Now's the time to take the money and run at Land Securities

Mitie is pick of the support services sector; CRC continues to buck the telecoms trend;

There's nothing so comforting in these nerve-jangling markets as the prospect of a bumper cash payout for shareholders. Whether it is a chunky dividend or a big return of capital, Land Securities has them both.

There were a few cheers in the City yesterday when Ian Henderson, the chief executive, upped his promised return of capital from the £500m flagged in May to £540m. Investors on the share register on 5 September will get new shares that are immediately redeemable for 102p in cash.

The company has taken a look at its balance sheet and decided it can prudently take on a higher proportion of debt, still have a decent credit rating, and still commit itself to progressively raising the six-monthly dividend. The dividend yield, at yesterday's share price of 792p, is already more than 4 per cent.

It's a good tale, and is certainly attractive in the current climate. But the shares themselves are higher risk than they once were, and the balance of probability is that they will decline in value.

The wider restructuring of the group in recent years has moved the company on from its days as a staid old cash cow, reaping rents from its property portfolio. That is not an attractive business model in an era of low inflation. So the company has become much more active in property development. Only yesterday, Mr Henderson was visiting the company's new leisure complex at The Gate in Newcastle which, at £63m, is one of its costliest new projects.

The company is also pinning its hopes on Trillium, a facilities management business which, it is hoped, will contribute 25 per cent of profits in five years, up from 10 per cent now. The jury is still out. Trillium acts as an intermediary, taking on management of giant property portfolios (such as those of the BBC and British Telecom) and contracting out services such as cleaning and maintenance. It is a decent proposition for the likes of BT, increasing their corporate flexibility and raising a tidy sum to boot. But bidding for these contract is costly. The contracts stretch for decades, so it is difficult to judge what liabilities may be. And the settled level of margins won't be certain until the early deals with their sub-contractors start to be renegotiated.

Meanwhile, the value of the group's London office properties looks set to decline as the effects of the economic downturn feed through. Land Securities shares trade at a sector-average discount to the company's net asset value, when most agree the discount should be narrower. Unfortunately it is the asset value that is likely to come down, rather than the shares to rise.

The prospect of a return of capital should hold up the shares until September, but its longer term prospects are much more cloudy. Avoid.

Mitie is pick of the support services sector

The world of contract cleaning and maintenance was made sexy by Sir Clive Thompson (aka Mr Twenty Per Cent) but investors are finding it notably less attractive of late.

Mitie's chief executive, Ian Stewart (whose own expectations of the company's future growth might make him Mr Nearly Twenty Per Cent) was bemoaning the market reaction to yesterday's full-year figures, which showed another record profit, up 21 per cent to £30.4m in the year to March. His shares fell 6p to 107.5p, almost their worst in two and a half years.

The accounting woes of Amey and other companies, which have been aggressively expanding in blue-collar services, has triggered a long overdue derating of the support services sector as a whole. But Mitie does stand out as a star, with clear earnings growth ahead of it, even more so as its contracts get bigger and longer. The stock trades on less than 15 times expectations of current-year earnings, which is great value for highly visible growth of this kind.

Mitie has grown by all-share acquisitions – the best way to keep its new employees incentivised – but this is not as alarming compared to other cases. The price is capped and is always lower than Mitie's prevailing price-earnings ratio; that is, it is always earnings enhancing. The unique business model makes Mitie the pick of its sector, and the shares are now worth picking up.

CRC continues to buck the telecoms trend

You could be forgiven for assuming a company which gets the bulk of its business from the mobile phone and set-top box markets would be one to avoid. Three-quarters of CRC Group's work is on mobile phones and the handset maker Nokia alone accounts for just under two-thirds of sales.

But CRC provides "after-sales" services, where it services and repairs mobiles and set-top boxes. Second-quarter sales and profits grew more strongly than expected, the company said yesterday. It is the second quarter in a row to have confounded the sceptics.

CRC puts the improvement down to managing its business more efficiently. The group also benefits when customers launch new products – which Nokia has been doing aggressively – as there is more scope for the kit to go wrong.

CRC is not without risk. Nokia could terminate one or all of its contracts with CRC before it has had a chance to diversify into other areas, for example.

Analysts expect the company to make about £8.4m of pre-tax profits this year on sales of about £110m. Forecast earnings of 23.5p put the stock (up 14.5p to 232.5p) on a forward multiple of 10 times. Even after factoring in the risks, that does not seem demanding. Buy.