COMMENT
Ten Facts About Booming Blue-Chip Dividends
By
Maynard Paton (TMFMayn)
March 14, 2006
Blue-chip dividends continue to boom. Here are ten facts you should know:
1. Average increase of 16%: So far this year, 59 FTSE 100 companies have released full-year, interim or nine-month results. And the average dividend hike reported has been an impressive 16% while the median was a decent 10%. A list of the 59 shares is at the end of this article.
2. The largest increases: Ten payouts surged by 30% or more. They were declared by International Power (LSE: IPR), BG (LSE: BG.), Carnival (LSE: CCL), Centrica (LSE: CNA), Xstrata (LSE: XTA), AstraZeneca (LSE: AZN), Capita (LSE: CPI), ITV (LSE: ITV) and BHP Billiton (LSE: BLT).
3. And more big increases: A further sixteen FTSE companies lifted their dividend between 10% and 30%.
4. Welcome to a maiden payer: PartyGaming (LSE: PRTY) was the sole FTSE 100 member to join the dividend list in 2005.
5. Two held dividends and one non-payer: Just two FTSE companies continue to maintain their payout: Lloyds TSB (LSE: LLOY) and Reuters (LSE: RTR). Cairn Energy (LSE: CNE) is the only blue chip to keep its payout at zero.
6. And no disappointments: No blue chip cut or scrapped its dividend last year. Notably, the sole disappointer during 2004, Amvescap (LSE: AVZ), followed up a 35% reduction with a 28% increase in 2005.
7. Favourable currency fluctuations this time: Unlike 2004, when a weakening US dollar hampered 2004 payout growth, last year's strengthening dollar supported greater payouts.
This table lists the three blue chips that declared both dollar- and sterling-denominated dividends:
So it's fair to assume the following dollar-based dividends, which represent a decent chunk of the market's overall payout, did rather better in sterling terms.
(*interim payment)
8. There were some special payments, too: Special dividends were declared by Anglo American (LSE: AAL), Antofagasta (LSE: ANTO), Rio Tinto (LSE: RIO) and what was Hilton Group and is now Ladbrokes (LSE: LAD).
9. FTSE down but dividends up: Despite the FTSE 100 being 8% below its level of six years ago, the leading index is now paying out 35% more in dividends:
| Date |
FTSE 100 |
FTSE 100
yield (%) |
FTSE 100
dividend points |
| 13 March 2000 |
6,467 |
2.10 |
136 |
| 13 March 2001 |
5,721 |
2.45 |
141 |
| 13 March 2002 |
5,272 |
2.66 |
140 |
| 13 March 2003 |
3,487 |
4.00 |
139 |
| 13 March 2004 |
4,545 |
3.21 |
146 |
| 13 March 2005 |
4,982 |
3.16 |
157 |
| 13 March 2006 |
5,953 |
3.08 |
183 |
Indeed, FTSE statistics indicate the past twelve months have seen aggregate blue-chip payouts jump 16% -- in line with the average so far reported this year.
10. So buy shares: Booming dividends and a record low price to earnings (P/E) ratio make today's FTSE 100 a buy. You can prosper from blue-chip dividends in 2006 and beyond through this low-cost index tracker. Alternatively, beat the index by following the investment recommendations provided by Champion Shares. As at 13 March 2006, the average Champion Shares recommendation sported a 17%* profit versus a comparable 10%* gain from the index. You can enjoy the Champion Shares service immediately with this no-obligation trial.
To learn more about the strength of today's stock market, check out:
"You Should Invest Now" by Maynard Paton
"How To Get Rich From Shares" by David Kuo
"Why Index-Tracking ISAs Are Good For You" by Jane Mack
*Champion Shares performance figures are based on mid-prices taken at the time of recommendation and include due dividends and exclude costs. Maynard owns shares in GlaxoSmithKline, iShares FTSE 100 (an exchange-traded fund that tracks the FTSE 100 index) and contributes regularly to an index tracker.
*Interim payout
**Dividend denominated in US dollars
***Nine-month payout
****Based on 58 dividends, excludes PartyGaming
