Indeed, the London-listed banks have patchy records when it comes to earnings and shareholder dividends. Their businesses look depressed right now along with their share prices, but I’m not keen to buy their shares.

Why I’d buy this stock for its top dividend yield

The banks are cyclical through and through. And trading tends to suffer or prosper according to the ups and downs of the general economy. We could buy bank stocks to try to ride the next up-leg of a cyclical recovery. But I reckon that strategy is risky. Instead, I’d much rather invest in a firm operating in the wider financial sector such as Randall & Quilter (LSE: RQIH).

The great thing about RQIH is the business is trading strongly right now. And the directors see opportunities for growth in the current market environment. In today’s half-year results report, they underlined their confidence in the outlook by maintaining the interim dividend. And City analysts following the firm expect a modest single-digit percentage advance in the shareholder payment next year.

With the share price near 153p, the forward-looking dividend yield for 2021 is almost 6.7%. I reckon that’s useful income to collect while the business realises its growth ambitions. Indeed, the prospect of capital growth from a rising share price in the coming years is a real possibility.

RQIH describes itself as “a profitable and progressive dividend-paying non-life insurance group.” Operations involve investing in and managing insurance assets. The company also acts as “a conduit”  for capital providers, such as reinsurers, niche underwriting businesses, and managing general agents (MGAs).

A dip in earnings set to recover

Today’s report reveals to us that in the six-month period to 30 June, the company held almost 57% of its gross assets in North America, around 22% in the UK and 21% in Europe. And those assets delivered a pre-tax operating profit in the period up 30% year on year. Although the profit-before-tax figure declined substantially.

The directors explained in the report the results were affected by Covid-19 due to a reduction in total investment returns, delays in on-boarding new programme management business and by a change in the mix of Legacy transactions.  However, the underlying business and financial trends were good in the period and the directors expect the full-year trading outcome to be “in line with market expectations.”

According to City analysts, that means we’ll likely see a surge in profits putting the earnings multiple just below 11 for 2020.  Looking ahead, the directors think RQIH is “well-positioned to capitalise on favourable market conditions.”

I reckon the firm will continue its record of organic and acquisitive growth in the years ahead. Meanwhile, the share price has dipped a bit today, perhaps because of the fall in the net profit figure.

But the dip in earnings looks temporary, and we could be seeing a decent opportunity to buy better value with the shares today.

Investors would be foolish to channel all of their efforts into hunting for large-to-mid-cap businesses on these indices, however, as there are plenty of great income shares on the capital’s lower listings that could also make you a fortune now and in the years ahead.

M&A mammoth

One of these little-known lovelies is Randall & Quilter Investment Holdings (LSE: RQIH), a business whose restructuring drive promises to light a fire under already-impressive earnings growth. Pre-tax profit from continuing operations soared 40% during January-June to £7.8m.

The insurance leviathan has undergone a strategic overhaul to focus solely upon the fast-growing legacy and program underwriting management segments, resulting in the disposal of its Lloyd’s Managing Agency and Insurance Services late last year and in early 2018.

And Randall & Quilter has used these funds to help finance blockbuster M&A to boost its position in North America and Europe. Last month it made its biggest ever acquisition with the takeover  of Global Re US, while it also dusted off the chequebook to buy UK-based MPS Risk Solutions (both purchases are subject to regulatory approval).

It’s no great surprise that City brokers are expecting earnings at the AIM-quoted firm to leap 31% in 2018 and 39% in 2019 given the rate at which it is winning business. It expects more contracts to be signed before the end of the year that will result in annualised gross written premiums around the $500m marker. Randall & Quilter has said that profits estimates could be even higher should the Global Re US takeover receive regulatory sign-off before the end of 2018.

With profits blowing higher it’s also no shock that the number crunchers are predicting impressive dividends. The anticipated 9.1p per share dividend for this year yields an exceptional 4.8% and the dial moves to 4.9% for 2019 thanks to the expected 9.3p payout.

Right now Randall & Quilter carries a forward P/E ratio of just 13.7 times. This is far too cheap in my opinion given the company’s rapidly-improving growth outlook.

Dividends training higher

The trading outlook for Begbies Traynor (LSE: BEG) is also steadily getting better as economic conditions become ever tougher.

The business recovery specialist announced this week that the number of insolvencies in the UK continues to increase, with government statistics showing the total of corporate insolvency appointments rising 6% in the six months to June to 7,915.

