Interserve provides a wide range of support services, such as facilities management and probation services, as well as construction and equipment hire to many public sector organisations. The firm’s successful expansion into the Middle East has resulted in an increased workforce of 80,000 people.

The market welcomed the encouraging results the company released earlier in the month and the share price has risen 33 per cent since then. These figures accompanied the announcement that it was exiting the energy-from-waste contracts in Scotland which led to a £70m exceptional charge in the first half. Furthermore, the dividend yield of 6.8% is relatively high compared to peers, and the company has a good track record with pay-outs rising steadily for the past 10 years. The improved share price combined with the high dividend yield demonstrates the firm’s strong recovery following the EU referendum.

Support services has seen good growth in the UK and overseas, boosted by acquisitions and the trend to more outsourcing activities in both the private and public sectors.  Revenues are more resilient as the company has managed to derive orders from a wide range of sectors, both public and private. Furthermore, the company’s expansion beyond the UK provides exposure to different areas of potential growth.

Due to the growth in the support services division, the healthy dividend yield and good value represented by the current price, we recommend the Interserve as a buy for those willing to accept a higher level of risk.