Ace fund manager Neil Woodford holds Legal & General (LSE: LGEN) as a high-yield pick, and hes usually pretty good at spotting sustainable cash payments. With the insurance firms 2015 full-year results due on 15 March, is now a good time to join him?
The predicted dividend yield of 5.9% would only be a little more than 1.4 times covered by EPS, but rising earnings forecasts should be enough to justify that analysts suggest a 15% gain for 2015, putting the shares on a suggested P/E of under 12 on todays 226p share price. With the yield set to rise to 6.7% based on 2017 forecasts, theres not much of a safety margin should the company suffer an unexpectedly bad year or two but forecasts would also drop the P/E to around 10.3 by then, which is not stretching.
The firms Q3 update reported a 14% rise in net cash generation, and chief executive Nigel Wilson opined that by aligning our strategy to macro trends we have created a high degree of resilience in our business model and are well positioned for further growth, so things look good for results on the 15th.
Theres a reasonably strong buy consensus out there at the moment, and I go along with it although I do think there are better bargains in the insurance sector right now.
Also on 15 March, well have 2015 results from Antofagasta (LSE: ANTO). Now, many will think my suggestion that the mining giant could be one of Marchs best picks is insanity and they might be right. But the share price slump has been reversed of late, and since 20 January weve seen a 40% recovery to 491p!
Antofagastas snapping up of a 50% interest in the Zaldvar copper mine from Barrick Gold for $1bn, at a time when commodity prices were are a low and bargains were to be had, could be a master stroke the asset still has an expected life of 14 more years and produced around 100,000 tonnes of copper in 2014.
Theres a big fall in EPS expected for the year just ended, but analysts see 2016 as the start of a strong earnings recovery for Antofagasta. One for the brave, certainly, but it could turn out very nicely.
Another company that could be on the cusp of a turnaround is Gulf Keystone Petroleum (LSE: GKP), whose 2015 results should be with us on 17 March. Gulfs biggest problem of not getting paid for the oil it has been exporting through the Kurdistan Regional Government has been addressed and the firm is now receiving monthly payments. But there are downsides.
Firstly, a recent change away from fixed payments means that the firm will actually receive a little less in the short term (although there is some progress being made towards the payment of around $280m in arrears). And there wont be enough cash coming in to meet this years debt repayments, so some sort of debt restructuring looks like it will be needed.
Will Gulf be able to pull it off? If it does, there could be a nice long-term upside with the firms assets currently very lowly valued on todays share price of just 14p. But if not, well, the company could even go bust.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.