This unloved 6% yielder could make you very rich

Greene King
Greene King

Investor appetite for Greene King (LSE: GNK) has failed to recover following the frightful trading statement it put out at the end of September.

Back then the ale giant advised that "we remain cautious about the trading environment and expect[s] the challenges of weaker consumer confidence, increased costs and increasing competition to persist over the near term." The challenging conditions it highlighted were reflected in a 1.2% decline in like-for-like sales for the 18 weeks to September 3.

It doesn't take a genius to work out that the leisure sector is likely to suffer from rising pressure on drinkers' wallets in the months, and possibly years, ahead. But thanks to its concentration on the more affluent South East of England, its brand improvement strategy, and its extensive cost-cutting, I believe Greene King is in great shape to ride out the worst.

Stunning yields

And in my opinion, its rock-bottom valuations make it an extremely enticing pick right now, a predicted 5% earnings decline in the year to April 2018 creating a forward P/E ratio of 7.8 times (earnings are expected to rise 1% in fiscal 2019, as an aside).

Moreover, those on the hunt for scintillating yields really need to give it a close look. Last year's 33.2p per share dividend is predicted to rise to 33.3p and to 34p this year and next, resulting in mountainous 6.3% and 6.5% yields.

Fun in the sun

Thanks to the brilliant revenues potential of its foreign operations, I am convinced National Express Group(LSE: NEX) is another solid dividend share I reckon could make stock pickers small fortunes in the years ahead.

I have long advocated the exceptional investment case for the travel titan, and my faith has been reinforced by brilliant third-quarter trading details released on Thursday.

National Express announced that normalised profit before tax jumped 12.3% during July-September while revenues across the business rose 6.4% from the same 2016 quarter. Passenger numbers, meanwhile, swelled 2.5%, thanks in large part to the progress of its overseas divisions.

In Spain and Morocco, its ALSA subsidiary enjoyed "a particularly strong summer performance," with passenger numbers up 4.1% and underlying revenues 2.1%. And in North America, revenue growth boomed to 13.7% in the three months, National Express reporting "both organic growth and strong progress in interesting new markets."

And the Birmingham-based business affirmed its commitment to M&A in these exciting foreign territories to keep revenues sharply rising.

Another dividend dynamo?

Today's bubbly release has encouraged investors to pile back into the FTSE 250 share with some gusto, it gaining 6% in value as a result.

Still, broadly speaking, National Express has not exactly been the belle of the ball in recent times, the firm having sunk to eight-month lows in the run-up to Thursday's release. So while it has sprung to life again today, it still offers terrific value for money right now.

With City brokers predicting a 6% earnings improvement in 2017, National Express deals on a forward P/E ratio of just 12.5 times. Furthermore, profits are predicted to keep marching onwards too, an 8% increase being estimated for 2018.

And as I already said, it should prove an exceptional selection for income investors. Last year's 12.28p per share reward is anticipated to improve to 13.4p this year and 14.6p in 2018, meaning that yields for these years clock in at 3.7% and 4% respectively.

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Royston Wild has no position in any of the 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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