Right now City brokers are expecting earnings at Begbies Traynor to edge 4% higher in the year to April 2019, helped by recent acquisition activity, before profits expansion blasts to 21% in fiscal 2020. And the possibility of more M&A action could supercharge earnings growth further out.

This is a good omen for long-term dividend growth as well. In the meantime, though, payouts are expected to rise to 2.5p and 2.8p per share for this year and next respectively, figures that yield a chunky 3.5% and 4%.

Right now the firm boasts a slightly-toppy forward P/E multiple of 17 times, but in my opinion this slight multiple is justified given Begbies Traynor’s position as an increasingly exciting growth and income share.

Latest data from the Universities and Colleges Admissions Service (UCAS), the body which handles applications for higher education in the UK, showed on Thursday that a record 75,380 overseas students (excluding those from the EU) have applied to study here, up 6% from the same point in 2017.

Meanwhile, those applying to study from inside the EU have increased 2% from the corresponding period last year, UCAS added, to 50,130 individuals.

It is too early to say how application numbers from the latter group will alter in the years ahead, given the state of Brexit negotiations and how favourable conditions will end up being for EU nationals. But the latest figures suggest that aggregate demand for university places from those from abroad should remain strong.

Big, big yields

This backdrop makes the likes of Empiric Student Property (LSE: ESP) a great investment destination, in my opinion.

Mirroring the buoyant numbers from UCAS, the student accommodation provider declared in recent days that bookings for the 2018/19 academic year stood at 73% as of June 30, up from 63% at the same point last year. Empiric said that it’s now on track to hit full occupancy for the upcoming academic period.

With the business also stepping up efforts to slim down its cost base, it would appear to be in a strong position to generate solid profits growth in the medium term and probably beyond. While a 9% earnings slip is forecast for 2018, Empiric is predicted by City analysts to rebound with a 50% bottom line advance in 2019.

A bright profits outlook is also allowing the small-cap to continue doling out generous dividends. Rewards of 5p per share are forecast for both this year and next, meaning investors can drink in a bumper dividend yield of 5.5%.

Empiric’s forward P/E ratio of 26.1 times may be expensive on paper, though I reckon the rate at which overseas student numbers continue to grow makes the business worthy of this premium.

Great value. Terrific dividends

Investors seeking classic value plays may want to give Randall & Quilter Investment Holdings (LSE: RQIH) a look, instead.

Thanks to predictions of a 30% earnings jump in 2018, the insurance giant can be picked up on a forward P/E ratio of just 12.1 times — comfortably inside the value terrain of 15 times or below — as well as a corresponding sub-1 PEG reading of 0.4.

This is particularly cheap given that the AIM-quoted stock is in great shape to deliver strong and sustained profits growth, thanks to its robust new business pipeline (a 32% earnings improvement is anticipated for next year).

Reflecting this strong outlook, Randall & Quilter is predicted to fork out a 9.1p per share dividend this year, an estimate that yields 5.5%. And this readout leaps to 5.7% for next year due to the predicted 9.3p payment.

The fossil fuel giant is now trading at its highest since last March above 235p per share, investor appetite still igniting on the back of resurgent crude values. The Brent benchmark was last trading through the $75 per barrel marker and at levels not seen since the dying embers of 2014.

Oil values have gained additional traction as, in tandem with existing supply fears in the wake of recent military action in Syria, market makers are also considering the prospect of fresh US sanctions being imposed on Iran and the possibility of extra disruption to supplies.

In this climate it would be foolish to rule out additional crude price strength. However, I remain unconvinced by the outlook for oil prices further down the line.

US pumping away

OPEC and Russia have of course given energy prices terrific support since the start of 2017 via their pumping cap. However, concern is mounting that, with oil prices continuing to charge as the market surplus declines, the cartel and its partners in Moscow may be tempted to turn the taps up again when the current agreement runs out later this year.

This could prove a disaster for oil prices, particularly as US shale producers continue to boost output at a stratospheric rate. The enormous political and commercial implications of this mean that OPEC will likely have limits on how long it will sit back and watch US output quickly accelerate before joining the party. UAE oil minister Suhail Mohammed Faraj Al Mazrou recently urged more nations to join the supply accord in an interview with German newspaper Handelsblatt.

Too much risk?

