Picking the right dividend stocks could help the investor earn a higher income than savings or bonds – using the TipRanks Stock Screener Tool, we picked up two very famous stocks from Britain’s media landscape which offer the potential of high dividend income.
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News publisher, Reach (GB:RCH) and media and television company ITV (GB:ITV) are both well-known names in Britain – but what’s less well known is that they have a dividend yield higher than the industry average.
The two stocks also have good upside potential in their share prices, according to analysts.
Let’s discuss the stock in detail.
ITV Stock
ITV is a household name in Britain, a media and entertainment company with the largest TV network in the UK. The company also creates and distributes content globally through its ITV Studios.
The company’s stock has seen a bumpy ride in recent months, after the company announced its last annual results for 2021. Although the numbers were good, investors seemed to be worried about ITV’s aggressive content investments. The stock has been trading down by 41.2% YTD.
The increased spending is due to the launch of streaming service ITVX in November 2022, which will replace the current ITV hub. ITVX is a new free, ad-funded service, and the company is expecting it to generate £750 million of digital revenues by 2026.
Recently reported interim results for 2022 gave relief to its shareholders, as the company is on track to achieve the targets and maintain higher shareholder returns. It announced an interim dividend of 1.7p per share and remains on track for a total dividend of 5p for the full year.
According to TipRanks’ analyst rating consensus, ITV has a Moderate Buy rating. The ITV target price is 107.25p, which shows a growth of 67% on the current price level.
Reach PLC Stock
Reach is a UK-based publisher of newspapers, magazines, and online content – well-known for publishing the Mirror and Express newspapers. The company has around 130 million national and regional brands spread across print and online media.
The company has been a stable dividend payer for a long time now. Its dividend yield is quite attractive at 9.5% as compared to the sector average of 0.54%.
It further announced an interim dividend of 2.8p per share in its interim results reported in July 2022. The dividend amount is 4.7% higher than the interim dividend of 2021.
In the interim results, digital revenue increased by 5.4% to £72.5 million. However, the total group revenue was marginally down by 1.6%, hit by a fall of 3.9% in print revenues. The print business is currently facing headwinds from inflation, which is affecting profits.
To overcome this, the company is incorporating some operational changes in print production and distribution for cost efficiency.
The Reach target price is 93.0p, which is 21.4% higher than the current level. The company has one Hold rating from Barclays analyst Nick Dempsey.
Conclusion
These companies recognise the importance of growing dividends for their shareholders. Even though the stock prices are currently affected by market volatility, analysts believe they have long-term growth potential.
