Are you looking for exciting smaller-cap opportunities rather than boring old FTSE 100 companies? Here are five from the FTSE 250 and the FTSE Small Cap that are offering very attractive dividend yields, and which could suggest strong share price growth to come:
If you’re looking for a great potential dividend, look no further that the 7.2% forecast for Ladbrokes (LSE: LAD) after the shares fell 21% in the past year to 103p. With the the mooted 2015 payout not expected to be covered by earnings, there’s cause for caution, even if an 11% EPS rise expected for 2016 would improve things for that year’s predicted 7% yield. But it’s all down to the firm’s longer term potential, so how’s that looking?
Well, it looks uncertain right now after CEO Jim Mullen, in a Q1 update delivered today, said “I will complete my review of the wider business quickly and I will present some of the principal changes that I intend to make, in June, earlier than planned“, but that’s a dividend worth watching.
Shares of troubled construction company Kier Group (LSE: KIE) have recovered since the start of the year, but they’re still down 7% over 12 months to 1,633p. But we do have two years of dividend growth forecast, with yields of 4.7% and 5% forecast for this year and next.
The firm is building up some impressive projects, and has just been named the preferred bidder for a £170m regeneration development in the Ram Quarter, in Wandsworth, London, and I see no real risk to those attractive dividend prospects.
Shares in KCOM Group (LSE: KCOM) have climbed 20% since January’s low, and we’re looking at forecast dividend yields of between 5.7% and 6.4% between now and March 2017, on a price of 94p. A recent pre-close statement told us that “trading remains in line with market expectations“, so I really don’t see any justification for KCOM’s low share price right now. Dividend cover is perhaps a bit thin at around 1.5 times, but the firm’s future in fibre broadband looks enviable.
Are there any great undiscovered dividends to be had from insurance companies? The 6% yield forecast for Amlin (LSE: AML), on a share price of 468p, looks pretty tasty, and it should be covered around 1.4 times. The risk is that it that could be rebased in the same way as others in the sector, and with earnings expected to drop this year that can’t be discounted. But forecasts have been stable for some time, and we could be looking at a neglected bargain.
City of London
City of London Investment Group (LSE: CLIG) is up 36% over the past 12 months to 348p, but even after that we still have a forecast dividend yield of 6.9% for the year to June 2015, upped to 7.5% on 2016 forecasts. Cover would be stretched, so how’s the company doing? In its latest quarterly update, the company reported a 5% rise in funds under management, to $4.2bn, so there doesn’t seem to be any pressure on the dividend.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended KCOM Group. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.