Tragically, this means a lot of quality dividend shares outside the Footsie slip through the cracks. The FTSE 250 carries exceptional income opportunities for share pickers, too. There are also many robust small-cap shares on the UK stock market with excellent dividend credentials.

Huddle in close, and let me reveal two ‘secret’ income stocks grabbing my attention right now: BRCK Group (LSE:BRCK) and YouGov (LSE:YOU). Want to know what makes them great dividend stocks to consider?

8.5% dividend yield

BRCK Group went by the name of Brickability until last month. You’ll probably now have a good idea of what it does — it makes and sells bricks, though recent acquisitions have boosted its presence in markets for other construction materials.

The firm has a great dividend track record, raising annual payouts even though market conditions have been less than ideal due to higher interest rates. The business has its exceptional cash generation to thank for this.

However, BRCK has had to bite the bullet and chose to freeze the interim dividend in November. The reason? It’s focusing more closely on debt reduction following some acquisitions.

On the plus side, trading remains extremely robust — both revenues and adjusted gross profit increased in the six months to September, driving cash flows higher. There’s no guarantee this resilience will continue as the Middle East conflict drags on, raising the prospect of Bank of England rate hikes.

But will this mean this year’s annual dividend slumps? City analysts don’t think so. They expect a full-year dividend of 3.5p per share, matching that paid in financial 2025. This produces a healthy 8.5% dividend yield.

Another top income stock

You may have heard of YouGov when reading or watching the latest political news. It’s best known for opinion polling, including projecting outcomes like who will be the next party in UK government.

What attracts less attention is its strong performance as a dividend stock. Shareholder payouts have risen every financial year since 2013, a record that’s tipped to continue. So YouGov shares yield a tasty 6%.

Dividends are never guaranteed, but in my view analysts’ dividend forecasts look pretty strong. A predicted 9.68p per share for this year is covered 2.9 times by anticipated earnings. A reminder: a reading of two or more provides a wide margin for error.

So what are the risks attached to YouGov shares? Last week, the company warned on profits due to heavy investment at its shopping data unit. Higher capital expenditure could remain a problem as AI disrupts traditional market research.

But this shouldn’t impact dividends, at least in the immediate future. Over the longer term, I’m confident its push into AI and automation can fuel strong earnings and dividend growth.

The post Whisper it: these SECRET dividend stocks could supercharge your passive income appeared first on The Motley Fool UK.

On 24 April, the group released a pre-close trading update stating that revenue for the year ended 31 March (FY25) is expected to be 7% higher than in FY24. Also, adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) is forecast to be 11% better.

Some of the improvement is due to its specialist cladding and fire remediation division delivering projects ahead of schedule. This is a shift of turnover between accounting periods rather than new business. But the group said there was “good momentum in trading” more generally.

Within a week of this announcement, the group’s share price had risen 15.5%. But its shares are now changing hands for only fractionally more than before the news was released. It means nearly all of the benefit to shareholders from its FY25 results being ahead of expectations has been lost.  

So what’s going on?

Downsizing

A quick look at the company’s other stock exchange announcements is revealing. On 13 June, Alan Simpson, a non-executive director (NED), and Sarah Simpson, a close associate, reduced their combined stake from 11% to 7.23%. The shares fell nearly 6% when this news was announced. The amount received hasn’t yet been disclosed but it’s likely to be around the £7m mark.

And two days earlier, the managing director of Brickability’s Distribution division sold 3m shares and another NED offloaded 1m. These sales realised proceeds of £2.07m and £690,000 respectively.

Of course, I’ve no idea why these individuals have decided to reduce their stakes in the company. Everyone has different financial circumstances and I don’t think it’s unreasonable to ‘cash out’ at some stage. After all, you can’t spend shares. But whatever the reasons, these sales aren’t a good look.

Loss of income

These senior managers are going to miss out on generous levels of passive income. Based on amounts paid over the past 12 months, the stock’s currently (20 June) yielding 5.5%. The FTSE AIM All-Share index is offering 2.27%.

We don’t yet know what the final dividend for FY25 will be but it looks as though it’s likely to be higher than it was in FY24. If so, it means the group will have increased its annual payout for four consecutive years.

