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2 Dirt-Cheap Dividend Dynamos I’d Buy Before Next Week (Like This FTSE 100 Star)


Today I am discussing two top dividend shares investors should consider buying in the coming days.

Bloomsbury Publishing

Publisher of the Harry Potter book franchise, Bloomsbury Publishing, has long proved to be a brilliant buy for income chasers.

It’s raised the annual dividend 24 times on the spin and thanks to the immense earnings visibility created by the boy wizard’s enduring appeal with readers young and old — not to mention the exceptional cash flows that he helps to conjure up — City analysts don’t expect this run to come to an end any time soon. Last year’s 7.96p per share reward is expected to rise to 8.4p in the period to February 2020 and again to 8.9p in fiscal 2021, numbers with yields of 3.4% and 3.6% respectively.

What’s more, Bloomsbury looks in great shape to make good on such forecasts as well. On top of its robust balance sheet (net cash rose to £27.6m as of January), those estimated dividends are covered more than 2 times by anticipated earnings, too.

And I believe now could be a great time to buy the books giant. Not just because of those inflation-beating dividend yields. And not just because of its low forward P/E ratio of 15.3 times which is in and around the widely-considered value watermark of 15 times and below.

No, with fresh financials just around the corner — half-year trading numbers are slated for Tuesday, October 29 — I reckon the share price could be about to spring higher. Sales may have ducked 3% in the four months to June, according to Bloomsbury’s most recent update in July, though this was down to traditional seasonal weakness and the strong comparators of the previous year.

In truth, demand for its non-consumer titles (like Harry Potter) and its consumer books remain robust, whilst its turbocharged push into the academic and professional publishing arena is also paying off richly. And I fully expect these items to be reflected in those imminent financials.

Barratt Developments

I also reckon now could be a good time to buy Barratt Developments as the share price here could be primed to spike in the coming days, if not hours.

The housebuilder isn’t due to release financials of its own. It did that earlier today, in fact. No, I reckon the FTSE 100 firm could spike should UK lawmakers achieve the impossible and grab a Brexit deal with the European Union that it can pass through Parliament, and possibly as soon as Saturday.

Now look, the obstacles to getting a deal over the line remain significant as those wanting a ‘hard’ Brexit, a ‘soft’ Brexit, or no Brexit at all compete for supremacy. However, with discussions over a second referendum rising amongst MPs it’s possible that those not hoping to lose Brexit at all may well hold their nose and vote for any deal to pull Britain out of the trading club, giving prime minister Boris Johnson the numbers he needs to leave the continental trading block as he so desperately intends on October 31.

The housebuilders have seen their share prices leap in recent days as the threat of a no-deal Brexit has waned, and Barratt is now at its most expensive level for two years. There’s plenty of room for it to continue rising, too, helped by its still-low valuations — it currently trades on a forward P/E ratio of 9.5 times and boasts a brilliant 6.2% dividend yield for the fiscal year to June 2020.

Incidentally, in that trading release of today Barratt advised that “we have started our new financial year well, with a good sales rate and a healthy forward order book.” Its sales rate from the start of the new financial year to October 13 was at 0.72 net private reservations per active outlet per average week, broadly stable with the previous year, while its forward sales book had risen to 12,963 homes. And in my opinion there’s little reason to expect demand for the firm’s newbuild homes to cool off given the country’s worsening homes shortage, a problem which threatens to run for decades to come.

Royston Wild owns shares in Barratt Developments.

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