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Has there ever been a better time to buy the ITV share price?

Back in September, I explained why I’d buy ITV (LSE: ITV) for a dividend portfolio. Today, I want to revisit the shares. I’m also going to take a look at another company I think could be a long-term cash machine.

Why I love “I’m a celebrity…”

Whatever you think of ITV’s hit series I’m a Celebrity… Get Me Out of Here, the show is a good example of the company’s successful business model.

In addition to regular advertising revenue, this show generates income from phone-in votes, competitions and brand sponsorships. The whole formula is then sold to television networks in other countries. According to the I’m a Celebrity… Wikipedia page, the show has been licenced to countries including the US, Germany, France and Australia.

This approach has been used for most of ITV’s reality series in recent years. Alongside this, the ITV Studio business has also focused on producing popular drama series, which can be sold in overseas markets.

What’s new?

Newish boss Dame Carolyn McCall wants to extend the broadcaster’s reach and improve revenue per viewer. One part of this plan is the ITV Hub online viewing service.

ITV Hub viewing time rose by 37% during the first nine months of the year. The company says that 75% of the UK’s 16-24 year-olds have registered for this service — viewers who increasingly shun scheduled television, but spend much of their time (and money) online.

I’d keep buying

I haven’t yet found space in my portfolio for ITV, but I’m hoping to do so soon. This business generated an operating margin of 18% last year, and a return on capital employed of nearly 27%.

Given this, I think the stock’s forecast price/earnings ratio of 10, and 5.5% dividend yield, are simply too cheap. I remain a buyer.

This could be another income gem

Telecom Plus (LSE: TEP) is the company behind the Utility Warehouse business, which allows customers to buy all of their utilities — including mobile and broadband — through a single account.

The firm’s selling point is that Utility Warehouse uses its buying power and market savvy to ensure you get a competitive price for each service, with the convenience of a single bill.

Telecom Plus scored a major marketing coup earlier this year when Utility Warehouse was chosen as Which? ‘Utility Provider of the Year’, confirming its value credentials.

Record profits

The firm’s shares were 5% higher at the time of writing, after management reported record profits for the first half of the year. Revenue rose by 4% to £311m during the six-month period, while adjusted pre-tax profit was up by 1.2% at £26m.

Customer numbers rose by 10,479 to 621,218, double the increase seen during the first half of last year. This increase was probably driven, in part, by the Which? Award, but it also suggests the company’s pricing remains competitive.

I remain a fan of this stock, but the shares have risen by 20% over the last three months. They’re starting to look fully priced to me, on 21 times 2018 forecast earnings.

Although the dividend yield is still attractive at 4.3%, I’d prefer to wait for a market dip to add Telecom Plus to my portfolio.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. 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.