Final thoughts

But the group’s relatively small. As its listed on the Alternative Investment Market (AIM) with a market-cap of just under £200m, it doesn’t have the financial firepower to cope with a sustained downturn in the UK construction industry.

And even though I’m sure there are perfectly valid reasons for the directors’ share sales, they’re likely to dent investor confidence.

But the group has lots going for it. Revenue and earnings are heading in the right direction and the green shoots of a recovery are starting to show in the housebuilding sector. Also, the UK cladding ‘scandal’ is providing plenty of opportunities for further work.

For these reasons, when combined with a healthy 5%+ yield, investors could consider adding the stock to their portfolios.

The post This dividend stock’s yielding 5.5% but its directors have sold nearly 15m shares this month! appeared first on The Motley Fool UK.

Here’s why the stock caught my eye, and my investment case explained!

Bricks, mortar, and much more

Brickability Group distributes external and internal building solutions to private and commercial contractors. It also offers installation services too. The firm operates in three main segments, which are bricks and building materials, roofing services and heating, and plumbing and joinery.

The shares have been under pressure in the past 12 months. They’re down 2% over this period/ from 67p at this time last year to current levels of 65p.

The bull case

Let’s be honest, the building trade perhaps isn’t the most exciting sector, compared to say a cutting edge tech stock. However, it still plays a vital role in day to day lives and the infrastructure of our society.

I’m buoyed by Brickability’s diversification to start with, as it covers all major aspects of building internally and externally. This could help grow performance and returns.

Moving on, the business has a good track record of performance. Although I’m aware past performance is not a guarantee of the future, it’s hard to ignore in this case. Revenue has grown from £163.3m in 2019, to £681.1m in 2023. Furthermore, profits have risen nicely in the same time period from £6.5m, to £27.7m.

From a growth perspective, the housing imbalance, and ageing existing infrastructure in the UK could offer the firm potentially lucrative times ahead. All facets of building materials will be needed to plug this gap and bring housing and other infrastructure into the modern age.

Next, the shares look good value for money on a price-to-earnings ratio of just over six. Furthermore, a forward dividend yield of over 5% is attractive. In fact, this is higher than the FTSE 100 average of 3.9%. However, I’m conscious that dividends are never guaranteed.

Finally, a trading update released on 27 February for the year ending 31 March spoke of resilience and an eye on potentially fruitful growth opportunities once inflation comes down and rates are cut.

Risks and final thoughts

The obvious issue right now is the fact that demand for bricks, its biggest money-spinner, is down due to economic issues and a weaker housebuilding market. If this continues to persist, then performance and returns could be dented.

In addition to this, political issues, such as it being election year, could be a major blocker as to the rate of new house building and addressing the housing imbalance in the UK. This potential delay could hurt Brickability’s performance levels, as well as level of return.

Overall, there’s a lot to like about Brickability for me. A passive income opportunity and enticing valuation, as well as good future growth prospects and diversification help my investment case.

If the business can perform in a similar vein to the past few years, I don’t see it being a small-cap stock for too much longer!

The post 1 under-the-radar dividend stock yielding over 5% I’ve got my eye on appeared first on The Motley Fool UK.

We love these tax-efficient products here at The Motley Fool. Even though the age at which it can be accessed is 55 (and due to rise to 57 in 2028), the perks they offer make them excellent for retirement saving.

Capital gains and dividend income are both tax-free, and the government also provides tax relief on contributions. It will give investors a 20% top-up for any contributions they make, while higher- and additional-rate taxpayers can claim even more tax relief.

For this reason, I plan to make as much use of my annual allowance as I can before the 5 April deadline. I’m able to invest 100% of my annual income up to £60,000, which includes my own contributions and those of the government.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

2 top stocks on my radar

Of course, I don’t have to actually buy a stock, fund or any other financial instrument to claim my allowance. I only need to have parked my money in the SIPP and have it sitting there ready to invest.

But I don’t see any point in waiting. Firstly, the sooner I get my money working for me, the better. And secondly, there are plenty of brilliant bargains out there I’m hoping to buy before the market wises up and they rise in price.

Here are a couple of cheap, high-dividend shares I’m thinking of buying before the end of the week.

