According to a trading update issued by the firm today, it looks as if this continues to be the case, although the outlook is not as bright as it once was. Specifically, in today’s update, the company said: “The board expects to report continued growth with results ahead of last year but marginally below market expectations.“

Management is blaming this performance on “later than expected rollout of a significant contract” as well as higher costs “associated with the recent changes in senior management.” The company recently lost its Managing Director of Park Retail Limited, Gary Woods after 38 years of service only a few months after Finance Director Martin Stewart announced that he would be stepping down in August.

Underlying growth 

Despite this management turmoil, it seems Park’s underlying business continues to recover. Today’s update notes that over the crucial Christmas trading period, customer orders at the group’s consumer business rose 4% year-on-year. Meanwhile, the number of corporate clients using Park’s business-focused offering is also growing steadily.

And as long as there are no further surprises to earnings throughout the rest of the financial year, it looks as if shares in the business are a steal at current levels. 

Based on current analyst estimates (earnings per share growth of 7.6% for fiscal 2018), the stock is trading at a forward P/E of 14.3. Now we know the company is going to come in slightly below target for the full year, earnings estimates will be revised lower over the next few months, but even after factoring in this decline, a forward P/E of around 14.3 looks to me to be too cheap for a steadily growing retail business.

Dividend danger? 

Another turnaround play that I believe could generate impressive returns for investors is Talktalk (LSE: TALK). 

Over the past two years, earnings per share have been cut in half, from 10.2p to 4.8p. However, analysts believe that the company will start to recover in 2019. Earnings growth of 45% has been pencilled in for 2019. Even though the stock still looks expensive based on this projection (forward P/E of 17.9), it’s the long-term growth that interests me. 

Assuming the telecoms business can return to its earnings high water mark 0f 10.2p, the shares are trading at a multiple of only 12 times forward earnings, a discount of around 20% to the broader telecoms sector. What’s more, Talktalk has a history of giving investors market-beating dividend yields, a trait I expect the group to reclaim when its recovery is fully underway. My Foolish colleague Peter Stephens is also optimistic about the company’s outlook and believes the group could become a takeover target in the near future.

That being said, not everyone is optimistic about Talktalk’s outlook. Another Fool, G A Chester, has put Talktalk on his “dividend danger” list, due to the company’s rising indebtedness. 

The post Could these turnaround stocks make you rich? appeared first on The Motley Fool UK.

More reading

• Starting with nothing? Here’s why now is the perfect time to start building a passive income
• Decided not to bother with a Stocks and Shares ISA? You might be missing these 3 things!
• Why is everyone buying GSK shares?
• £10,000 invested in easyJet shares at the start of 2026 is now worth…
• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?

Rupert Hargreaves owns no share 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.

There are few income stocks out there that have reported dividend growth like Telecom Plus (LSE: TEP). Over the past six years the company’s earnings per share have expanded by 40%, and over the same period, management has hiked the dividend payout by 61%, or around 8% per annum. 

Thanks to the company’s steady earnings and dividend growth, over the past five years the shares have produced an annual total return of 9.5% for investors. Over the past 10 years, the shares have generated a total return of 26% per annum. 

And it looks as if the company’s dividend growth is set to continue following the release of first-half figures today. 

Dividend growth

After a robust first half, Telecom Plus management now believes that annual adjusted profit before tax should come in “slightly ahead” of expectations for the full year. Adjusted pre-tax profit from continuing operations rose 6% to £25.7m, while reported pre-tax profit rose 7% to £19.1m. 

Customer numbers have continued to grow organically, with 5,265 customers added in the first half to push the total up to 613,067. The company has benefitted from its diversified offering and impact of customers taking up more services. 

On the back of these figures, the dividend for the half was raised 4.3% to 24p from 23p. 

City analysts are expecting the company’s organic growth to continue for the next few years, with earnings per share growth of 5% predicted for this year, and 10% for 2018. I believe that this earnings rise should underpin further dividend increases, indicating that not only does the company’s current 4.1% dividend yield look attractive in the present environment, but it also looks sustainable and set to rise in the years ahead. 

Recovery play 

Telecom Plus’s impressive total shareholder returns cannot be matched by peer TalkTalk (LSE: TALK). Following a hack attack that affected 157,000 customers last year, shares in TalkTalk have underperformed the FTSE 100 by 17% as management has struggled to rebuild customer and investor trust. 

