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One 7% and one 5% yield I would buy today

The fear contagion currently washing across global share markets may have spread to the FTSE 250 in Friday business. But a solid set of trading numbers has enabled Victrex (LSE: VCT) to defy the gloom, and it was last dealing 1% higher on the day.

The polymer manufacturer declared that it has “made a strong start to its 2018 financial year,” adding that it has enjoyed “continuing positive performance in the Industrial business, offset by a slightly weaker performance in Medical.

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The business announced that, against weak year-ago comparatives, revenues had grown 41% between October and December to £78.7m. Meanwhile, sales volumes of 1,051 tonnes during the quarter represented a 30% year-on-year improvement.

Victrex put the stunning quarterly performance down to three significant factors: the benefit of currency hedges; the contribution of Zyex which it acquired last spring; and a significant uptick in volumes, thanks to a large consumer electronics order it had received during the period.

Excluding these items, our underlying momentum is broadly unchanged from the positive performance we saw in the second half of 2017,” the company said.

Giant yields

Victrex’s solid growth momentum, coupled with its abundant cash flows, has seen it emerge as a terrific income play over the past year. And I’m confident its stellar pipeline of new products should provide the fuel to keep paying out massive dividends.

The company ignited a fire under dividends last year — as well as hiking the ordinary dividend 15% in the 12 months to September 2017, to 53.8p per share, the plastics powerhouse also forked out a special dividend of 68p, taking the total to a monster 121.8p.

And City brokers expect further earnings growth — rises of 11% and 2% are forecast for fiscal 2018 and 2019, respectively — to keep the special payouts coming. Consequently, the yield clocks in at elevated levels of 5% through to the close of next year.

Now Victrex doesn’t come cheap with the firm changing hands on a forward P/E ratio of 19.9 times. But I believe its hot growth and dividend prospects make the business worthy of this slight premium.

The 7%-yielder

Share pickers on the lookout for clobbering yields must also give Marston’s (LSE: MARS) serious consideration, in my opinion.

The City is in agreement that the rising pressure on drinkers’ wallets, on top of a rising cost base, will continue to drag on earnings growth lower at the pub operator.

However, the impact of Marston’s’ estate restructuring drive, allied with the soaring popularity of its ales, will keep earnings to continue their northwards march. A fractional rise is forecast for the year to September and a 5% increase is predicted for fiscal 2019.

Hardly spectacular, I’d agree. But what these estimates do is support is predictions of extra dividend expansion. So last year’s 7.5p per share reward is expected to rise to 7.7p in the present period, and again to 7.9p next year.

Marston’s subsequently sports gigantic yields of 7.3% and 7.5% for this year and next.

The FTSE 250 business isn’t without its share of risk, clearly. But I believe a forward P/E ratio of 7.4 times is far too cheap given its proven resilience in challenging trading conditions. Indeed, like-for-like sales rose 1.1% during the 16 weeks to January 20, excluding weather-related disruption.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Victrex. 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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