HSBC Holdings

I may not be able to draw down on the dividends HSBC Holdings (LSE:HSBA) offer just yet. But the income it provides can be used to buy more shares, giving me the chance to compound my earnings over time.

And the dividends City analysts expect the bank to pay in 2024 are certainly worth paying attention to. Today, its dividend yield sits at an enormous 9.9%.

Combined with its low price-to-earnings (P/E) ratio of 6.3 times, I think it’s a top value stock.

Asia-focused companies like this could face some profits turbulence as China’s economy splutters. But the long-term outlook for HSBC remains robust, with wealth levels tipped to drive demand for financial services through the roof.

The FTSE 100 bank is investing heavily to capitalise on this opportunity too. It plans to add hundreds more staff to its investment bank, for instance, it told Financial News last week.

Brickability Group

Brickability Group (LSE:BRCK) also offers a large forward dividend yield right now, at 5.3%. And, like HSBC, I think it’s in great shape to grow passive income over time.

It also looks dirt cheap from a growth perspective, trading on a P/E ratio of 6.7 times.

The housing market remains challenging in the UK which, in turn, poses risk to building materials suppliers like this. But with signs of recovery in homes demand — home sales rose 7% in the first quarter, according to Zoopla — now could be a time to invest.

I certainly expect Brickability’s sales to grow strongly in the years ahead as housebuilding activity picks up. Demand for its product will also be driven by ongoing upgrades to the UK’s ancient housing stock.

The post Last-minute SIPP buys! 2 cheap passive income stocks I’m considering before April’s deadline appeared first on The Motley Fool UK.

In 2023, the FTSE 100 rose 3.8% while the FTSE Smallcap Index largely had negative returns until the end-of-the-year rally helped it break even.

In bad times, people tend to gravitate towards large-cap stocks for their stability. Retail investors panic and sell their holdings in small-cap stocks. This is seen with the fact that UK small-cap funds have seen consistent withdrawals since late 2021.

As a result, good small-cap companies get dumped along with the rest. Personally, this makes them very attractive to me since many are still undervalued. Now, institutional portfolio managers from Dunedin Income and Shires Income are planning to invest.

Given that inflation has consistently gone down and rates have peaked, stocks as a whole could see a lift in share prices and ought to help small-cap companies recover.

Brickability Group

Brickability Group (LSE: BRCK) is a collection of construction companies that work together to provide building materials and contracting services.

As the UK government plans to invest billions of pounds to fix crumbling infrastructure and secure enough affordable housing, construction companies are prime targets to capitalise on this trend.

Unlike most construction companies in the sector, Brickability stands out as having one of the best financials. Its revenue has grown from £163.3m in 2019 to £681.1m in 2023, a 42.9% compound annual growth rate (CAGR). Meanwhile, profits have soared from £6.5m in 2019 to £27.7 in 2023, a 44% CAGR. It also pays a respectable dividend, with a 5.42% yield.

Despite the company having steadily grown, its shares are down over 18% from a year ago, and over 50% from its highs in 2021. Now, it’s trading at a trailing price-to-earnings (P/E) ratio of 6.08x, over 50% lower than the industry average of 9.2x.

The biggest risk to Brickability is how well the housing market can recover and the speed of housebuilding. Despite the desperate need to speed up the pace of housebuilding, political gridlock could keep the market depressed for longer.

However, I’m looking into Brickability for its great financials, low valuation, and secular demand.

Games Workshop

Games Workshop (LSE:GAW) is a board game company best known for its line of Warhammer. In the past six months, the stock has fallen over 12% as a result of macro concerns but is now recovering.

The company has consistently grown revenue and net income in the past four years, at a 16.3% and 19.61% CAGR respectively. Its dividend has grown from £1.25 per share to £4.70 per share, giving it a 4.75% dividend yield at the time of writing.

Games Workshop’s value comes from owning the IP to Warhammer, which it can easily scale to different platforms. From a board game in the 80s, it’s now being made as a movie by Amazon. In addition, it makes money from selling video games and merchandise.

The biggest risk to the stock is its relatively high P/E ratio, which trades at 23.36x. However, I believe it justifies this valuation because of its fast growth.

