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Have £2,000 to invest? Here are 2 dividend stocks I’d buy in an ISA today

2019 has been a good year for exhibitions, events and business publishing group Informa (LSE: INF), its stock climbing 44% to 872p. This figure slightly flatters the group, however, since it merely recoups its losses in last year’s global sell-off.

Going up!

Full marks to Rupert Hargreaves, who saw the opportunity in December when he wrote that time is running out to buy this FTSE 100 dividend stock at a bargain price

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The Informa share price is up more than 5% this morning after a bouncy half-year report to 30 June, which showed revenues up 47.1% on a reported basis, although that is flattered by its recent UBM acquisition and the underlying increase is just 3.4%.

The enlarged group delivered £306.4m of enhanced free cash flow, more than doubling last year’s £131.1m. Management has been whittling down debt to make the balance sheet more efficient, reducing it from 3.1x EBITDA to 2.7x over the year.

Not so cheap now

Group CEO Stephen A. Carter said a year on from the UBM acquisition the enlarged Informa Group is “performing to plan, delivering a further period of growth in revenue, adjusted operating profit, free cash flow and dividends”.

The obvious downside with buying this £10.6bn company today is that it’s no longer a bargain trading at 16.5x forward earnings. The forward yield is relatively low at 2.8%, although cover of 2.2 gives scope for handsome progression, as we saw in today’s 7.1% interim dividend hike.

Earnings growth has been steady at mid-single-digits for the last five years and this looks set to continue, City analysts say. No longer a bargain, but still a buy.

At your convenience

Payment processing firm PayPoint (LSE: PAY) is also up today after reporting a 3.6% rise in group net revenue to £28.7m, although the stock moved by a less spectacular 1.66%.

The £628m FTSE 250 group operates a network of payment terminals in local stores and corner shops, and is trying to broaden its convenience retailer offering. Today’s trading update reported 30.7% service fee growth of £700,000, driven by a 2.8% service fee hike and the rollout of PayPoint One to 13,633 sites at 30 June, which puts it on track to reach its year-end target of 15,800.

However, ATM net revenues dropped 8.4% to £3m due to LINK’s 10% interchange fee cut and a 3% fall in transactions to 10.4m.

To the point

CEO Patrick Headon nonetheless hailed “a good financial and operating performance” as new initiatives drive future growth and profits, and declared his confidence that there will be a progression in profit before tax and exceptional items for the year to 31 March 2020.

Some 99% of the UK population is within a mile of a PayPoint terminal, and the forecast valuation of 13.9x earnings is tempting, while the forecast yield is now a blockbuster 8.7%. Cover is thin at 0.8 but the business has a net cash cushion of £36.1m.

The PayPoint share price has underwhelmed in recent years, and is down another 12% over the last month, possibly because it has been caught up in the Neil Woodford debacle. The stricken star went big on this stock but has sold roughly half his 20% stake in recent months. PayPoint’s long-term prospects remain promising, despite that.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of PayPoint. 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.