Currency manager Record (LSE: REC) has detonated in end-of-week trade following the release of electrifying full-year results.
The stock was last 16% higher from Thursday’s close after advising that revenues detonated 13% during the 12 months to March 2017, to £23.9m. This caused underlying pre-tax profit to rise a similar percentage, to £7.9m, while assets under management hit an all-time top of $58.2bn.
Payout rises
These stunning results prompted Record to lift the ordinary dividend to 2p per share from 1.65p in the prior period, and to shell out a 0.91p special dividend. And the Windsor firm hinted that income chasers could have much more to cheer. It said: “The board has decided that conditions are now right for a change in our capital policy and is considering a return of approximately £10m of excess capital to shareholders, more details of which will be provided to the market shortly.”
The number crunchers’ current forecasts suggest that Record is due to pay dividends of 16.5p per share — matching the levels of fiscal 2016 — in the periods to March 2018 and 2019 respectively. Such figures yield a juicy-if-unspectacular 3.4%.
But with earnings expected to keep rocketing (rises of 11% for 2018 and 5% for 2019 are currently anticipated), and following on from last year’s dividend hikes, I reckon payout predictions could receive hefty upgrades in the near future.
Sales accelerate
Investing in the retail sector would appear to be risky business right now, a combination of intensifying inflation and flatlining wage packets playing havoc with consumer confidence.
These troubles were borne out in latest Office of National Statistics numbers this week, which showed retail sales up just 0.9% from the corresponding month in 2016, the lowest rate of growth since April 2013.
Still, there are a number of high street operators that should be protected from the worst of the rising strain on consumers’ wallets, and N Brown (LSE: BWNG) is one such stock.
The huge investment the retailer has made in its niche fashion lines in recent years, like its Simply Be plus-size brand, is helping its offer to continue flying off the shelves. Indeed, N Brown saw womenswear revenues rising 4.2% during the year to February 2017, the best performance for almost a decade.
On top of this, I believe the retailer can expect demand for its products to pick up as cost-conscious shoppers switch down from more expensive ranges offered by competitors.
Delicious dividends
The fashion play is not immune to the pressures swirling around the retail sector however, and with revenues growth expected to slow and the company’s investment drive still rolling, earnings are anticipated to slip 6% in the year to February 2018, say City analysts.
This is expected to prompt N Brown to keep the dividend locked at 14.23p per share.
Still, this projection yields a market-mashing 5.2%. And N Brown’s transformation drive (which has also seen it significantly bolster its online footprint) is expected to tip profits higher again from next year. A 3% earnings advance is pencilled-in for fiscal 2019, a result that is expected to nudge the dividend to 14.3p. As a result, N Brown’s yield improves to 5.3%.
And I reckon the hard yards N Brown has put in to improve its brands and bolster its multi-channel approach should deliver generous dividends long into the future.