In the US, growth has soared almost 450% in the past 10 years and is still very underpenetrated. The success in other markets will likely keep growth high.

With the UK economy recovering and its financials and growth strong, Games Workshop seems attractive to me.

The post 2 small-cap stocks that can explode in 2024 appeared first on The Motley Fool UK.

That said, there are actually many smaller, less well-known businesses out there that also return healthy amounts of cash.

Here are two examples, either of which I’d be willing to buy so long as my portfolio was already sufficiently diversified.

Market minnow

With a market capitalisation of around £270m, it’s perhaps no surprise that housebuilder MJ Gleeson (LSE: GLE) doesn’t attract as many headlines as its sector heavyweights in the FTSE 100.

However, I reckon the market’s current aversion to any player in this space could offer an opportunity to long-term-focused Foolish investors like me.

As things stand, MJ Gleeson’s stock trades on a price-to-earnings (P/E) ratio of 11. Importantly, this is after taking into account analysts’ projections that earnings will halve in the current financial year.

They may not be wrong. After all, getting a mortgage is a lot more expensive than it was this time last year, and inflation is still at multi-decade highs.

Even so, this month’s half-year report contained some green shoots.

Strong investment case

Yes, pre-tax profit in the second half of 2022 fell to £16.1m, compared to £24.7m in 2021. However, the company said that net reservations were now “starting to recover“. Indeed, they had doubled from the low levels seen before Christmas in the four weeks to results day.

All told, MJ Gleeson now expects to deliver somewhere between 1650 and 1850 homes in the current financial year. New CEO Graham Prothero is also looking to save £4m annually by making the company “more operationally efficient“.

And the cash returns? Right now, MJ Gleeson offers a forecast dividend yield of 3.1%. That’s not massive compared to top-tier peers. However, it does look more secure (covered almost three times by profit).

Investors might also argue that this company’s small-cap status means the recovery in the share price could be more substantial.

Picks and shovels play

If investing in a single housebuilder feels too risky, another option for me would be Brickability (LSE: BRCK). This this business, of course, supplies bricks (and also rain-screen cladding systems, masonry, paving, roof tiles and slates) to the construction industry.

As with MJ Gleeson, Brickability’s shares have been pummeled over the last year. This is despite trading remaining fairly resilient.

Having “continued to deliver a strong performance across all of its business divisions“, the small-cap expects to report adjusted earnings of “at least” £47m for the full year to the end of March. This would beat analysts’ earlier expectations of £44.7m.

Still cheap

Naturally, the market lapped up this news with shares soaring by over 20%. Even so, Brickability shares continue to look dirt cheap on a price-to-earnings (P/E) ratio of just six.

That valuation looks tempting to me, especially as I’m being paid to wait for a recovery in the property sector.

A total dividend of 3.3p per share is expected for FY23, easily covered by profit. At today’s price, that would equate to a yield of 4.9%.

Again, factor in the possibility of a sizeable capital gain on top of this once the housing market recovers, and I think there are a lot worse places to park my cash in 2023.

The post 2 cheap dividend shares hiding in plain sight appeared first on The Motley Fool UK.

I believe they could provide a healthy second income for years to come.

Central Asia Metals

Investing in mining shares can be a wild ride. Even the best-run raw materials producer can endure profits crashes when commodity prices fall. The Central Asia Metals (LSE:CAML) share price for example sank last summer as prices of industrial metals came under pressure.

But I’d still buy this mining company for my shares portfolio today. This business — which is listed on London’s Alternative Investment Market (AIM) — produces copper from Kazakhstan. It also owns a lead-and-zinc-producing asset in North Macedonia.

I like this particular business because of its impressive record of production. The mining giant beat output estimates again in 2022 at its Kounrad copper project after another record year. Central Asia Metals also produces metal at extremely low cost.

I think profits here could soar from later on this decade if likely supply shortages emerge and prices of base metals rise. The graph below from Wood Mackenzie illustrates how copper demand, for example, could be on course to outstrip future production. Trends like increasing urbanisation and the energy transition will both supercharge demand for the red metal.

I also think Central Asia Metals is a top stock for dividend income. Today it carries a 7% dividend yield. I think this is too big to ignore.

