Online gaming business GVC (GVC) has confirmed plans to reinstate its dividend next year after making an impressive start to the turnaround of Bwin.Party, the underperforming gambling company it acquired on 1 February.

The £1.5 billion cap, which is expected to move to the Premium segment of the London Stock Exchange in the next few months, is forecast to produce a 7.4% yield in 2017 after taking a dividend holiday this year.

GVC’s chief executive Kenneth Alexander says Bwin won’t be dilutive to its historically high yield because it’s profitable, cash generative and already showing signs of returning to growth. In the first quarter, Bwin’s long-struggling PartyPoker brand showed its first year-on-year growth for five years.

‘The brand has been given more focus under GVC, it’s got new leadership and new games have been released which have gone well. It’s turned around very quickly,’ says Alexander.

GVC is considering selling parts of Bwin, including the Kalixa payments business, but core brands like Foxy Bingo will remain. Alexander wants to launch Bwin in Latin America and Greece, where GVC has been successful.

Group revenue rose by 9% in the first quarter and by 13% in the year to 20 April, helped by good sports results and the integration of the Bwin sportsbook into GVC’s platform.

GVC is on track to realise substantial cost synergies and is becoming more diversified from a geographic, regulatory and product perspective. At 543p we see plenty more to go for. Canaccord Genuity’s 615p target price implies 13% upside.