August is a time for sun, sea, sand – and spending. Holidays, day trips, kids’ entertainment and long evenings out mean that demands on our wallets skyrocket in the summer.
Dividends from shares can provide much-needed income at such times and certain companies are particularly liberal with their payouts.
Translation specialist RWS could win prizes here. At 85p and with an expected 12.7p dividend, the group is delivering eyewatering annual income of 15 per cent. Such high figures can prompt suspicion that something is awry, but RWS has increased dividends consistently for more than a decade and intends to continue doing so.
Other generous payers include shopping mall owner Newriver Reit and insurance specialist Chesnara, whose shares have risen 53 per cent since I first tipped them, rising more than 12 per cent in the past year alone.
RWS
Midas first looked at translation and patent specialist RWS in 2009, when it was valued at around £140million and each share was priced at the equivalent of 48p.
The stock climbed to £7 by 2021 but has fallen steadily since then and is now trading at just 84p.
The recent performance is disappointing but long-term shareholders are still in the money, benefiting from almost 16 years of dividend income along the way.
RWS has helped companies from Coca Cola to the London Stock Exchange to translate documents, websites and manuals into hundreds of languages
Importantly too, today’s price offers real potential to new investors, with the shares expected to rise materially over the coming years.
Back in 2009, RWS focused on translating patents into other languages and this remains a key part of the business.
It has expanded substantially since then, however, helping companies from Coca Cola to the London Stock Exchange to translate documents, websites and manuals into hundreds of languages.
RWS has developed a range of AI-powered tools as well to help with basic translation exercises, create and update documents more efficiently and ensure that companies’ own AI models work as they should.
Customers here include 15 US states, as well as some of the biggest technology firms in the world.
Chief executive Ben Faes – who took the helm in January – has already taken steps to simplify and streamline the business, accelerate profits and growth, and create solid, predictable revenues.
At the same time, Faes is committed to the dividend, with 12.7p forecast for the year to September and sustained payments expected thereafter. Short-term challenges mean that profits are likely to be down this year but Faes is determined to deliver growth and forked out £679,000 on a million shares just a few months ago.
That purchase proved well-timed but, at 85p, there should be plenty more upside to come, with brokers suggesting the stock is worth at least double today’s price.
Ticker: RWS
Traded on: Aim
Contact: 01628 410100
Chesnara
An anagram of ‘earn cash’, Chesnara was determined from the start to deliver annual rewards to shareholders.
The life assurance and pensions group has fulfilled its mission with aplomb, delivering 20 years of dividend growth and intending to continue in that vein.
Operating in the UK, Sweden and the Netherlands, Chesnara owns several businesses, some which are closed to new customers, while others are keen to attract them.
Closed books generate plenty of cash, which can be channelled into dividend payments. Books that are open to new customers cost more to run but have the potential to deliver long-term growth.
Chief executive Steve Murray has just splashed out £260million on HSBC Life, an ‘open’ business focused on life assurance and investment bonds
Chief executive Steve Murray is keen to balance the two and has just splashed out £260million on HSBC Life, an ‘open’ business focused on life assurance and investment bonds.
The deal increases customer numbers by 45 per cent to nearly 1.5million and takes assets administered by the group from £14billion to £18billion. The transaction also enhances Chesnara’s reputation, given HSBC’s standing in the world of finance.
Crucially too, the acquisition will boost dividends, with 23p pencilled in for 2025, rising steadily thereafter. With the shares at £2.87, that puts the stock on an attractive 8 per cent yield.
Murray and his team are already on the hunt for new growth-enhancing deals and have sufficient cash to go for it, should the right ones come along.
Half-year results this week should be positive and the group has just been admitted to the FTSE 250 index, boosting its appeal to big investors.
Midas tipped the stock in 2012 at £1.90 and again last September at £2.60. The shares have already delivered for investors but at £2.87, they remain a long-term buy.
Ticker: CSN
Traded on: main market
Contact: chesnara.co.uk or 01772 972050
Newriver Reit
Inflation is rising, tax increases are a racing certainty and sentiment is gloomy – an unwholesome combination, not least for Britain’s thousands of stores and supermarkets.
Fortunately, NewRiver shopping centres and retail parks are beating the market and business is brisk. Revenue and profits growth allow the company to be generous with dividends and 6.9p is forecast for the year to next March, putting the stock on a yield of almost 9.5 per cent.
It recently reported a 6.7 per cent increase in consumer spending across its portfolio, far higher than the national average, and chief executive Allan Lockhart expressed optimism for the future.
Lockhart has property in his blood, having worked in the sector since the 1980s and co-founded NewRiver with his father in 2009.
Recent years have been tough but the business is now fighting fit, with 13 retail parks, 27 shopping centres and management contracts for dozens more outlets across the country.
Lockhart’s confidence is based on hard numbers. Recognising the power of reliable data, NewRiver tracks consumer spending across its portfolio on a quarterly basis so Lockhart knows what works best and chooses tenants and locations accordingly.
Top tenants include value retailers like Lidl, TK Maxx and Primark and popular brands such as Boots, Sainsbury’s, Next and M&S. Shopping centres and retail parks stretch from Aberdeen to Hastings and many tenants are benefiting from so-called omnichannel retailing, where customers blend online shopping with trips to physical stores.
Lockhart also bought rival firm Capital and Regional last year, a canny deal that is already delivering results.
Across the group, properties are 95 per cent full, tenants are loyal and rents are rising.
The outlook is encouraging too. Increased rents feed through to higher dividends and boost the value of NewRiver’s properties, so it can sell non-core sites and acquire new ones.
Lockhart also manages assets for big institutions, banks and private equity firms and hopes to do more, earning handsome fees along the way.
NewRiver shares peaked at more than £3.50 eight years ago but have tumbled to 74p.
Covid hurt, the cost of living crisis did not help and NewRiver was hit hard when disgraced financier Neil Woodford fell to earth, as he was a big investor in the business.
NewRiver is now in a better place. Prospects are sound, dividends are attractive and the shares, at 74p, offer room for growth.
Ticker: NRR
Traded on: main market
Contact: Nrr.co.uk or 020 3328 5800
