What a little beauty Homeserve (LSE: HSV) has proven to be for its investors. Thanks chiefly to a staggering 265% share price spike since 2014, the emergency callout specialist has delivered a 300% total shareholder return in that time. And I’m convinced it’s not done yet.
Homeserve’s success on foreign shores is the cornerstone of its bright investment case and, in particular, the soaring progress it’s making in the US. Revenues from its Stateside territory boomed 18% in 2018, a result that pushed group sales 12% higher from the prior year.
North America has now displaced the UK as the company’s biggest business by the number of customers, reflecting the recent acquisition of the home repair services business Dominion Products and Services as well as savvy marketing which brought 1.2m more customers onto its books last year. And Homeserve continues to invest heavily in this hot market to keep sales on the up-and-up. For example, it’s also bolstered its presence in the $29bn heating, ventilation, and air conditioning (HVAC) market.
Homeserve has delivered some staggering double-digit earnings growth over the past five years and City brokers expect it to keep on trucking. Profits are anticipated to swell 9% and 10% this fiscal year and next, numbers which, in turn, prompt predictions of more handsome dividend growth.
Indeed, the FTSE 250 firm’s payout policy is what makes it really stand out. Ordinary dividends have been hiked 86% during the past five years and are anticipated to keep swelling, to 23.5p this year, and 25.8p for the following period.
True, there are bigger yields out there than Homeserve’s 2.1% and 2.3% for this year and next, respectively. But I would argue that its progressive dividend programme makes the company a brilliant buy for your ISA, given the prospect of some really mighty yields in the years ahead.
Another income great
If you’re looking for big yields today, then Big Yellow Group (LSE: BYG) might be more up your alley. Dividends here have also sprung higher in recent years — by 53% to be exact — and are expected to keep doing so. Thus payments of 35.3p and 37.7p are forecast for this fiscal year and next, respectively, ones that yield inflation-bashing figures of 3.6% and 3.8%.
Big Yellow has thrived in recent years as the rising numbers of renters in Britain has helped drive demand across its self-storage facilities, as has the steady growth in the hoarding culture. These two themes are seemingly going from strength too, making the structural shortage in available space ever more worse.
Now Big Yellow has already delivered a total shareholder return of 123.4% over the past five years. I’m certainly not expecting it to stop generating great gains for its investors, particularly as it expands its store network to capitalise on these terrific structural opportunities. It’s another white-hot buy in my book.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Homeserve. 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.