I’ve always liked Man Group (LSE: EMG), mainly as a long-term dividend investment. And Friday’s share buyback announcement has grabbed my attention. The share price has been volatile, typically swinging further than the FTSE 100 and FTSE 250 in both directions. But the hedge fund manager has been providing very attractive long-term returns.
In 2020 so far, the Man Group share price has fallen 25%. That’s lower than the two main indexes, both down 20%. But it does make the dividend look even more attractive to me right now.
The yield has been varying as the share price fluctuates, even if the dividend level itself has been quite stable. In the past five years, we’ve seen yields from around 4% to as high as 7%. Current forecasts put yields for this year and next at 6%.
I think that’s enough justification to buy man Group for income, but I do think the shares are oversold in 2020 and too lowly valued too. The new share buyback would seem to indicate that the company thinks so too. The plan, to buy back up to $100m in shares, is “in line with the company’s policy to distribute capital to shareholders while maintaining a prudent balance sheet after taking into account required capital and potential strategic opportunities.”
I think that bodes well for the next few years for income from Man Group, and I’d buy.
Dividend plus growth
My second income pick is PZ Cussons (LSE: PZC), which has shown strong defensive characteristics. The firm supplies a wide range of cleaning products, and Covid-19 has certainly boosted demand for those. And while share prices are crashing around us, PZ Cussons shares have managed a 1% gain since the start of the year.
The company has suffered a few years of falling earnings, and the current year looks set to be no exception. Full-year results should be with us on 23 September, and Cussons has already told us: “Our full year profit guidance remains within consensus range, albeit at the lower end.“
But the firm has maintained its dividend, which has remained covered by earnings. If the annual payment remains unchanged this year, we’d see a yield of 4% on the current share price. The first-half dividend was maintained, but that was before the pandemic hit. So we shouldn’t be over-confident, but forecasts suggest we’ll see no change.
Return to growth?
Those same forecasts indicate a return to earnings growth for 2021 and beyond. Now, the PZ Cussons share price valuation is not exactly at rock bottom. There’s a forward P/E of 18 for next year. But I think that reflects a growing confidence in Cussons’ refocused approach, and in this year’s new chief executive Jonathan Myers.
I’ve long seen PZ Cussons as an attractive long-term dividend investment. And with the share price down over five years, I’m seeing a renewed growth opportunity too.
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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended PZ Cussons. 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.