Sale! 3 stocks with double-digit earnings growth and 5% dividend yields

The 2014 financial year (FY) is over for most ASX-listed corporations and investors need to be ready for the flood of earnings results which will hit the market in August.

At this late stage there should be few surprises and most companies can be expected to report FY 2014 numbers close to analyst consensus expectations. Of much more importance will be the outlook statements provided by management for FY 2015.

Here are three companies which according to consensus estimates provided by Morningstar are forecast to grow their earnings by over 10% in the 12 months to FY 2015. All are also trading on forecast dividend yields above 5% fully franked.

Importantly, these three stocks are also trading on price-to-earnings (PE) ratios below the average FY 2015 PE multiple for the S&P/ASX 300 Industrials Index (ex-financials) of 17 times.

1) Engineering and professional services provider Cardno Limited (ASX: CDD) has just released preliminary full-year profit guidance for earnings per share (EPS) of approximately 51.6 cents per share (cps). This is slightly below the consensus figure of 53.7 cps. Whilst this will disappoint some investors, it’s worth noting that management is upbeat in its assessment for FY 2015. Even allowing for a slight revision downwards in the current consensus figure for FY 2015 of 60.1 cps, Cardno should still comfortably achieve double-digit earnings growth. A full year dividend of 36 cps for FY 2014 is expected which implies a fully franked dividend yield of 5.7%.

2) Pharmaceutical-wholesaler Sigma Pharmaceutical Limited (ASX: SIP) continues to face tough industry conditions, however it is still forecast to achieve double-digit EPS growth in FY 2015. At the current price, the stock has a forecast fully franked dividend yield of 5.9% and a PE of 13.7.

3) Retail Food Group Limited (ASX: RFG) is forecast to achieve EPS growth of 12.8% in FY 2015 despite heightened competition with Domino’s Pizza Enterprises Ltd. (ASX: DMP). Assuming the company meets expectations then it currently trades on a PE of 14.9 and pays a dividend of 24.6 cps with a yield of 5.5% fully franked.

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