With the deadline rapidly approaching for investors to top up their ISA allowance before the 2017/2018 tax year slams shut, I’m looking at two dividend shares investors need to consider buying.
One of these is N Brown Group (LSE: BWNG), a share which is in great shape to keep on delivering market-smashing yields, despite an increasingly-difficult marketplace.
I warned back in January that the clothing retailer’s focus on the value end of the market is no guarantee of immunity to the wider pressure on consumer spending on non-essential items.
However, there were two factors that convince me N Brown has what it takes to keep delivering impressive revenues growth. Firstly, a dedication to servicing the needs of the ‘curvier’, or plus-size, end of the market gives it a pocket of opportunity over its more general high street competitors.
And finally restructuring in recent years to latch onto the exploding e-commerce segment also gives it an edge over many of its rivals, such as fellow cut-price clothing retailer Primark. Indeed, N Brown saw more than 80% of new customer demand generated online during the 18 weeks to January 6, a result that helped total internet revenues rise 9% year-on-year.
And a slew of improvements to its online operations, from the rollout of app upgrades through to customer service improvements such as the introduction of new delivery options, should keep the hit counter ticking over, too.
Looking good
Despite the current strain on shoppers’ wallets, City analysts expect N Brown to finally snap into earnings growth with a 3% rise in the year ending February 2019. As a consequence, the retailer is predicted to keep the dividend frozen at the anticipated reward of 14.23p per share for the prior period. As a result, investors can drink in a monster 8.3% yield.
The good news doesn’t stop here, either. With profits expected to tread 4% higher in fiscal 2020, the dividend is anticipated to improve to 14.7p, meaning the yield stomps to a stunning 8.6%.
Clearly N Brown is not without risk. However, I believe a forward P/E ratio of 7.5 times more than reflects the troubled business environment.
Foreign firecracker
While yields over at SThree (LSE: STHR) may lag those of N Brown by no little distance, I reckon the company should still attract serious interest from income investors.
While the recruitment ace is expected to keep dividends on hold for yet another year in the 12 months to November 2018, at 14p per share, this prediction still results in a gigantic 4.2% yield.
And with earnings growth expected to rev to 16% next year from 6% in the present period, SThree will finally resurrect its progressive dividend policy again, or so say City analysts. A 14.8p reward is currently being forecasted, a figure that nudges the yield to 4.5%.
Like N Brown, SThree can also be picked up for next to nothing, with the company carrying a forward P/E rating of just 12 times. This is far too cheap in my opinion given the stunning progress it’s making in mainland Europe.