (LSE: ESUR) have also been tumbling, being pushed down further by a 12% fall in adjusted 2014 EPS, reported last month. The result is an 18% fall over a year to 221p, but the low price did give investors a 7.5% dividend yield. The same yield is forecast for 2015, and though cover will be weak the company will be keen to keep its dividend attractive at this early stage.
Carillion (LSE: CLLN) provides construction services and facilities management, and the construction industry is still under a bit of pressure. Carillion shares are down 9% to 330p over a year, but we’re looking at a potential dividend yield for this year of 5.6% from shares on a P/E of under 10. The yield is the lowest so far, but it’s more than twice covered and looks very safe. With 2014 results looking positive and a return to EPS growth on the cards, Carillion seems cheap to me.
Who’s Premier Farnell (LSE: PFL), you might ask. It’s an electronics and technology distribution and maintenance company, trading in more than 100 countries. Its 2014 results showed a modest fall in EPS, but the dividend was maintained for a 6.2% yield. With earnings forecast to start recovering this year after a few years of falls, we should see the dividend start to rise again. Forecasts suggest cover of a modest 1.4 to 1.5 times, but indicate yields of 5.8% and 6% this year and next on a price of 187p.
We’re back to construction again with Kier Group (LSE: KIE), a company that has lifted its dividend every year for the past five years and is forecast to do the same for the next two, against a background of strong earnings. Forecasts suggest 4.8% and 5% yields for this year and next on 1,609p shares, covered around 1.6 to 1.7 times. The first half showed a small fall in underlying EPS, but the interim dividend was boosted by 7% with revenue rising nicely. Kier is, to my mind, one of our better construction prospects, and well worth a closer look.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.