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Meet the 62p UK stock with a 7.6% dividend yield
Investors seeking high dividend yields tend to favour blue-chip stocks like Legal & General, Aviva, and HSBC. And that's understandable, as these kinds of companies are established and often very reliable dividend payers. But there are plenty of small UK companies – outside the Footsie – that sport high yields and have equal, if not more, return potential. Here's a look at one that I feel could be worth considering right now. A high yield from a UK small-cap The stock I want to highlight today is Record (LSE: REC). It's a small British financial services company that specialises in currency hedging and specialised asset management and currently comes with a market-cap of around £120m. Listed on the London Stock Exchange's main market (not the AIM), it trades for 62p. At that share price, its prospective dividend yield is about 7.6%. A diversified business model Now, this kind of small-cap stock's going to be riskier than a blue-chip like Legal & General. However, looking at the company and its financials, I like the risk/reward proposition. Recently, Record introduced three key product pillars. These are risk management, absolute return, and private markets. I think this is a sound strategy. Not only does it diversify the company away from currency management (its original business activity), but it provides potential for more long-term growth. The private markets exposure looks particularly interesting. It's still early days here (meaning that this segment isn't having a big impact on revenues today) but this is a huge growth market and there's substantial potential. The currency management side of the business still has the potential to do well though. With Donald Trump in the White House, the world's currency markets are likely to be volatile in the years ahead. Attractive financials Zooming in on the financials, I like what I see. This is a very profitable company. Last year, return on capital employed (ROCE) was a high 30%, meaning that the firm's good at generating profit from the money it has invested in the business. Meanwhile, dividends are rising, which is what I want to see from an income stock. Over the last three financial years, the annual payout's jumped from 3.6p per share to 4.65p per share (4.68p per share's expected for the current financial year). As for the valuation, it looks attractive. Currently, the price-to-earnings (P/E) ratio's only 12.6. At that multiple, there's scope for an upward re-rating if the company can show its new triple-pronged strategy's working. Worth a look On the downside, dividend coverage (the ratio of earnings to dividends) isn't high. So there are no guarantees that the company will be able to continue paying big dividends. There are also no guarantees that the company's new strategy will pay off. After all, private markets is a competitive industry and the group's up against some big players. However, I see a lot of reasons to consider this small-cap stock. Not only does it have the potential to be an income machine but there's also scope for share price gains. The post Meet the 62p UK stock with a 7.6% dividend yield appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Edward Sheldon has positions in London Stock Exchange Group. HSBC Holdings is an advertising partner of Motley Fool Money. The Motley Fool UK has recommended HSBC Holdings. 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. Motley Fool UK 2025
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a day ago
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After a stonking set of results, can the Aviva share price continue to power higher?
After years in the doldrums, long-standing shareholders of Aviva (LSE: AV.) finally have something to shout home about, with the share price up 41% in 2025. The transformation over the past few years into a lean, capital-light business has undoubtedly taken the market by surprise. Now that it's finally got rid of the label of being a 'boring' stock, can the growth story continue? Evolving business model At the heart of Aviva's transformation has been a shift toward a capital-light business model. Less than three years ago, over half of all profits were generated from the more capital intensive business units of Retirement and Heritage. Today, the mix is totally different with General Insurance accounting for half of all profits. But the business isn't ending there. By the end of next year, it expects that over 70% of all profits will be generated from the capital-light insurance, wealth, and protection businesses. Driving this optimistic forecast is the Direct Line acquisition, which completed last month. Direct Line Following the buy-out of personal lines insurance competitor Direct Line, the business now boasts greater than 21m UK customers on its books. To put that in perspective, only Lloyds Banking Group is larger. Today, 40% of the adult UK population has a policy of some sort with them. One of the most important aspects for any insurer looking to grow its book is to find innovative way of reaching more customers. Acquiring Direct Line will boost its presence across retail channels (e.g., through price comparison websites) as well as strengthen its position in lower-cost segments. As it deepens its relationships with customers, I foresee a virtuous cycle ensuing. To provide but one example, clear synergies exist between the newly acquired Green Flag brand, Direct Line's Auto Services, and its own in-house car repair service, Solent. Risks One of the key factors that has boosted profits for Aviva over the past few years has been sky-rocketing insurance premiums. However, clear evidence is emerging that this trend is now going into reverse. The latest monthly national general insurance price index shows that motor insurance premiums across the industry have now fallen for seven months in a row. Premiums are now on average 6% lower than at the start of the year. Now, these figures must be treated with caution because they only include data from price comparison websites. Aviva sells a number of policies direct and through intermediation channels too. Another risk I foresee is potential challenges from the integration of Direct Line into its core business. The business foresees cost efficiencies of £125m over the next three years. However, there is no guarantee that these will emerge. Amalgamating two large businesses together is a lot harder than it looks on paper. Many mergers and acquisitions in the past have failed to deliver on expected cost savings. Nevertheless, I think there is an awful lot to like about Aviva. It operates in many high-growth markets including pensions, advice, and investments. With a growing customer base, the opportunities are clearly there. And the icing on the cake is a forward dividend yield of 5.8%. I have been accumulating the stock for years, and after an excellent set of results, expect to buy more soon. The post After a stonking set of results, can the Aviva share price continue to power higher? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Andrew Mackie has positions in Aviva Plc. 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. Motley Fool UK 2025
Yahoo
a day ago
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Aviva First Half 2025 Earnings: EPS: UK£0.22 (vs UK£0.23 in 1H 2024)
Explore Aviva's Fair Values from the Community and select yours Aviva (LON:AV.) First Half 2025 Results Key Financial Results Revenue: UK£12.4b (up 14% from 1H 2024). Net income: UK£578.0m (down 6.3% from 1H 2024). Profit margin: 4.7% (down from 5.7% in 1H 2024). The decrease in margin was driven by higher expenses. EPS: UK£0.22 (down from UK£0.23 in 1H 2024). Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. All figures shown in the chart above are for the trailing 12 month (TTM) period Aviva Earnings Insights Looking ahead, revenue is forecast to grow 6.6% p.a. on average during the next 3 years, compared to a 5.7% growth forecast for the Insurance industry in the United Kingdom. Performance of the British Insurance industry. The company's shares are up 3.1% from a week ago. Risk Analysis You should always think about risks. Case in point, we've spotted 2 warning signs for Aviva you should be aware of. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
