In addition to this familiar blue-chip name, I also see value in a high-yielder that most investors probably haven’t considered. It released its annual results today and I’ll come to it shortly.

Progressive and resilient

Legal & General’s dividend has increased from 7.65p in 2012 to 14.35p last year, driven by annual double-digit growth in earnings per share (EPS). That growth is set to continue this year and the dividend is forecast to rise to 15.25p, almost double the 2012 payout. At a share price of 260p, the forward yield is 5.9% and the dividend is covered a reasonable 1.6 times by forecast earnings.

The company has a strong balance sheet and market-leading businesses in areas underpinned by long-term macro and demographic growth drivers. It noted in its first-half results last month that while it’s not immune to market volatility, its successful performance through a snap UK general election and the start of Brexit negotiations “continues to demonstrate the resilience of our operating model.”

More of the same

The company also said: “Our financial ambition is to achieve a similar performance in 2016-2020 as that achieved in 2011-2015; where EPS grew by 10% per annum and net release from operations by 10% per annum.”

This ambition bodes well for healthy dividend increases over the next few years, because the board’s progressive dividend policy is aligned to “expected medium-term underlying business growth, including net release from operations and operating earnings.” The consensus among City analysts is for the dividend to increase to 16.15p next year, giving a yield of 6.2% for buyers at today’s price, and to 17p in 2019, giving a yield of over 6.5%.

A 10.3% yield

Hansard Global (LSE: HSD) offers tax-efficient investment products within a life assurance policy wrapper, designed to appeal to affluent, international investors. Supported by a multi-language internet platform, a network of independent financial advisors and some financial institutions, the company has access to clients in more than 170 countries.

In its annual results today, it reported a 14% rise in assets under administration to just over £1bn, a 24% increase in new business sales to £148m and a 43% uplift in its operating cash surplus to £22.7m. A dividend for the year of 8.9p means this FTSE SmallCap firm — which is valued at £119m at a share price of 86p — has a running yield of 10.3%. However, this year marks the end of a string of bumper payouts of 8p+, which were partly supported from cash reserves.

Still a high-yielder

Hansard today reiterated its intention to reduce the 2018 dividend by 50%. It said this will better match actual cash flows and also allow the company to “take advantage of strategic and new business opportunities.” A 4.45p dividend next year still gives a high yield of over 5% and the payout should grow as those strategic and new business opportunities come through.

Finally, I’m not too concerned by Hansard’s £14.3m of contingent liabilities relating to certain client claims against a legacy business. The company believes it has a strong defence and initial court judgements are tending to support it.

The post Legal & General Group plc isn’t the only high-yield stock I’d buy today appeared first on The Motley Fool UK.

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G A Chester 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.

I believe earnings growth, cash generation and debt levels are bigger factors in achieving a reliable dividend income. Today I’m going to look at two dividend stocks which I believe could deliver outstanding cash returns for long-term investors.

Essential infrastructure

HICL Infrastructure Company Limited (LSE: HICL) specialises in investments in public sector infrastructure. Recent examples include stakes in a Dutch prison and a motorway.

The group announced today that it has completed the acquisition of a 36.6% interest in Affinity Water Group for £269m. Affinity is the largest water-only company in England and Wales, measured by revenue and by population served.

In total, HICL owns about 115 such investments spread across seven countries, including the UK, USA and Australia. These are generally long-term assets which generate stable and predictable incomes.

This attribute is reflected in HICL’s dividend, which has risen by an average of 2% every year since the group’s flotation in 2006.

2% per year might not seem very exciting, but this has taken place during a period of low interest rates and low inflation. Rather than using borrowed cash to boost dividend payments, HICL’s management has ensured that the dividend has been broadly covered by free cash flow since at least 2011.

I believe this conservative approach means a cut is much less likely. With the stock yielding 4.3% at present, I reckon HICL could be an excellent ‘buy and forget’ dividend stock.

A more adventurous choice

Small-cap financial group Hansard Global (LSE: HSD) specialises in selling long-term savings and life assurance plans to customers around the world. The group only sells through financial advisers and other financial institutions and uses a multi-lingual web platform to support its operations.

Hansard is expected to pay a dividend of 8.95p per share for the current year. That’s equivalent to a stonking 10% dividend yield at the current share price of 88p. Of course, there is a catch. The group’s payout is expected to fall by 50% to 4.5p next year. This will cut the forecast yield to 5% but is needed — according to management — to fund new growth initiatives.

Indeed, the group does appear to have significant turnaround potential. Earnings per share are expected to rise by 31% to 8.5p in 2018, putting the stock on a forecast P/E of about 10.

There’s also another source of potential upside. Hansard is currently the subject of a number of legal cases by European customers alleging that the investment products they were sold — mainly during the financial crisis — did not perform satisfactorily.

The group believes it has “strong defences to such claims”, which currently total £13.8m. However, regulatory restrictions mean that these writs require the firm to reserve cash which would otherwise be available for distribution to shareholders.

If Hansard’s view that the claims being made against it are unjustified is correct, then it’s possible that the group will be able to return a significant amount of additional cash to shareholders over the coming years.

Investing in Hansard isn’t without risk, but I believe the stock could deliver attractive returns for patient investors.