Brickability Group

Investing in small-cap shares can be a great idea for growth-hungry investors. But many smaller UK stocks can also be great investments for passive income. This is where building product manufacturer Brickability Group (LSE:BRCK) comes in.

As the name suggests, this AIM stock makes its money predominantly from selling bricks. Sales volumes of these critical components are tipped to soar as housebuilding activity in Britain picks up (the government is targeting the creation of 300,000 new homes each year).

In fact trading at Brickability is already very impressive. Last week it announced that it “continued to deliver a strong performance across all of its business divisions” and hiked its profit forecasts for the year. That’s even as the housing market suffers near-term softness due to rising mortgage costs.

I’m also expecting a strong repair, maintenance and improvement (RMI) market to underpin strong profits growth at the firm. The UK has one of the oldest housing stocks in the world. This means constant updating is required to stop the country’s homes crumbling into dust.

Now let’s look at Brickability’s dividend forecasts. For the financial years to March 2023 and 2024 the dividend yield sits at a juicy 4.5% and 4.7% respectively.

Making bricks is an energy-intensive process. So Brickability’s profits could suffer if oil and gas prices spike again. But on balance I think this small-cap share could be a great way to make excellent dividend income.

The post 2 top dividend shares (including a small-cap stock) I’d buy today! appeared first on The Motley Fool UK.

The brickmaking behemoth

Grabbing exposure to the UK’s strong homes market is a great idea right now. And I think investing in building materials supplier Brickability Group (LSE: BRCK) is an excellent way for me to do this.

There’s a risk that homes demand will suffer when the Help to Buy equity loan scheme ends next spring. This has the potential to derail many first-time buyers getting on the property ladder.

But I’m not expecting government to stop supporting first-time buyers. Solving the housing crisis is a key issue with voters, after all. So Britain will need to keep building to solve the issue, meaning brick sales at Brickability should remain strong.

Hot homes demand

Indeed, cabinet minister Michael Gove this week touted introducing default protection insurance to help buyers without large deposits secure a mortgage. There are other levers that the government could pull to help first-time buyers from next spring too.

There simply aren’t enough homes to go around. Low interest rates, growing competition among mortgage providers, and (in all likelihood) ongoing government support should keep the industry well supported long into the future.

Expanding for growth

Pleasingly, Brickability remains active on the acquisition stage to make the most of what are likely to remain fertile trading conditions too. It bought timber specialist Taylor Maxwell and roofing giant Leadcraft last summer to boot its product ranges and geographic footprint.

And signalling more potential action on this front Brickability commented last month that its “acquisition pipeline remains strong”. The firm added that it is “assessing a number of potential opportunities”.

At 88p per share, Brickability today trades on a forward P/E ratio of just 11 times. Meanwhile, its dividend yield of 3.1% provides a bonus. I think this represents very good all-round value.

Another penny stock to buy

Copper consumption is also likely to balloon as global construction rates ramp up. In particular, demand for the red metal is tipped to soar as urbanisation rates in emerging regions accelerate.

This is why I’m thinking of investing in Phoenix Copper (LSE: PXC) right now. This penny stock (which trades at 48p) is developing the Empire mine in Idaho with a view to producing first material in H1 next year. The asset contains some 129,641 tonnes of copper.

There’s still some way to go before Empire is up and running. Any setbacks on this front could scupper analysts expectations that Phoenix will start making profits from 2023.

Still, I think the long-term outlook for copper demand still makes this penny stock a top buy today. Phoenix can expect soaring electric vehicle sales to bolster consumption of its product alongside booming construction activity.

Australia’s government also thinks refined copper demand will surge 31% between 2020 and 2030.

The post 2 penny stocks to buy and hold until 2032 appeared first on The Motley Fool UK.

A blend of low growth and rocketing inflation (also known as ‘stagflation’) is the perfect scenario for bullion prices to rise. And last week economic data from the US and the eurozone added to fears that this is happening.

Latest news on this front came from Europe on Friday. It showed eurozone consumer price inflation hitting fresh record highs of 7.5% and GDP growth slowing to 0.2% in Q1. The outlook for gold (and by extension gold stocks) looks quite bright, in my opinion.