Hefty restructuring charges have held back the firm’s recovery, pushing it to report a £75m pre-tax loss for the six months to September 30, compared with a £30m profit a year earlier. A £31m charge for overhauling its mobile business, coupled with £59m of exceptional charges for restructuring helped push the business from a profit to a loss.  

To help rebuild the balance sheet, TalkTalk’s management has also slashed the dividend payout. The group is paying a half-year dividend of 2.5p a share, compared with 5.3p this time last year. Nonetheless, I believe that this is a sensible strategy, which should ensure that the payout remains manageable for the foreseeable future.

You see, historically the company’s dividend payout per share has exceeded earnings per share, which is generally interpreted as a sign that the payout is unsustainable. Now however, analysts believe the payout will be covered 1.1 times by earnings per share next year. 

These numbers give me confidence that the current dividend, equal to a yield of 4.9%, is here to stay. 

The post Should you be tempted by these 2 high-yield shares? appeared first on The Motley Fool UK.

More reading

• A 9.1% forecast yield! 1 under-the-radar FTSE income share to buy today?
• 3 FTSE shares tipped to grow 100% (or more) in the next 12 months

Rupert Hargreaves owns no share 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.

Dividend yields of 6% or more do exist, but they are very rare. Luckily, two stocks in the FTSE 250 currently support dividend yields of around 8%. These payouts look safe for the time being and are well covered by earnings per share.

Talktalk (LSE: TALK) is the first 8% yield candidate. Over the past two years, Talktalk has lurched from one disaster from another, and the shares have plunged by more than 50% from their 2015 high of 400p. However, as shares in the company have dropped the yield on offer has risen, and now shares in Talktalk support a dividend yield of 8.1%. 

Even though there have been some calls for management to cut the dividend, only a small decrease in the annual payout is expected, from 15.9p for the year ending 31 March 2016 to 14.6p for the fiscal year ending 31 March 2017.

Analysts have also pencilled in a decline in the payout to 12.6p for the year after, before a slight increase back up to 13.2p for the fiscal year ending 31 March 2019. Over the same period, analysts are expecting Talktalk’s earnings per share to grow from 8.4p to 15.6p, and while the payout isn’t currently covered by earnings per share, if forecasts hold true, for the fiscal year to 31 March 2018 payout will be covered 1.1 times by earnings per share.

As mentioned above, even though there have been some calls for Talktalk to cut the company’s dividend payout, it seems that for the time being management is happy with the level of the dividend. Even considering the slight decrease in the annual payout expected for 2018, the yield will not drop below 7%. 

Well-covered dividend 

Like Talktalk, shares in Carillion (LSE: CLLN) have come under pressure over the last year. Shares in the construction business have lost 27% over the past 12 months, but this is great news for income seekers. 

At the time of writing shares in Carillion support an impressive dividend yield of 8.5% and analysts are only expecting that payout to increase. For 2018 a dividend of 18.9p per share is expected, up from 2017’s 18.7p. What’s more, unlike Talktalk, the payout is covered 1.8 times by earnings per share. 

Carillion is projected to earn 34.2p for 2017 and 35.2p for 2018. And as well as the impressive high single digit dividend yield, shares in Carillion also trade at a depressed forward earnings multiple of 6.4. This is the lowest valuation the firm has traded at during the past five years.

The bottom line

Overall, both Talktalk and Carillion are two of the London market’s most attractive income stocks. Shares in both companies support dividend yields of 8% or more and the payouts look sustainable for the near future. If I had to choose between the two, Carillion’s payout seems to be by far the most secure as it is covered twice by earnings per share, giving the company plenty of financial flexibility.

The post Are these two 8%+ yields the best the FTSE 250 has to offer? appeared first on The Motley Fool UK.

More reading

• Starting with nothing? Here’s why now is the perfect time to start building a passive income
• Decided not to bother with a Stocks and Shares ISA? You might be missing these 3 things!
• Why is everyone buying GSK shares?
• £10,000 invested in easyJet shares at the start of 2026 is now worth…
• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?

Rupert Hargreaves 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 same terminology can be applied to fallen dividend angels — those companies once considered dividend champions but now unloved by income investors. 

Out of favour

Talktalk Telecom (LSE: TALK) is one such fallen dividend angel. This time last year the company was considered a safe bet for income investors. Operating in the traditionally defensive market of telecoms, Talktalk paid out most of its income to investors via dividends and was highly praised by income investors. But storm clouds are gathering over the firm. 

