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2 top dividend stocks I’d buy this February

The waves of risk aversion washing over global stock indices over the past week or so mean that the good news in Rank Group’s (LSE: RNK) latest trading statement has been washed out.

This gives savvy share pickers the opportunity to steal a march on the competition, however, and to pile into the FTSE 250 business ahead of the broader market.

The terrific progress Rank Group is making in cyberspace was underscored by recent news that digital revenues in the UK leapt 16% during the six months ending December, to £60.6m. Consequently operating profit here jumped 56% to £11.4m.

The strength of its exciting online operations allowed it to overcome issues like continued pressure on the high street (revenues across its venues dropped 1% in the period, to £317.5m), as well as the impact of new gaming duty laws on customer bonuses. And it allowed group operating profit before exceptionals to rise 14% in the six months to £41.7m.

Big yields

Rank Group’s positive first-half result gave it fresh juice with which to power up its progressive dividend policy — it hiked the interim reward by 8% to 2.15p per share. And City analysts believe there is much more to come in the near term and later on.

Although earnings are expected to flatline in the 12 months to June 2018, its positive long-term profits outlook — a 5% bottom-line improvement is forecast for fiscal 2019 — means that a full-year payment of 7.3p last time around is predicted to sprint to 8p in the current year.

With the payment expected to rise again in the following period, to 8.7p, yields for fiscal 2018 and 2019 stand at a delicious 3.6% and 3.9% respectively.

An added bonus is that these projections are actually looking pretty secure. They are covered 2 times by predicted earnings through to the close of fiscal 2019. And the gambling giant’s impressive cash generation (cash flows from operating activities leapt 19% during July-December to £61.9m) provides an extra layer of security.

Even bigger yields!

Like Rank Group, dividends over at Ibstock (LSE: IBST) are also expected to advance at an electrifying rate now and beyond, helped by a predicted surge in profits.

In 2017 the total dividend (assisted by a modest 1% earnings uplift) is anticipated to improve to 8.2p per share from 7.7p in the former period. As I say, payout growth is expected to pick up the pace from now onwards — a 14% earnings improvement in 2018 is expected to push the reward to 9.5p.

And next year the dividend, helped by an anticipated 10% annual profits jump, is predicted to rise to 11p in 2019. This means that yields for this year and next rock in at 3.9% and 4.5% respectively.

Ibstock carries a brilliant blend of above-average yields and exceptional security as well, with dividend coverage ranging from 2.1 times to 2.2 times through to the close of 2019.

The Leicestershire-based business saw revenues in its core UK marketplace increase 5% last year, with demand for bricks continuing to grow as 2017 progressed. And Ibstock is well placed to capitalise further on the gaping supply/demand imbalance once its new brick manufacturing plant hits full capacity later in 2018.

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What’s more, with both Rank Group and Ibstock dealing on dirt-cheap valuations - their forward P/E ratios ring in at 13.7 times and 11.7 times respectively - I reckon they are dividend giants too good to pass up on right now.

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Royston Wild owns shares in Ibstock. 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.