Looking For Splendid Dividend Stocks At Little Cost? This FTSE 250 Stock Could Be Just The Ticket
In a recent article I took a look at a couple of dividend greats trading much, much too cheaply at the current time. I’m at it again here by discussing another great, undervalued income share, the FTSE 250’s Cineworld Group.
It’s no surprise to have seen the cinema operator’s share price explode on the back of latest trading details released on Thursday (it was last up 9% on the day). It burst back through the 300p per share barrier on the back of announcing that, following the acquisition of US-based chain Regal Entertainment in February, that revenues surged to $1.86 billion during January-June from $528.7 million a year earlier. As a consequence adjusted pre-tax profit boomed 182% from the same 2017 period to $152.4 million.
As I discussed last time I covered Cineworld in April, the spectacular fare driven out by the Hollywood conveyor belt is more popular today than at any point before, and this helped keep box office takings at Cineworld to keep bubbling higher in spite of the popularity of the FIFA World Cup and the hot weather in the UK, issues that have traditionally proved to be a drag on cinema attendances.
Unsurprisingly these Tinseltown cash cows are set to keep on marching through the gate, too. Following on from crowd pullers like Avengers: Infinity War and The Greatest Showman, which drew in the punters during the first half of 2018, titles like Mission Impossible: Fallout and Mamma Mia! Here We Go Again have helped get the latter half off to a bang. And Cineworld still has the likes of Venom, Fantastic Beasts: The Crimes of Grindelwald and Mary Poppins Returns to come.
Profits set to soar
Now City analysts are expecting earnings at Cineworld to blast 165% higher in 2018, and a further 17% rise is being forecast for 2019. What’s more, it’s easy to foresee sales continuing to rip higher as the business extends its wingspan across the planet.
The $5.8bn takeover of Regal has created the world’s second-largest cinema chain. And Cineworld’s quest for global domination also saw it open six sites in the six months to June, adding 56 screens in total across the US, UK, Central and Eastern Europe, and Israel.
The group now operates 792 sites and 9,542 screens but it is not done there — it plans to open 12 further sites and 111 screens for the July-December period alone.
Value plus dividends
Despite its bright growth prospects Cineworld can be picked up on a forward P/E ratio of 14.9 times, cheap even after today’s share price gallop. But this is not the only reason to invest thanks to the likelihood of more delicious dividends.
A 10.8p per share dividend is anticipated for this year, and it is predicted to leap to 12.6p next year. Yields stand at a chunky 3.6% and 4.2% for 2018 and 2019 respectively, and given Cineworld’s exceptional cash generation and stellar profits outlook it isn’t difficult to envisage dividends to do anything but keep ripping higher beyond this point.