Talktalk’s management is still committed to the company’s dividend payout. At the time of writing, the shares support a dividend yield of 8.6%, and management has stated the payout will be maintained at this year’s level during 2017. 

However, Talktalk’s debt is rising, and City analysts are now openly calling for the company to cut its dividend and prioritise debt repayment as earnings fall. The company was recently forced to ask bankers for a £75m receivables purchase agreement to improve its financial position and almost all of the company’s debt now falls due within three years. Maybe it’s wise to avoid Talktalk for now despite its high-single-digit dividend yield. 

Regulator clampdown 

Shares in Plus500 (LSE: PLUS) plunged earlier this month after the FCA issued new rules on the promotion of CFDs to retail investors. These declines have left shares in the company supporting a highly attractive dividend yield of 11.7% but this yield might not be around for long. 

According to Plus500’s management, the new FCA rules will have “a material operational and financial impact on the UK regulated subsidiary.” The company’s dividend payout is only covered one-and-a-half times by earnings per share, which doesn’t leave much room for flexibility, indicating to me that the payout could be cut next year as regulations come into force.  

Shipping sector problems 

Braemar Shipping Services (LSE: BMS) has been hit by the general downturn in the shipping industry this year. The company’s shares have lost a third of their value as management has warned on profits and City analysts have downgraded forecasts. For the year ending 28 February 2017 analysts are expecting earnings per share to decline 39% to 21p, which means that even after recent declines, shares in Braemar are trading at a forward P/E of 12.9. The company’s dividend will be held steady at 26p for this financial year. 

Next year, Braemar’s financial position is expected to improve. City analysts have pencilled-in earnings per share of 27p for the year ending 28 February 2018, up 28% year-on-year. The payout is expected to be held at 26p. If Braemar’s earnings recover to this level, it’s likely the dividend will be maintained so the current 9.3% dividend yield could be here to stay. 

The post Are these fallen dividend angels too cheap to pass up? appeared first on The Motley Fool UK.

More reading

• Starting with nothing? Here’s why now is the perfect time to start building a passive income
• Decided not to bother with a Stocks and Shares ISA? You might be missing these 3 things!
• Why is everyone buying GSK shares?
• £10,000 invested in easyJet shares at the start of 2026 is now worth…
• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?

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.

A handsome yielder

A dominant player in the closed life funds sector, Phoenix Group (LSE:PHNX) has once again made a splash on financial newswires. Thankfully, it’s not because of another scandal involving a near-retiree losing most of their pension or savings in a zombie fund. Rather, Phoenix Group appears to lead the race to buy its smaller UK rival, Sun life.

Acquisitions are the name of game for closed life funds like Phoenix Group as it depends on making acquisitions to grow cash generation rather than issuing new policies. And cash generation is ever more important with the introduction of Solvency 2, which imposes stricter capital requirements, ultimately posing a risk to a company’s ability to continue paying out lofty dividends.

Thus, should the Sun life deal go ahead, it would provide a much needed cash injunction to Phoenix Group’s balance sheet. Importantly for us yield hunters, it should help firm up that lofty 6.3% dividend yield.

Making good on old promises

Esure’s (LSE:ESUR) earnings report released, May 5, was positively received by the market as key metrics across the board were higher compared to the same period a year ago.  Gross written premiums were up nearly 16%, gross written motor premiums rose 17% and home premiums grew 8.3%.

However, what investors were really keen on scrutinising was the performance of Esure’s price comparison unit, GOcompare.com. Esure has recently invested heavily in new advertising campaigns focused on money products such as loans, credit cards and current accounts. Fortunately for investors, the price comparison unit didn’t disappoint as income soared 19% when compared to the first quarter of 2015.

It might seem somewhat strange that I’ve called this a ‘dividend musketeer’ given that the company reduced its current annual dividend to 11.5p from 16.8p a year earlier.

However, the bigger picture here is that management is making good on old promises. In March, management announced plans to cut the dividend in order to fund growth in an improving UK motor insurance market. Thus, the increase in gross written motor premiums fully justifies its decision.

Considering that Esure’s current payout ratio is around 70%, investors will be hoping that continued growth in UK motor insurance helps boost earnings and soften the payout ratio. The payout ratio refers to the proportion of earnings paid out as dividends. Usually, a lower payout ratio is preferred as it implies that dividend payments are more sustainable.

