2 dividend champions for a winning portfolio

Insurance colossus eSure(LSE: ESUR) found itself paddling backwards in Thursday trade after the release of first-half trading details.

The stock was last 3% lower from the mid-week close, but I would not consider today's results as a sound reason to cash out. Indeed, it is no surprise to see investors pause for breath given the insurer's strong share price progress in recent months.

eSure announced today that gross written premiums stomped 22.8% higher during January-June, to £393.3m, while pre-tax profit climbed 44.6% to £45.1m.

The result led chief executive Stuart Vann to say: "I am delighted with our performance in the first half of 2017. We have delivered strong growth in premiums, policies and profits as the success and momentum of our footprint expansion programme and disciplined underwriting continues to drive the business forward."

He added that "in Motor, we are growing across all our customer segments, demonstrating the value and service proposition we offer to customers."

At its car insurance division, eSure saw gross written premiums pound 27.4% higher, to £351.3m, while the number of in-force policies rose 16.4% to 1.74m.

This bubbly half-year result has prompted the Reigate-based business to lift its guidance for the full year. In March eSure said that it expected premiums growth of between 15% and 20%, and in-force policies to see a rise of between 5% and 10%. The company now "expects to deliver results at the positive end of this guidance," it said.

Upgrades around the corner?

Its excellent performance and strong balance sheet (its solvency ratio stood at 153% as of June) in the year to date has encouraged eSure to lift the interim dividend to 4.1p per share from 3p a year earlier, comprising a 2.9p base payout and a 1.2p special dividend.

City brokers are already expecting a dividend of 11.6p per share in 2017, resulting in a hefty 4.1% yield. But given its encouraging capital position and improving momentum, I reckon this projection -- along with eSure's predicted 24% earnings rise -- could be in line for upgrades in the weeks and months ahead.

Bargains beauty

Budget retailer B&M European Retail (LSE: BME) is another dividend stock I think deserves serious consideration right now.

Those expecting blistering yields may be left disappointed. But those seeking meaty dividend expansion year after year need to give the retailer a close look, in my opinion -- as well as benefitting from rising pressure on shoppers' wallets, lighting up demand for its low-cost wares, B&M's store expansion drive in the UK and Germany promises to light a fire under earnings growth.

The City is expecting bottom-line expansion of 16% in the year to March 2018, a result which should drag the dividend from 5.8p per share last year to 6.9p. This estimate yields a handy-if-unspectacular 1.9%.

B&M reported last month that revenues roared 18.3% higher during the first fiscal quarter, with UK like-for-like sales swelling 7.3%. But not content to rest on its laurels, the Liverpool firm pounced on discount convenience store operator Heron Food Group this week to give the top line an extra kick. I reckon there is plenty of reason to expect profits, and also dividends, to continue pumping higher.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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