The post These could be the best dividend stocks you’ve never heard of appeared first on The Motley Fool UK.

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Roland Head has no position in any 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.

The small and mid-cap section of the market is full of bargains yet many investors are afraid to tread there. But while small-caps do come with more risk, at the same time there’s usually greater return potential on offer, which more than makes up for the extra research required. 

One attractive small-cap I’ve recently stumbled on is Hansard Global (LSE: HSD). 

Dividend champion 

With a market capitalisation of £120m, Hansard flies under the radar of most City investors, but you shouldn’t write it off. 

Hansard is a long-term savings and investments manager with assets of £1bn under management. The company is clearly doing something right as during the last six months of 2016 AUM grew by around 10% from £923m to £1bn. However, while AUM is growing, earnings are not. 

Over the past six years, pre-tax profit has declined from £11.1m for the year ending 30 June 2012 to £9.1m for the year ending this June. Still, the one area where Hansard stands out is dividends. For the past five years, the company has consistently paid out the majority of its earnings to shareholders via dividends, with the per-share payout never dropping below 8p. 

For the current fiscal year, City analysts are expecting a full-year payout of 8.9p per share, which equates to a yield of 10.1% at current prices. The shares currently trade at a forward P/E of 23.1. Based on Hansard’s record of returning cash to shareholders, I believe the firm is an attractive long-term dividend stock. 

Volatile income play

Recruitment agency Gattaca (LSE: GATC), which used to be known as Matchtech, has similar attractive income qualities. For the past five years, the company has consistently paid out around half of its earnings to investors via dividends. 

Despite speculation that the business could come under pressure following the Brexit vote, Gattaca has proven its doubters wrong with net fee income rising 6% in constant currency terms over the six months to the end of January. City analysts are expecting this growth to continue with earnings per share growth of 26% pencilled-in for the year ended 31 July 2017 and further growth of 8% expected for the following year.

Based on these forecasts, shares in Gattaca are currently trading at a forward P/E of 7.1, falling to 6.6 for the year to July 2018. Furthermore, the company’s dividend payout per share is expected to rise from 23p to 23.5p, hardly explosive, but growth nonetheless. Based on Gattaca’s current share price, the payout is equal to a dividend yield of 8.1% and the payout is covered twice by earnings per share, so it looks safe for the time being. 

Unfortunately, due to the nature of Gattaca’s business, the company’s dividend may not be a great long-term investment. Recruitment income is volatile and moves with economic growth, so a deteriorating economy would likely push management to cut the payout. Still, when times are good Gattaca is happy to reward shareholders and looks to be an attractive income play for now. 

The post Can you retire on these two 8%+ dividends? appeared first on The Motley Fool UK.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Financial services stumble

Earnings have been a bit rocky from Hansard Global (LSE: HSD) in recent years, though a big rise in 2015 suggested the financial services firm might be back to winning ways. But a big fall in profits for the year ended 30 June led to a 14% fall in morning trading today, to 120p, reversing the price spikes of the past few days.

Underlying profit after tax fell by 23% to £9.2m, with reported earnings per share down 45% to 6p. But on the bright side, the company did enjoy a near doubling of new business sales, to £119.3m, and lifted its final dividend payment from 5.25p to 5.3p per share — the total payout of 8.9p represents a yield of 7.4% on the current share price, although it’s not covered by earnings.

Hansard shares had been up 26% since 27 July before today’s revelation, and that rise has now been pegged back to just 7.6%. So does today’s retreat give us a buying opportunity?

Hansard conducted a strategic review in 2014, and chairman Philip Gregory reminded us that the subsequent changes were always going to take several years to work through. He said that 2016 was the year in which “the strategic changes made to our products, distribution, processes and executive management started to improve our performance.“

I really don’t think this year’s results, replete with one-off items, genuinely reflect the underlying value of the business.

In fact, on the same day as these results, the firm’s broker Panmure Gordon lifted its price target to 143p from 124p — not as good as an independent broker doing the same, but worthy of note.

Estate agent woes

Shares in estate agent Countrywide (LSE: CWD) dropped 3% this morning, to 220p, after the firm revealed the sale of its stake in Zoopla Property. Countrywide sold more than 9.2m shares at an average price of £3.17 for a total of £29.2m, telling us the proceeds will be used “to reduce corporate indebtedness and for other general corporate purposes.“

At the same time, the company told us it expects UK house prices to fall by 1% in 2017, with 2016 growth predicted to slow to 2.5%. The reason, unsurprisingly, is the uncertainty resulting from June’s Brexit vote.

Today’s fall means Countrywide shares are now down 56% over the past 12 months, having drifted even lower following the plunge that followed the referendum result. So are we looking at a dead duck, or at an unfairly oversold company with solid long-term potential.

Very much the latter, I’d say, with the shares now trading on a P/E of 7.4 on full-year forecasts, dropping as low as 6.8 for 2017. The fall has also boosted the forecast dividend yields, to a tasty 6.6% this year and and an even more tempting 8.3% next. Those forecasts may be downgraded a little now, but the dividends are still decently covered by predicted earnings and there’s plenty of room for a reduction while still maintaining a strong yield.

The post Do today’s big fallers provide unmissable bargains? appeared first on The Motley Fool UK.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.