And investors have reason to be optimistic as analysts are expecting earnings to grow nearly 16% by 2017. Including the current yield of around 4%, making this dividend musketeer ever more attractive. 

Time to talk about TalkTalk

Despite the hacking scandal hanging over TalkTalk that makes customer acquisition and retention efforts harder, Talktalk has performed strongly in 2016, adding over 17% to its valuation year-to-date. This performance far outstrips the wider FTSE100.

Yet there are more reasons than the strong capital gains YTD to hold onto TalkTalk as many are predicting that, given its shaky reputation and customers pouring out of the exits, it may be ripe for takeover bid from one of its rivals, Vodafone. However, juicy rumours and impressive capital gains aside, the yield of 5.7% remains attractive.  

The post The 3 dividend musketeers: Esure Group plc, Talktalk Telecom Group plc and Phoenix Group Holdings appeared first on The Motley Fool UK.

More reading

• Decided not to bother with a Stocks and Shares ISA? You might be missing these 3 things!
• Standard Life’s announced a £2bn deal but its share price is largely unchanged. Why?
• No savings at 40? Buying passive income shares could one day deliver a £3k monthly ISA income
• How much would someone need in an ISA to aim to treble the current State Pension?
• 3 high-yield income stocks, investment trusts, and ETFs to consider in 2026!

Yasin Ebrahim 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.

However, not all companies in the telecoms sector are created equal, and some are better stewards of shareholder capital than others.

Sky’s the limit

When it comes to generating the best returns for shareholders, there are few companies that can match the record of Sky (LSE: SKY). Sky is the biggest pay-TV provider in the UK. The company’s size and dominance over the pay-TV market as well as access to bespoke programming gives it an edge over smaller peers. What’s more, customers acquire the company’s services on a 12-month contract, which gives the group visibility over earnings and cash flows.

All of the above factors mean that Sky can generate one of the best returns on invested capital employed (ROCE) in the media industry. A high double-digit ROCE often means that the company has a defensible edge versus its competitors and in the past, Sky’s ROCE has averaged 30%. As a result, over the past six years, Sky’s shareholder equity has risen fivefold.

Sky’s shares currently trade at a forward P/E of 15 which may seem expensive but is relatively cheap considering the company’s impressive returns on capital. The shares support a dividend yield of 3.7%.

Biggest rival

It would be fair to say that BT (LSE: BT.A) is Sky’s biggest rival in the UK. Just like Sky, BT has achieved impressive returns for investors over the years, and the company has recently been investing heavily in growth to help differentiate itself from the competition.

These investments seem to be paying off. Yesterday BT announced a record rise in pre-tax profit of 9%, showing that the company is moving in the right direction. BT also intends to invest £6bn in ultrafast broadband as it seeks to provide wider and faster coverage across the UK, further differentiating itself from peers. 

On the valuation front, after recent gains BT is trading at a forward P/E of 14.6, and the shares support a yield of 3.5%.

Struggling 

As BT and Sky have powered ahead over the past five years, Talktalk (LSE: TALK) has tried to keep up but the company has repeatedly stumbled and it now looks as if Talktalk’s growth story is starting to unravel. 

Up until last year’s hacker attack, City analysts were expecting Talktalk’s earnings to double during 2016. However, now the City expects earnings to grow by a more modest 9%. Based on this forecast, Talktalk’s shares are trading at a forward P/E of 29 and support a dividend yield of 6%. 

Unfortunately, while this yield may look attractive for income seekers, the payout of 16.2p is uncovered by Talktalk’s earnings per share of only 8.9p.

Foolish summary

Overall, it looks as if the telecoms stock to buy is Sky. BT looks like a solid hold as the company’s growth picks up, while Talktalk might be a sell as the company struggles to rebuild its reputation and return to growth.

The post Buy, sell or hold: Talktalk Telecom Group plc, Sky plc and BT Group plc? appeared first on The Motley Fool UK.

More reading

• 2 FTSE 100 stocks that are navigating market volatility remarkably well
• These FTSE 100 stocks are tipped to rise 53% (or more) in the next year!
• Up 17% this year, the BT share price looks good. But are these price swings sustainable?
• £20,000 invested in BT shares 2 years ago is today worth…
• £10,000 invested in BT shares 5 years ago has turned into…

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