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2 ‘under the radar’ dividend stocks I’d buy right now

Shares of Town Centre Securities (LSE: TOWN) are trading modestly higher at near to 300p after the company released its annual results today. It said its performance “belied the market backdrop of economic and political uncertainty following the Brexit referendum.”

Its outlook statement was bold. It said: “Increases in rental income and also in capital value [have] proved the pessimists wrong. We expect this to continue.”

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Attractive NAV discount and yield

Town Centre Securities (TCS) reported a 0.6% increase in net asset value (NAV) to £191.1m, or 359p a share. So the shares are currently trading at a discount to NAV of over 16%.

Operating profit (before property valuation movements) increased 1.6% to £14.7m, underlying earnings per share (EPS) rose 6.7% to 13.2p and the dividend was lifted 4.5% to 11.5p. This gives a yield of 3.8%, rising to just over 4% on forecasts of a 12.1p payout for 2017/18. You’ve probably spotted that dividend cover (1.15) is on the low side, but this is because of payout rules for Real Estate Investment Trusts (REITs), such as TCS, as well as FTSE 100 giants like Land Securities and British Land.

TCS continues to intensively manage its portfolio, disposing of mature properties and reinvesting capital when it sees “the right opportunities.” It also has “extensive” development opportunities, while its growing car parks portfolio — £3.9m operating profit (up 11.8%) — provides useful diversification.

History of outperformance

Founded in 1959, TCS has a fine history of growing NAV and dividends over the long term. It has outperformed the FTSE All Share REIT index and forerunner FTSE All Share Real Estate market over one, three, five, 15 and 25 years. Shareholder returns over the quarter-century period are represented by a compound annual growth rate of 10.9% versus 8.3% for the index.

I see this £159m FTSE SmallCap firm as a great dividend stock for the long-term. And I’d be happy to buy a slice of the business right now, with the discount to NAV of over 16% and a prospective dividend yield of over 4%.

Attractive P/E and yield

Bloomsbury Publishing (LSE: BMY) is another FTSE SmallCap dividend stock that looks very buyable to me today. At a current share price of 160p, the company is valued at £121m. It offers a forecast dividend of 7p for its financial year ending 28 February 2018, giving a prospective yield of 4.4%.

In a Q1 trading update in July, the company reported revenues up 19% year-on-year (13% at constant exchange rates) and the board said it expects profit for the full year to be in line with its expectations. The analyst consensus is for EPS of 12.2p, giving decent dividend cover of over 1.7 times and putting the company on an undemanding price-to-earnings ratio of 13.1.

Impressive growth

Bloomsbury may be best known as the publisher of Harry Potter but it’s far from being a one-trick pony. For example, in its non-consumer division, its digital resource business is growing revenue fast from a low base.

Overseas growth is also progressing impressively, with 61% of sales now originating from customers outside the UK. Bloomsbury Australia grew revenues by 50% (26% at constant exchange rates) last year and revenues in Bloomsbury India grew 46% (30% at constant exchange rates).

The undemanding P/E, nice dividend yield and growth opportunity from digital resource and international lead me to rate the shares a buy today.

5 best buys

While I'm keen on TCS and Bloomsbury, I believe blue-chip stocks should provide the core of a dividend portfolio. With this in mind, the Motley Fool's experts have been scouting the market to identify the very best FTSE 100 businesses with the ability to deliver top-notch returns through thick and thin.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended British Land Co. 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.