Against this backcloth I believe investing in Tullow Oil is a very risky proposition. While the African driller has worked hard to pull down its colossal debt pile, it is still mountainous enough to potentially leave it in a tough position should crude values stage a reversal from current levels.

Despite surging energy values and Tullow’s improving production outlook, earnings at the business are still set to fall 42% and 5% in 2018 and 2019 respectively, or so says City consensus.

When you throw an uninspiring forward P/E ratio of 16.6 times into the mix, I see little reason to invest in the FTSE 250 driller today.

The 6% yielder

I’d be much happier to sell out of Tullow Oil and to splash the cash on Randall & Quilter (LSE: RQIH) instead.

While the insurance specialist is expected to endure an 11% earnings reversal in 2018, it is expected to flip back into growth with a 21% advance next year as its decision to hive off non-essential operations and double down on its core operations begins to bear fruit.

Further to this, 2018’s anticipated bottom-line reversal still leaves the company dealing on a rock bottom forward P/E ratio of 10.8 times.

And income chasers will cheer news that this expected blip is not predicted to hamper further dividend expansion either — an anticipated reward of 8.8p per share for last year is expected to stomp to 9p and 9.3p per share for 2018 and 2019, figures that produce vast yields of 6% and 6.2% respectively.

The hotel operator announced that, although revenues had risen 5.1% in the 12 months to October 2017, to $59.9m, profit before tax had slumped 6.8% in the period to $11m.

Elegant Hotels — which owns and operates seven upmarket hotels and one restaurant in sun-baked Barbados — was struck by an increase in selling, general and administrative expenses which swelled to $22.9m from $20.1m a year earlier. And corporate costs increased following the appointment of a chief financial officer and group operations director.

Today’s release came as particularly troubling news for dividend investors. Reflecting what the company put down to “current market opportunities and the need to reinvest in our properties in an increasingly competitive market” it elected to slice the final dividend for fiscal 2017 to 1.75p per share, down from 3.5p in the prior year.

And as a consequence, the full-year payout dipped to 5.25p per share from 7p last year.

Colossal yield

Now City analysts are currently expecting Elegant Hotels to get building dividends again from this year, supported by expectations that the business will finally see earnings begin to rise again after two successive dips (a 19% rise is currently predicted).

So forecasts are pointing to a 5.7p per share reward for fiscal 2018, resulting in a mammoth 6.4% yield.

Investors need to be aware, however, that of course the factors that saw it slim down the final dividend last year could well endure beyond the current year. And with this year’s projected payment covered just 1.6 times by touted earnings (some way below the widely-accepted safety benchmark of 2 times) the current dividend projection is not as robust as many would like.

Having said that, Elegant Hotels may be worth a visit for many share pickers given the company’s advice that “trading since the start of the new financial year has remained in line with market expectations, and our bookings are currently tracking ahead of the same period last year.” What’s more, in the long-term, the company’s expansion strategy (which saw it snap up the Treasure Beach hotel last year) may lay the groundwork for sustained earnings, and thus dividend, growth.

I reckon an ultra-low forward P/E ratio of 10 times may make Elegant Hotels worthy of serious attention today.

Another bargain income beauty

Investors on the hunt for big-yielding shares on a shoestring also might want to give Randall & Quilter Investment Holdings (LSE: RQIH) more than a cursory glance.

The insurance business has blasted back into earnings growth over the past couple of years and this is finally expected to culminate in juicy dividends being forked out. In 2017, helped by an anticipated 9% profits improvement Randall & Quilter is predicted to pay an 8.8p per share reward.

And with earnings predicted to rise an additional 9% this year, the dividend is expected to rise to 9p. Consequently shareholders can bask in a sumptuous 6.7% yield.

As I say, Randall & Quilter can be picked up for next to nothing, the company sporting a forward P/E ratio of 9.8 times. In my opinion this is exceptional value given the pace of its profits turnaround, helped in no small part by the impressive pace of its ongoing restructuring drive.

The specialist non-life legacy insurance investor advised that pre-tax profit galloped to £5.4m in January-June from £1.2m in the same 2016 period, with a £19.1m contribution from legacy transactions proving critical in driving the bottom line.

Celebrating the results, chairman and chief executive Ken Randall said: “I am pleased to report that the Group delivered a very strong performance during the first half of the year. It is the Board’s view, especially given the advanced state of a number of other legacy transactions and the growing pipeline that the results for the full year will be at least in line with expectations, absent unforeseen circumstances. ”

And Randall added that “the outlook for the Group beyond the current year remains very promising.” The firm’s head specifically pointed out that its ongoing programme to simplify the business, following the recent disposals of its Lloyd’s Managing Agency and Triton divisions, still has some way to go.

