COMMENT
FTSE Dividends Are Booming

By Maynard Paton (TMFMayn)
August 3, 2005

Blue-chip dividends are booming. So far this summer, half-year payouts declared by FTSE 100 constituents have on average increased by 14%.

There's good news too for followers of the Motley Fool's Value Investor newsletter: seven 'high yield' blue-chip recommendations have upped their payouts by 12% on average in recent weeks.

This table lists the 28 FTSE companies that have announced a six-month payout since the start of July:

Company	Dividend change (%)
Amvescap (LSE: AVZ)	+60
Royal Dutch Shell (LSE: RDSB)	+46
Carnival (LSE: CCL)	* +40
AstraZeneca (LSE: AZN)	+37
BP (LSE: BP.)	+25
Rio Tinto (LSE: RIO)	+24
Capita (LSE: CPI)	+20
Exel (LSE: EXL)	+18
Reckitt Benckiser (LSE: RB.)	+13
Northern Rock (LSE: NRK)	+11
British Gas (LSE: BG.)	+10
Allied Unichem (LSE: AUN)	+10
British American Tobacco (LSE: BATS)	+10
Hanson (LSE: HNS)	+9
Reed Elsevier (LSE: REL)	+9
HBOS (LSE: HBOS)	+9
HSBC (LSE: HSBA)	* +8
Alliance & Leicester (LSE: AL.)	+7
Cadbury Schweppes (LSE: CBRY)	+5
Rolls-Royce (LSE: RR.)	+5
Liberty International (LSE: LII)	+5
Shire Pharmaceutical (LSE: SHP)	+5
Pearson (LSE: PSON)	+3
Legal & General (LSE: LGEN)	+2
Prudential (LSE: PRU)	+2
GlaxoSmithKline (LSE: GSK)	+0
Lloyds TSB (LSE: LLOY)	+0
Reuters (LSE: RTR)	+0
Average	+14

(*Denominated in US dollars)

Significantly, there were no decliners and just three payouts were maintained.

Of particular interest are the superb increases at BP and AstraZeneca. These two heavyweights represent 10% and 3% of the FTSE 100 index respectively and, despite reporting profits in (weak) US dollars, their sterling-based payouts will serve index trackers well. HSBC, representing nearly 8% of the FTSE 100, is another share that should please the tracker faithful.

On the other hand, the welcome 46% jump at Royal Dutch Shell (representing over 8% of the index) perhaps had more to do with the recent unification of the Anglo-Dutch oil giant. In addition, the 60% hike at Amvescap follows a substantial dividend cut last year.

Still, a 14% average improvement and a median at 9% indicate British blue chips as a whole remain in good health. The upward dividend trend is confirmed by FTSE yield statistics. Despite the market's weak overall performance during the past five years -- it's down 17% -- the FTSE 100 is now paying out 27% more in dividends!

End of	FTSE 100	Dividend yield (%)	FTSE 100 dividend points
July 2000	6,365	2.08	132.4
July 2001	5,529	2.45	135.5
July 2002	4,246	3.35	142.3
July 2003	4,157	3.39	140.9
July 2004	4,413	3.32	146.5
July 2005	5,282	3.19	168.5

What now?

You could of course own an index tracker to receive a share of these bumper dividends. But you could earn a larger chunk through Value Investor!

Since the newsletter's launch in January 2004, Value Investor members have enjoyed 18 'high yield' FTSE 100 recommendations, whose prospective dividend yields currently range from 3.2% to a whopping 7.0%. Their average forward yield is 5.2% -- well above the market. Dated 13 July 2005, the Value Investor scorecard shows the 18 recommendations have produced a 19% average return.

Unfortunately, the exact identities of the 18 high yielders can't be revealed in this article -- although seven of them are listed in the first table! This free trial has all the details.

A free trial of Value Investor is just that: free. The trial allows access to all past editions, there is no obligation to pay a penny within 30 days and you can cancel anytime. Since its launch in January 2004, Value Investor has recommended 62 shares, the average gain of which has been 10% (as at 13 July 2005).

Maynard owns shares in GlaxoSmithKline.