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Two cheap dividend stocks I’d buy in May

For those seeking great dividend stocks at tasty prices, I reckon books giant Bloomsbury Publishing (LSE: BMY) could prove just the ticket.

The London outfit saw revenues soar 19% between March and August, according to its latest trading update, to £62.7m. This was driven by strength at Bloomsbury’s core Consumer division, where blockbuster titles like its illustrated Harry Potter books helped drive sales 36% higher to £37.3m.

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But the publisher isn’t content to sit on cash cows like the spectacled wizard to drive revenues further down the line, Bloomsbury seeing revenues from its academic and professional digital resources double during March-August to £2m.

And via its Bloomsbury 2020 investment programme, the company is dedicating vast sums to build its position in the critical digital segment through the likes of Arcadian Library Online and Bloomsbury Popular Music.

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These factors are expected to see the bottom line recover from an anticipated 23% earnings fall for the year that ended in February. And City analysts are predicting a 1% dip in the present period before Bloomsbury bounces back with an 8% earnings rise in fiscal 2019.

And current forecasts make Bloomsbury splendid value at the minute, the company dealing on a prospective P/E ratio of 14.9 times, just below the benchmark of 15 times widely considered attractive value.

Furthermore, broker estimates also provide particularly good news for dividend chasers. An estimated 6.7p per share dividend for fiscal 2017 is expected to rise to 7p and 7.4p in the following two years, meaning Bloomsbury checks out with handsome yields of 4.1% and 4.3% for these periods.

Cash machine

Those seeking market-mashing dividend yields should also take a long look at Chesnara (LSE: CSN), in my opinion.

Like Bloomsbury, the life insurance giant is anticipated to endure earnings turbulence in the near term. In 2017 the company is expected to enjoy a 7% earnings rise before an 18% bottom-line slip transpires next year.

But as a side note, current projections leave Chesnara dealing on a mega-cheap forward P/E multiple of 12.9 times.

Despite the predicted profits pain however, the company’s excellent solvency position — not to mention its still-robust long-term growth outlook — mean Chesnara is still expected to keep dividends rolling higher. The company’s Solvency II ratio rose to 158% as of December from 146% a year earlier.

Chesnara has hiked dividends for 12 years on the spin, and this year is predicted to pay a 20.1p per share dividend, up from an expected 19.5p in 2016 and yielding 5.3%. And an anticipated 20.6p reward in 2018 yields a spectacular 5.4%.

The Preston business snapped up Legal & General Nederland in November 2016 for €160m, a move which is expected “to have a significant positive impact on the Economic Value of the group and will further enhance ongoing cash generation thereby supporting the continuation of our dividend strategy.”

And Chesnara’s healthy appetite for acquisitions could provide the ammunition for dividends to keep on climbing.

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Royston Wild has no position in any 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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