2019 has not proved to be a vintage year for Signature Aviation (LSE: SIG). The flight services provider has been hit by a reduction in air traffic because of growing concerns over the global economy, and City analysts expect the FTSE 250 firm to report another earnings drop for the outgoing year, this time by a chunky 7%.
It’s disappointing to see that news flow has failed to significantly improve of late too. Last month, chief executive Mark Johnstone commented that “business confidence and flying hours continue to be impacted by global economic uncertainty,” adding that business and general aviation (or B&GA) activity continues to remain volatile from month to month. Growth here for the third quarter clocked in at an insipid 0.5%, according to Federal Aviation Administration officials.
So why has Signature Aviation — which went by the name of BBA Aviation until very recently — seen its share price soar 18% in 2019, you may ask, a reading which also factors in recent heavy weakness following November’s share consolidation?
Well, market-makers continue to be impressed by the company’s resilience in these tough conditions. The impact of shrewd acquisitions (like that which brought fuel services provider EPIC under its wing in 2018) is one which is allowing the stock to keep outperforming the broader market, and helped total revenues rise 10.1% in the 10 months to October.
City analysts expect earnings to rebound 6% here in 2020, though clearly Signature remains an unappealing pick for growth chasers. Still, for dividend investors, the firm remains a decent buy, thanks to a jumbo 4.3% dividend yield. And there’s the little matter of $835m that’s to be distributed to investors via a special dividend following the sale of its Ontic plane parts division.
The special one
4imprint Group (LSE: FOUR) is another top income stock I’d buy for 2020 from Britain’s second-tier stock index.
A string of positive trading updates has kept its share price rocketing higher and this year alone, the marketing product manufacturer has risen 70% in value. And in financials last month, it advised that “demand activity in the second half has remained robust” and that sales to new and existing customers have remained stable from the first half.
This gives it strong momentum going into 2020 and leads to City expectations that 4Imprint will follow a 17% earnings improvement this year with a 12% rise in that upcoming period. And dividends are expected to keep swelling at this reputable dividend grower, the ordinary dividend of 70 US cents per share in 2018 being anticipated to rise to 80 cents in 2019 and again to 104 cents next year.
A yield of 2.6% isn’t the biggest out there. In fact, it’s a figure that trails the British mid-cap average of 3.3% by some distance. But long-term investors should buy 4Imprint on the prospect of some truly-staggering dividend cheques in the year ahead. Oh, and the possibility of more special dividends coming down the line provides even more to get excited about (the business paid a giant 60-cent supplementary payout last time out).
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Signature Aviation. The Motley Fool UK has recommended 4IMPRINT GROUP PLC ORD 38 6/13P. 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.