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Forget the State Pension: These 7%+ yield dividend stocks could help you retire in comfort

Today I’m looking at two high-yield stocks that I believe may also offer ‘under the radar’ growth opportunities.

The first company I’d like to consider is payment processor PayPoint (LSE: PAY).

You’re probably used to seeing this company’s yellow logo outside convenience stores and newsagents. PayPoint’s electronic terminals allow customers to use cash to pay their bills, top-up pre-paid mobile phones and drop off Collect+ parcels. It also operates a similar business in Romania.

What’s interests me about this business is the way it’s becoming embedded in the business model of convenience stores. The company now has terminals in 29,043 shops in the UK and Ireland, and 19,802 in Romania.

There’s obviously a risk that the number of ‘unbanked’ customers who pay bills with cash will fall. To address this, PayPoint is moving ahead with newer systems that provide a wider range of point-of-sale functionality.

For example, the firm’s flagship product, EPoS Pro now allows retailers to order stock electronically from wholesaler NISA. Sales reporting and inventory can be managed through an app.

I’m going to buy more

This business generated an operating margin of 25% last year on revenue of £213.5m. Net profit of £42.9m was backed by free cash flow of £48.8m, all of which was returned to shareholders.

The group continues to maintain a net cash balance, some of which is also being returned to shareholders via special dividends.

Looking ahead, the stock trades on a 2018 forecast price/earnings ratio of 15 with a prospective dividend yield of 8.1%. I already own this stock, but intend to buy more over the next few weeks.

Small company, big ideas

The next company I want to look at is Manx Telecom (LSE: MANX). As its name suggests, this is the main telecoms provider on the Isle of Man. But it also offers services to users off the island, including a specialist mobile roaming service and data centre solutions.

Today, the company announced the planned launch of a new mobile service, Goshawk. This will target customers with hearing loss and will be operated as a UK-wide virtual mobile operator.

Manx says that there are 11m people in the UK with hearing loss. So the potential target market could be quite large.

Dialling up a 7.1% yield

In the meantime, the group’s regular business appears to be performing quite well. Half-year results published today showed that pre-tax profit rose by 4.9% to £5.5m during the first half of the year.

Importantly for dividend seekers, the group’s cash conversion remained strong. Underlying operating cash flow was almost unchanged at £10.1m, and operating cash flow after exceptional costs rose from £5.4m to £8m. The group’s net debt of £64m is a little higher than I’d like to see, but it shouldn’t be a problem and is expected to fall later this year.

Underlying earnings were almost unchanged at 5.9p per share, while the interim dividend will rise by 5% to 4.1p per share. This performance suggests to me that Manx Telecom is on-track to hit analysts’ full-year forecasts for earnings of 14.1p per share and a 12p dividend.

This dividend looks safe enough to me. And with the shares trading on 12 times forecast earnings with a prospective yield of 7.1%, I’d have to rate this stock as a buy.

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Roland Head owns shares of PayPoint. The Motley Fool UK owns shares of PayPoint. The Motley Fool UK has recommended Manx Telecom. 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.