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Legal & General Group plc isn’t the only Neil Woodford dividend stock I’d buy

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Those seeking brilliant investor returns in the years ahead need to pay close attention to Legal & General Group (LSE: LGEN).

The Footsie insurance giant is a favoured pick of fund manager Neil Woodford. It is placed second and third in terms of weighting in his Income Focus Fund and Equity Income Fund respectively, comprising a juicy 5.94% and 5.07% of each fund’s total (as of the end of January).

It isn’t hard to see why Woodford is backing Legal & General either. As I pointed out last time, the company continues to make splendid progress on both sides of the Atlantic on the back of helpful demographics, i.e. rapidly-ageing populations, in both the US and UK. These sympathetic conditions helped the Footsie firm note in December that its pipeline for pension risk transfer in these markets “is the largest it has ever been.”

Juicy yields

It has forged a reputation as a go-to pick for those seeking chunky dividend growth. And City forecasters are expecting the business, helped by a 15% earnings improvement, to have lifted the dividend again in 2017, to 15.3p.

They are predicting another rise to 16.2p in the current period too, even though earnings are expected to drop 5% year-on-year. Steps to improve the balance sheet saw the insurance leviathan’s solvency II surplus improve by £1bn during January-June, to £6.7bn, giving it the wiggle room to ride out any near-term profits turbulence and to keep hiking shareholder payments.

Consequently investors can bask in a monster 6.2% dividend yield.

The good news for income seekers does not end there either. Legal & General is expected to raise the dividend again in 2019, to 17.1p, meaning the yield steps to an even-better 6.6%. Earnings are likely to resume their upward path next year as well, a 7% advance currently predicted.

I’ve been a fan of this firm for some years now, and my confidence was given a shot in the arm when it advised in early December that it “continues to see great momentum in all its businesses in the year to date and has experienced particularly strong growth in recent weeks.”

Now is a great time to load up on the insurer, in my opinion, and particularly in light  of its ultra-low valuation, a forward P/E ratio of just 10.6 times.

The eventual 9%+ yielder!

Greetings card and celebration specialist Card Factory (LSE: CARD) is another share Neil Woodford is confident enough about to have splashed the cash on.

A combination of huge cost pressures and difficult retail conditions are expected to have nudged earnings 6% lower in the year to January 2018. However, helped by its expansion programme, things are looking rosy further out, and City boffins are predicting earnings rises of 1% and 4% during fiscal 2019 and 2020 respectively.

Now unlike in fiscal 2018, Card Factory is not in line to fork out another special dividend this year. But this should not cause alarm as a predicted 14.9p per share total dividend results in a mammoth 7.4% yield.

And the 18.6p per share payment forecast for fiscal 2020 moves the yield dial to 9.2%. I am convinced Card Factory is an income share to buy and to hold onto long into the future.

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What's more, with Card Factory, like Legal & General, carrying a rock-bottom valuation (a forward P/E ratio of just 10.6 times), I reckon it is too good to ignore right now.

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Royston Wild has no position in any of the 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.