Companies often make positive noises about dividends that might be under pressure, but it's rare that we get what amounts to almost a five-year guarantee. But that's what we appear to have from Stobart Group(LSE: STOB), with its forecast dividends set to yield 7.4% this year and 7.7% next.
That's despite a drop in EPS on the cards this year, and predicted earnings not coming close to covering the projected payouts.
In a trading update Thursday, Stobart said: "Its strategy is to use disposals from its Infrastructure and Investment divisions to support the dividend to 2022, at which point the dividend will be supported through income from its growing operating divisions; Aviation, Energy and Rail."
The company, which has gone through significant restructuring since its early trucking days, now owns and operates London Southend and Carlisle Lake District Airports -- and it's seen a 25% rise in passengers at Southend during the year.
Volume targets for its Energy division are expected to be achieved during 2018, and the company says it is "on track to deliver EBITDA targets on rail and civil engineering projects," which will help support its aviation business.
On top of that, Stobart has revealed an interest in troubled airline Flybe Group, and while there's been no firm move towards an acquisition yet, Stobart has confirmed it is considering bidding for the company as part of a consortium. Flybe shares climbed by around 25% when the news emerged.
If you buy Stobart shares now, you'll be buying into a long-term story that's really only just getting started and might well have a very rosy future ahead of it. Current valuations are hard to quantify, but there's unlikely to be any shortage of cash, and the firm's faith in its dividend is reassuring.
I see Stobart as a buy-and-forget stock right now.
When I look at Bovis Homes Group(LSE: BVS), I see another big dividend payer whose shares appear to be unfairly overlooked.
Bovis did go through a bad patch and lost a fair bit of customer confidence, but under a new boss and the implementation of a turnaround plan, we're looking at forecasts for a return to earnings growth this year after two years of falls. Analysts are predicting a 37% EPS gain for the current year, with a further 16% pencilled in for 2019.
With 2017 results, delivered on 1 March, chief executive Greg Fitzgerald said: "In 2018, we will deliver a controlled increase in volume, continue to build upon our high level of customer service, drive profitability, and complete our balance sheet optimisation."
And though the firm saw a fall in profits, the average selling price rose by 7%, and year-end net cash soared by 275% to £144.9m.
Crucially, the dividend was lifted 6% to 47.5p per share, for a yield of 4.1% on the current share price of around the 1,170p level.
And in 2018, the company will be embarking on a plan to return total special dividends of £180m over the three years to 2020. That's equivalent to around 134p per share, and should boost income very nicely in 2018 and beyond.
The total forecast for this year of 98p would provide a yield of 8.4%, rising to 8.8% if 2019 predictions come good.
P/E multiples dropping to around 10 look too cheap for a company generating these levels of cash and paying such big dividends.
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Alan Oscroft 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.