I think this 3% growing dividend yield could be one of the safest around

I’m still as bullish as I was last December about this counter-cyclical small-cap stock and its growing dividend yield.

And Begbies Traynor (LSE: BEG) had a ‘good’ coronavirus-crash experience. Indeed, the business recovery, financial advisory and property services consultancy saw its shares bounce back fast after the March crash. And by 7 April, the stock had exceeded its level before the market plunge.

A growing dividend yield

Had you bought some of the shares in December, you’d be up around 12% at today’s 98p. And on top of that, the company hasn’t missed a beat with its shareholder dividends. In today’s full-year results report to 30 April, we learn that the directors have raised the total dividend for the year by almost 8%. The forward-looking yield for the current trading year is around 3%.

And there are some more tasty figures too. Revenue rose by just over 17% compared to the previous year, driven by both organic progress and acquisition activity. And adjusted earnings per share moved almost 19% higher. It seems clear the firm’s doing many things right. And I reckon the shares are a decent ‘hold’ in the economic environment we’re experiencing now.

Indeed, today’s report reveals to us the company earned around 75% of its operating profit in the period from business recovery and financial advisory services. Executive chairman Ric Traynor expects an increase in market insolvency levels “once the short-term Government support measures for the economy are removed.”

When times are tough for other companies, Begbies Traynor tends to do well from its business recovery, insolvency, and restructuring work. As such, operations have a degree of counter-cyclicality. And in the current economic environment, the shareholder dividend could be one of the safest around.

Growth ahead

Looking ahead, Traynor reckons good trading and a higher order book in the current trading year places the company well to exceed today’s results. Recent acquisitions and investment in operations should also boost the results a year from now. The company expects insolvencies to rise this year, so there’s a strong tailwind behind the business.

In a measure of the firm’s resilience, it kept trading through the lockdown and didn’t call on any financial help offered by the government. And I think the business is in the rare position that the coronavirus pandemic has improved its forward prospects. Indeed, the difficulties Covid-19 created for other companies could boost insolvency levels and create more work for Begbies Traynor.

The forward-looking earnings multiple for the current trading year to April 2021 is around 16. Meanwhile, the dividend has been on the rise since 2017, powered by impressive increases in revenue, earnings and cash flow. It seems to me those measures have every chance of improving further in the years ahead.

I’m tempted to add the share to my long-term diversified portfolio to collect that growing dividend yield.