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Have £3k to spend? I think this 6%-plus dividend yield’s a brilliant buy for your ISA today

It wasn’t a surprise to see market makers march for the exits and away from London’s quoted recruitment specialists last week. PageGroup got hearts skipping beats for all the wrong reasons when issuing a shock profit warning, citing “increasingly challenging trading conditions” in key regions, such as the UK, Greater China, and Continental Europe.

Hays (LSE: HAS) was one of those that got spat out in the aftermath, though its plunge to multi-week lows was quite mild compared to some of the sector drops seen elsewhere. Indeed, the FTSE 250 firm has recovered quite nicely soon after, in the wake of renewed optimism over a possible Brexit deal between UK and European Union lawmakers before the close of October.

Subdued but satisfying

I’m not the only one who believes hopes of a Brussels breakthrough are looking more than a little fragile, though, and that the share price gains of some UK-focussed stocks are therefore a bit too giddy. However, I don’t think the same can be said for Hays, even if the rationale behind its latest move higher is a tad questionable.

At current prices, the recruiter still changes hands on a forward P/E ratio of 13.6 times, comfortably inside the benchmark of 15 times and below, which suggests decent value on paper. And I reckon this makes the business a bargain given its resilience in tough trading conditions, as its latest financials released on Tuesday showed.

I’m not going to say Hays’s update was anything near electrifying. Net fees rose just 1% in the three months to September, while on an underlying basis, they were completely flat. Trading activity continued to fall in the UK and Ireland (like-for-like fees down 4%) and in its Australia and New Zealand division too (down 2%).

However, business at group level remained largely stable thanks to more robust trading in its so-called ‘Rest of World’ and Germany units, its first- and second-largest divisions in terms of net fees, respectively. While like-for-like net fees were flat in its Central European territory, Hays saw corresponding fees in the RoW rise 4% year-on-year.

Special dividends to keep coming?

Now clearly Hays isn’t a suitable pick for growth-orientated investors. In fact, City analysts expect earnings at the company to slip 7% in the fiscal year to June 2020.

I’m encouraged, however, by the fact that the business continues to make exceptional inroads across many of its territories. It still generated record fees in eight countries in the last quarter, including key growth markets such as the US and China, for example. That should stop profits from falling off a cliff during this period of cyclical weakness in the global economy.

And in the meantime, investors can still look forward to the support services firm doling out special dividends, facilitated by the strength of its balance sheet (there was net cash of £90m on the books as of September, up £10m year-on-year).

Consequently Hays offers up a stunning 6.2% dividend yield for the current fiscal year. I consider the stock to be a top buy today.

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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.