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Why I’d banish Bitcoin and buy this stock’s 6%+ dividend yields instead

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In an article I produced over the weekend, I reminded readers of the pitfalls of investing in Bitcoin and identified a big-yielding dividend share (Santander, while you ask) as a much more sensible way to make use of your excess capital.

In fact, there’s no shortage of brilliant stocks that I’d rather buy than any type of cryptocurrency, and in this piece I’m looking at another big-yielding income stock I consider to be a much-better investment.

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Big dividend yields

PageGroup (LSE: PAGE) is one of the hottest dividend dynamos on the FTSE 250 right now. Why? Market-smashing yields of 6.2% and 6.6% for 2019 and 2020 respectively, figures that blow the Footsie broader average of around 4.5% for instance out of the water, that’s why.

Put simply, PageGroup is a formidable cash machine which is enabling it to supplement its progressive payout policy with the delivery of special dividends. In fact, the business raised the amount it forked out in supplementary rewards in 2018 to £40.8m, supported by an uptick in cash generation (cash flow from operations rose 6% to £131.7m).

And City analysts see no reason why this run of additional dividends should come to an end. This means that last year’s 25.83p per share total dividend for 2018 is tipped to move to 29.12p in the current year and again to 30.8p next year.

It’s not all about special dividends

I’d be doing PageGroup a disservice by focusing just on its smashing dividend prospects, though. Earnings per share at the business have swelled by almost 80% during the past five years, and the number crunchers are expecting its run of strong profits improvements to keep running — bottom-line increases of 13% are forecast for both 2019 and 2020.

A quick glance at the full-year financials released last month, a release which showcased PageGroup’s stunning progress in foreign territories once again, showed just why City experts are so bullish. The company reported record profits in around two dozen of its regions, including in one of its single biggest markets of Germany where gross profits surged 29% year-on-year.

Continental colossus

I’m not going to suggest that the FTSE 250 firm isn’t without risks. Just under half of group gross profits are sourced from its EMEA (Europe, Middle East and Africa) region, meaning that in theory it’s particularly susceptible to the cooling economic conditions here.

I’m not overly concerned by this, though. As PageGroup said of its so-called large, high-potential German market, for instance, this particular territory “has low penetration rates (markets where less than 30% of recruitment is outsourced) and significant growth potential, particularly in temporary recruitment.” Indeed, such is the terrific growth potential of this market — as well as its other biggest European region, France — that the lion’s share of fee earners on the continent were centred around these two countries last year.

Besides, at current prices, the recruiter’s low valuation, a forward P/E ratio of 12.7 times, more than bakes in the possibility of some near-term trading troubles. Instead, in my opinion at least, this cheap rating enhances PageGroup’s investment appeal. If you’re seeking big dividends and terrific profits growth, it’s a white-hot buy 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.

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