A great all-rounder

Current City forecasts certainly suggest that Randall & Quilter is worth checking out right now. The company is expected to record a 61% earnings increase in 2017, resulting in a forward P/E ratio of 7.8 times, which falls under the broadly-considered bargain watermark of 10 times.

Furthermore, a corresponding sub-1 PEG readout, at 0.1, underlines the investment giant’s brilliant value in relation to its growth potential.

And Randall & Quilter would appear to be a terrific all-rounder given that the number crunchers are also predicting juicy dividends in the near-term at least. In 2017 the business is expected to pay an 8.6 per share dividend, resulting in a market-mashing 5.9% yield.

IT master

Servelec Group (LSE: SERV) is another London-quoted stock that should deliver pleasing returns for both income and growth seekers, at least if current analyst projections are anything to go by.

In 2017 the company is expected to generate a 22% earnings increase, creating a delectable forward P/E ratio of 14.2 times as well as a PEG multiple of 0.6. And the Sheffield-based business is expected to keep this uptrend going with a 9% bottom line increase next year.

As I already said, Servelec provides plenty to get excited about on the dividend front too. An estimated 6p per share payout, if realised, would mark a decent upgrade on 2016’s 5.65p dividend and yields a chunky 2.1%. And the yield stomps to 2.3% for next year, thanks to a predicted 6.4p reward.

The IT services provider returned to profits growth in the first half of 2017, the vast sums it had ploughed into product development helping to drive orders once again and to rebuild relationships with its previous clients. And with conditions across many of its key markets also improving, I reckon Servelec could be about to deliver a period of sustained earnings growth.

Dividend increase

Shares in insurance group Randall & Quilter (LSE: RQIH) gained as much as 7% today after the company reported a more than tripling in profits in 2016. As after-tax profits increased from £2.8m to £8.3m, the Bermuda-based insurance investor and service provider also announced its first dividend increase since 2012, boosting its full-year dividend from 8.4p per share to 8.6p per share. This gives its shares a tempting prospective dividend yield of 6.8%.

The insurer is also upbeat about its prospects going forward. “2017 is expected to be a year characterised by further profit growth and strong strategic focus,” the company said in today’s announcement. R&Q sees further acquisition opportunities this year and expects to reap the rewards from the expansion of its product offering and stronger distribution in North America after years of investment and underperformance.

However, not everything is rosy. The company managed to deliver an extremely strong performance in its Insurance Investments Division following the completion of a series of 15 legacy transactions during the year and an improvement in investment returns. But profits fell sharply from its Insurance Services division, while losses widened at its Underwriting Management unit. This indicates an unbalanced reliance on investments as a source of growth, which could become a cause of concern should the company struggle to acquire new businesses and investment returns decline.

Growing acceptance

Meanwhile, Xeros Technology (LSE: XSG) announced the rollout of its commercial laundry machines continues apace. Shares in the developer and provider of polymer-based technologies gained by as much as 4% today as the company reported group earned income increased to £2.5m in the 17 months to 31 December 2016, up from £480,000 for the year to July 31 2015.

The company’s progress in the laundry market continues at a steady pace, with Xeros seeing multiple successful customer trials in the performance workwear market and increasing in its order backlog to 438 machines at the end of March. In addition, Xeros is seeing promising trial results for its polymer technology in tanning and textile manufacture applications, which could underpin the long-term growth prospects of the company.

Xeros is still some way away from delivering significant profits, as its pre-tax loss in the 17-month period widened to £21.1m, from a loss of £10.7m in the year to July 2015. However, the company is moving towards generating meaningful revenues — CEO Mark Nichols advised that “2017 will be a year of execution, in which we significantly progress the commercialisation of our highly disruptive, innovative technology.”

Year-to-date, shares in Xeros haven gained 26% — but they may yet have further to go. Xeros is looking to expand its distribution network and has recently secured a significant forward channel partner agreement to enter the Australian commercial laundry market. And as the rollout continues, Xeros could prove that there is growing acceptance and demand beyond the US and UK commercial laundry market. This would be a major boost to the company’s growth plans, increasing the penetration of its target markets.