5 Stocks With Market-Bashing Dividend Forecasts: Pearson plc, ARM Holdings plc, Mitie Group PLC, Premier Farnell plc And Marston’s PLC

Royston Wild details the delicious returns on offer at Pearson plc (LON: PSON), ARM Holdings plc (LON: ARM), Mitie Group PLC (LON: MTO), Premier Farnell plc (LON: PFL) and Marston’s PLC (LON: MARS).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Today I am looking at a cluster of London-listed plays with sterling dividend prospects.

Pearson

I believe that the fruits of extensive restructuring at educational specialists Pearson (LSE: PSON) should power dividends higher in the coming years. The rise of digitalisation has seen it embark on a massive revamp as traditional textbooks disappear out the window, while a rising emphasis on developing regions also promises to drive revenues skywards.

As a result Pearson is expected to wave goodbye to the travails of recent times — the company has seen earnings dip in each of the past three years — and punch earnings growth of 16% and 7% in 2015 and 2016 respectively. This gives an extra boost to the firm’s progressive dividend policy, and a payment of 51p per share last year is anticipated to rise to 55p this year, resulting in a meaty 4.1% yield. And this rises to 4.3% for 2016 amid predictions of a 58p reward.

ARM Holdings

At first glance ARM Holdings (LSE: ARM) may not be the most lucrative income pick on the market. Due to the vast capital drain required in the field of tech development, dividend yields at the business have long lagged the wider market and this phenomenon is not expected to cease any time soon. Indeed, ARM Holdings currently boasts yields of just 0.8% and 0.9% for 2015 and 2016 correspondingly.

Still, the company has a splendid record of lifting dividends in recent years — the chipbuilder has raised the full-year payment at a stonking compound annual growth rate of 24.7% since 2009 — and further chunky rises, from 7.02p per share last year to 8.7p in 2015 and 10.5p next year, are expected by City analysts. And should ARM Holdings successfully navigate market saturation in its key smartphone and tablet PC markets, and its recent diversification into networks and servers pay off, I expect shareholder rewards to continue advancing at a rate of knots.

Mitie Group

I reckon that outsourcing giant Mitie (LSE: MTO) is a strong contender for those seeking decent dividend potential. Although the business was last month forced to issue a profit warning due to declining demand in key markets, Mitie remains a critical partner for a broad range of blue-chip operators, while the homecare provider should continue to benefit from Britain’s ageing population. Indeed, the Bristol firm saw revenues leap 5.8% higher in the year ending March 2015, to £2.3bn.

Supported by reliable annual earnings growth, Mitie has been able to consistently lift the total dividend in recent years. And with the bottom line anticipated to increase an extra 1% this year and 7% in 2017, the number crunchers expect a payment of 11.7p per share last year to rise to 12.2p in 2016 and again to 13p next year. Consequently the business boasts appetising yields of 3.9% and 4.2% for these years.

Premier Farnell

With economic growth clicking through the gears across the globe, I believe Premier Farnell (LSE: PFL) is a great bet for those seeking solid growth and income prospects. The electronics builder has disappointed the market more recently, having elected to keep the dividend locked at 10.4p per share for the past five years as earnings have consistently disappointed.

But with conditions improving across all of its key marketplaces, Premier Farnell is expected to bounce back into the black and growth of 7% and 11% is estimated for the periods ending January 2016 and 2017 respectively. Consequently the payout policy is expected to get chugging higher again, and dividend projections of 10.5p per share for this year and 10.8p for 2017 create mouth-watering yields of 5.2% and 5.4%.

Marston’s

I believe that Marston’s (LSE: MARS) — helped by expectations of robust earnings expansion in the coming years — can wave goodbye to the recent bumpiness in its dividend programme. The pub and brewery operator is engaging in an aggressive expansion programme to capture rising demand, and plans to add to its portfolio of 1,600 pubs with the unveiling of a further 25, “high-quality” outlets in the current year alone.

The City expects this strategy to push earnings 9% higher in the year ending September 2015, in turn pushing the dividend from 6.7p per share last year to 7p and producing a yield of 4%. And predictions of a further 10% bottom-line rise in fiscal 2016 is expected to push the payout to 7.4p, shoving the yield to 4.2%.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »