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Dividend alert! 2 small-cap income stocks that I’d buy and never sell

It’s possible to get bigger dividends than those of Bloomsbury Publishing (LSE: BMY), the company rocking up with a forward yield of 3.6%.

I still consider it to be a brilliant income share to buy today and hold forever, though, given that the yield is still quite chubby, as well as the probability that dividends should keep rising at a health rate each year. Shareholder rewards at Bloomsbury have already risen for 24 years on the bounce.

Why am I so confident? Well the colossal popularity of Harry Potter, of course, and the huge amounts of profits and cash that the wizard conjures up for his publisher. This was perfectly illustrated by the fact that revenues from JK Rowling’s legendary franchise boomed 31% last year, one which marked the 20th anniversary since Potter first rolled into Hogwarts.

Bloomsbury would be mad not to capitalise on this and thankfully it has no intention of neglecting the franchise. Following the special editions which marked last year’s milestone, the publishing house has plans to unveil an illustrated version of Harry Potter and the Goblet of Fire in the months ahead, just to give you a flavour.

Strength all round

I’d be doing Bloomsbury a massive disservice by suggesting that it’s simply the House of Harry, though. The company has terrific strength and depth as shown by the 24 bestsellers it delivered last year.

I’m also hugely encouraged by the progress it’s making in the field of academic and professional digital resources, a segment in which revenues blasted 42% higher in the last fiscal year. Bloomsbury has big plans to keep sales here shooting through the roof by adding aggressively to its library and signing content partnership deals with major universities and academic organisations.

City analysts expect Bloomsbury’s profits growth to improve 14% in fiscal 2020 and this, allied with the rate at which it’s creating cash — net cash on the books rose £2.2m year-on-year as of February to £27.6m — suggests that it will indeed raise the dividend again this year. I think it’s safe to say that it’s in great shape to keep hiking rewards long beyond the near term.

Brick beauty

I’m also confident enough to tip Forterra (LSE: FORT) as another share that can provide huge returns for many years to come.

Not that dividend chasers have to wait long to make a large windfall. In May, the brick-maker said that it was increasing the dividend payout ratio to 45% of earnings in 2019 and to keep lifting rewards thereafter.

The rationale behind this move? The receipt of planning permission to build a state-of-the-art brick-making facility in Leicestershire, a move that’ll more than double current capacity and allow the production of 180m bricks per year when it opens in 2022. Forterra can be confident that its bricks should fly out of the factory and that demand should remain robust for many years given the scale of the country’s homes shortage

Like Bloomsbury, yields at the business may not be the biggest right now — this currently sits at 3.7% for 2019 — but its bright profits outlook and appetite for rewarding shareholders also makes it a top buy for income chasers, I believe.

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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.