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ISA investors! A cut-price 6% dividend yield I’d buy for 2020 and hold for 10 years

It’s a dangerous time for share investors who want to grab a slice of UK plc as the domestic economy toils. Not all stocks are equal, of course, and there are many British companies out there that are in great shape to deliver stellar shareholder returns, however politicians deal with Brexit over the next year.

For many share pickers out there, though, the idea of investing in one of the country’s recruitment providers is tantamount to pouring their cash down a drain. And there’s an abundance of data out there to back them up.

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With doubts over the country’s future relationship with the European Union still percolating, businesses are increasingly holding back on investment, and this is no more apparent than in terms of recruitment. According to a survey undertaken by ManpowerGroup, UK employers expect the labour market to be at its weakest for seven years in the first quarter of 2020, the jobs giant suggesting that hiring sentiment has softened in seven of nine industry sectors on both a quarterly and annual basis.

Stunning resilience

You may think, then, that recruitment play PageGroup (LSE: PAGE) would be a share to avoid like the plague in the New Year. But hold your horses, I say, as there are a few important caveats for the bears to consider when it comes to this FTSE 250 share.

It’s critical to remember that PageGroup generates just 16% of gross profits from these shores. This is why, despite a 4.1% profits drop in the UK during the third quarter, profits at group level still rose 4.2% year on year.

The business is experiencing some troubles in Asia Pacific too, because of the impact that trade troubles and political unrest in Hong Kong are having in China. Gross profits fell 4% in the Asian region between July and September and tanked 24% in its Chinese market. But strength elsewhere more than offset weakness here and in the UK, with profits in its core Europe, Middle East and Africa (EMEA) division and the Americas booming 7% and 17% respectively.

Dividend hero

And judging from ManpowerGroup’s survey, things are looking strong in some of its critical markets in 2020. In France, PageGroup’s single biggest territory and one that is responsible for 15% of group gross profits, hiring sentiment is at its strongest for 12 years. In the Americas, meanwhile, companies in all but one of the 10 countries surveyed have positive hiring outlooks, with employers in its gigantic US market expecting workforce gains in all 13 industry sectors.

It’s clear that a slowing global economy will pull PageGroup’s profits growth down from those double-digit annual increases of recent years, and a more sober 5% rise is forecast for 2020. It’s important to remember, though, that the recruiter’s appeal as an income stock remains unbowed, with City expectations of more dividend growth next year creating a delicious 5.8% yield. Combine this with a forward P/E ratio of 14.1 times and I reckon the firm is a top buy for income chasers looking for great value too.

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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.