Two cheap dividend stocks for your ISA

Thanks to the beauty of compounding, regularly receiving and reinvesting dividends can be a sound strategy for building long-term wealth. If this can be done through the purchase of high-yielding shares on relatively cheap valuations within a stocks and shares ISA, the results can be even more rewarding.

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Here are just two examples of companies that might fit the bill.

Juicy yield

£221m cap River and Mercantile(LSE: RIV) may not be the best known asset manager in the market but with shares trading on a not unreasonable-looking 14.6 times earnings and coming with an attractive 5.2% yield, I think this could be set to change.

Over the six months to the end of December, assets under the company's management rose by 13% to almost £29bn. Net inflows over the period hit £2bn with all divisions of the company registering positive flows. Statutory net profit after tax jumped to £6.1m -- a huge improvement when compared to the £2.7m achieved for the same period in 2015 -- and basic earnings per share more than doubled, from 3.25p to 7.41p.

Fees are, of course, the lifeblood of asset managers and here River and Mercantile has been doing well. Net management fees climbed 20% over the six months to the end of December compared to the same period in 2015 thanks to the aforementioned rise in assets under the company's control. Net advisory fees showed a similar improvement. At £4.7m, performance fees almost quadrupled.

Given that this year's total payout is expected to be 56% greater than last year, I think River warrants closer inspection from those seeking dividends.

"Another successful year"

Guernsey-based Sirius Real Estate(LSE: SRE) is another name that might be unfamiliar to many investors. As an operator of branded business parks in Germany however, Sirius possesses appealing Brexit-proof characteristics as well as a cracking yield.

Yesterday's trading statement for the 12 months to the end of March was also pretty bullish. In addition to moving to the main market, Sirius has grown substantially as a business, with acquisitions of EUR103m agreed or completed in 2016. This included a multi-let office building in Frankfurt for EUR4.5m. The purchase of an asset in Cologne for EUR22.9m is expected to be completed next month.

Annualised rental income increased to over EUR70m by the end of March 2017 in comparison to EUR60.5m in 2016. Most of this was attributed to the company's capital investment programme that has so far seen 160,000 sq m of sub-optimal areas fully renovated into lettable space. Sirius also reported marginally higher occupancy rates at the end of December when compared to the previous year (81%).

Elsewhere, the company agreed or completed on EUR103m of disposals over this period, the proceeds of which -- when combined with the recent EUR15m equity placing -- will be used to for additional acquisitions. Right now, management is looking at a number of multi-office and warehouse business parks, four of which are "under exclusive negotiations".

Aside from the positive numbers and the forecast 4.7% yield on offer (representing a hike of 35% on that paid in 2016), I'm also encouraged by the company's statement that the German market proved resilient during the last year. The attractiveness of its economy could become even more evident as negotiations on the terms of our EU exit start.

Trading on 13.7 times earnings for 2017, Sirius looks an appealing investment.

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Paul Summers 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.