Thursday tips round-up: Dignity, Legal & General

There are few things in life as certain as death, which gives funeral parlour operator Dignity exceptional visibility. So while the number of funerals dropped by 3.5% last year, the company is now set to benefit from the 23% rise in deaths registered over the first eight weeks of this year. In 2014 unfulfilled pre-arranged funeral plans grew by 25,000 to 384,000, providing a secure pipeline of future business.

Furthermore, the large number of independently-owned parlours in the UK means it has space to grow, given its financial resources. The statutory pre-tax loss it saw last year was a function of the costly debt refinancing it carried out in order to return £64.4m in funds to its shareholders. So ‘hold’ on to your shares in the 200-year old business, says the Daily Telegrah’s Questor column.

Insurance and asset management group Legal &General provides investors with a reliable source of dividend income, thanks to the transparency of its business and predictable cash-flows. While the different parts of the business are moving at different speeds the company continues to be a dependable cash generator, up by 10% last year to £1.1bn.

In the last five years the dividends have almost tripled, increasing by 21% for 2014 to 11.25p. The pay-out looks set to improve by another 15% this year. The current dividend yield stands at 4.2% and may increase to 4.8%. 'Buy', says The Times’s Tempus.