While market conditions remain extremely tricky for the likes of Trinity Mirror(LSE: TNI), I believe stock investors may want to take a look given the pace at which the publisher's digitalisation programme is progressing.
The publishing group was making headlines on Monday after announcing that revenues slipped 13% in 2017 to £623.2m, a result that pushed adjusted pre-tax profit 8% lower to £122.5m. The company attributed this to the "weak print trading environment."
Despite this, its financial strength still enabled it to hike the full-year dividend to 5.8p per share last year from 5.45p in 2016. It expects the balance sheet to keep on improving, and in a promising omen for future dividends advised: "The strong cash flows generated by the group provide resilience and financial flexibility to invest in the business, to grow dividends and over time meet pension obligations."
City brokers certainly expect Trinity Mirror -- which is about to rebadge itself as Reach following the acquisition of Express Newspapers last month -- to maintain its progressive dividend policy even though further earnings dips are predicted.
A 1% earnings-per-share reversal is predicted for 2018, yet this is not expected to prove a barrier to the print powerhouse raising the dividend to 6p. As a consequence share pickers can enjoy a 7.7% yield.
The good news does not end here, either, a predicted 6.4p per share for 2019 delivering an 8.2% yield.
The Square Mile is expecting Trinity Mirror's turnaround strategy to result in a modest 1% earnings rebound next year. And given the rate at which digital revenues are growing (like-for-like publishing digital revenues jumped 7% last year), allied with the the success of its cost-cutting exercises, I expect profits to beat a strong and sustained northwards path.
A forward P/E ratio of 2.3 times, allied to its gargantuan yields, makes Trinity Mirror worth a serious look in my opinion.
Fun in the sun
While you're here I'd like to bring your attention to another potentially-explosive income star that could make you a fortune in the years ahead: On The Beach Group (LSE: OTB).
The online holiday giant hiked the dividend to 2.8p per share in the year to September 2017 from 2.2p in the prior period, and City analysts are expecting stratospheric earnings growth to keep driving shareholder rewards skywards.
And so in fiscal 2018, helped by a predicted 25% profits advance, the dividend is expected to rise to 3.6p per share. Moreover, for the following year, a 4.7p dividend is predicted, supported by an estimated 22% earnings improvement.
While subsequent yields may stand at just 0.6% and 0.8% for this year and next respectively, the rate at which On The Beach is likely to hike dividends beyond the medium term should make investors sit up and take notice. Holiday bookings are likely to keep moving online at a strong pace, and On The Beach's superior platforms are likely to see it continue grabbing share from its competitors.
A forward P/E ratio of 26.1 times clearly isn't much to shout about. But a corresponding PEG of 1 suggests On The Beach is actually a bargain based on current earnings projections.
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.