BIG dividends

I like gold mining stock Centamin thanks to its decent value for money. At 92p per share the penny stock trades on a price-to-earnings (P/E) ratio of just 12.4 times.

This isn’t eye-poppingly cheap on paper. But I consider this to be an attractive figure given the encouraging forecasts for gold prices and the steps Centamin’s taking to supercharge production rates.

What’s more, at today’s prices Centamin carries a fat 5.1% dividend yield. If I bought physical gold or a gold-backed financial product (like an ETF) I’d receive no dividends at all.

Like any share Centamin exposes investors to some measure of risk. For example, profits forecasts could disappoint if gold prices fail to explode. Still, it’s my opinion that the outlook for this particular stock is skewed to the upside.

Brickability Group

I’d also buy Brickability Group (LSE: BRCK) shares for my portfolio in May. This is because it offers the sort of value that’s hard for me to ignore.

At 93p per share the building products provider trades on a forward price-to-earnings (PEG) ratio of just 0.3. Any reading below 1 suggests a share is undervalued.

Like Centamin, Brickability presents some danger to equity investors. Insolvency specialist Begbies Traynor said last week that the number of construction companies “in critical financial distress” leapt 52% year-on-year in the first quarter.

With the UK economy stalling, it’s possible that Brickability’s earnings forecasts could be downgraded. Still, it’s my opinion that its ultra-low valuation reflects this possibility.

A mega-cheap penny stock

Besides, over the long-term I think Brickability could be in great shape to deliver terrific profits growth.

Nationwide data last week showed that average home values continue to soar by double-digit percentages. This reflects the country’s huge housing shortage, which the government is aiming to solve by creating 300,000 new homes a year.

Firms like Brickability will play a massive role in this housebuilding revolution. I think I could make some excellent returns on the back of this.

The post Cheap UK shares! I think these penny stocks are a real steal appeared first on The Motley Fool UK.

The Works said on Tuesday that “unauthorised access to its computer systems” had caused trading and operating chaos. Some of its stores were forced to close and shop deliveries halted.

The problem of cyber attacks worsened considerably during Covid-19 lockdowns. And it’s expected to keep growing strongly as the world becomes more digitalised.

Soaring sales

With a market cap of just £63m Corero Network Security doesn’t have the clout of the industry’s major players. It will have to work extremely hard then to succeed in this ultra-competitive sector.

But I’m impressed by the rate at which Corero is winning business. The tech giant added 44 new customers in 2021 and saw revenues soar 24% year-on-year. It said in January that its “strong momentum” has continued into 2022 too and that it is investing additional resources this year to bolster growth.

Worth the price

It’s important to know that Corero shares look expensive today. At around 12.75p the penny stock trades on a forward price-to-earnings (P/E) ratio of 141 times.

This is the kind of sky-high rating that might prompt a share price correction if company news flow begins to disappoint. For example if those competitive pressures start to hit revenues growth.

Still, it’s my opinion that Corero’s solid momentum — tied with the rate at which the cyber security market is tipped to keep growing — means that a premium share price is warranted.

Another great penny stock

Getting exposure to the housebuilding sector is another good investment idea today. Property prices continue to soar and Brickability Group (LSE: BRCK) could be a good way to exploit this phenomenon.

As you can probably gather Brickability makes the products that are essential in home construction. Many housebuilders are supercharging build rates as demand continues to exceed supply. A steady stream of positive industry data leads me to think that they’ll remain super busy on the construction front too.

Halifax data today shows average house prices up 11% year-on-year in March. A new record high of £282,753 was also up 1.4% from February, the largest on-month increase for six months.

A dirt-cheap UK share

Of course firms like Brickability could be hit by incoming interest rate rises in 2022. The Bank of England is tipped to step up rate hikes in what could be a blow to buyer affordability.

But so far rate rises and the increasing cost of living is failing to cool the British housing market. And besides, I think Brickability’s dirt-cheap share price reflects this threat.

At 93.5p per share the brickmaker carries a forward price-to-earnings growth (PEG) ratio of 0.3. This is well below the widely-regarded bargain watermark of 1. I’d happily buy Brickability alongside Corero Network Security right now.

The post 2 penny stocks I’d buy with my last £1,000! appeared first on The Motley Fool UK.