Royal Dutch Shell
For decades, Royal Dutch Shell (LSE: RDSB)(NYSE: RDS-B.US) has been synonymous with scale, success and dependability.
This is manifested in the company’s dividend to shareholders. In 2012, Shell’s payout was raised by 2.4% to $1.72 per share. At today’s price, that puts Shell on an historic yield of 4.8%. Analysts are forecasting a 7.2% dividend increase this year, pushing the payout to 5.2%.
Profit growth is expected to outpace this, putting the shares on a price-to-earnings (P/E) ratio of 8.6 for the year. That’s a big discount to the average FTSE share.
Shell’s share price is incredibly stable. While it may be within touching distance of a new high, the shares are just 9% above their low for the year.
Lloyds Banking Group
In recent weeks, Lloyds Banking Group (LSE: LLOY)(NYSE: LYG.US) has been trading at around its highest level since October 2010.
Analysts have been increasing their estimates for the bank’s 2013 profits. Three months ago, the consensus was for 4.26p of earnings per share (EPS) this year. That figure is now 4.32p. This puts the shares on a P/E for the year of 14.8. That’s slightly ahead of the average price for a FTSE 100 share.
It is clear from this rating that investors are counting on a UK economic recovery. I don’t disagree with this analysis but it does not leave much room for disappointment. If the economy does stumble, Lloyds shares would be hit hard.
Rolls Royce
Last week, aero-engine company Rolls Royce (LSE: RR) issued its half-year results. Earnings per share rose 27% and the dividend was increased 13%. This news pushed the shares to an all-time high.
It is not just the profit that Rolls makes that keeps its share price up. The company is a world-leader. This status helps secure Rolls’ future pricing power.
Investors regard for the company is encapsulated in its share price. With EPS of 67.5p expected this year, Rolls shares are trading on a P/E of 17.8 times forecast earnings.
The dividend is expected to be increased for an eighth year running, pushing the yield to 1.8%.
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> David does not own shares in any of the companies mentioned.
