What This Top Dividend Portfolio Is Holding Now: Royal Dutch Shell Plc, BAE Systems plc And SSE PLC

Royal Dutch Shell Plc (LON:RDSB), BAE Systems plc (LON:BA) and SSE PLC (LON:SSE) are among the heavyweight holdings of Merchants Trust plc (LON:MRCH).

| 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.

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.

Merchants Trust (LSE: MRCH) has delivered 30 straight years of dividend increases, and is expected to extend the record for the year ending 31 January 2014.

The trust has already paid a first-quarter dividend of 5.9p (up 1.7% on the same period last year); and the trailing 12-month payout gives a yield of 4.7% at a recent share price of 496p.

Picking great dividend shares has helped Merchants outperform the FTSE All-Share Index over the past three, five and 10 years.

Let’s take a look at three of the trust’s current heavyweight holdings: Royal Dutch Shell (LSE: RDSB) (NYSE: RDS-B.US), BAE Systems (LSE: BA) and SSE (LSE: SSE).

Royal Dutch Shell

Oil giant Royal Dutch Shell paid a dividend of $1.68 a share for 2009, 2010 and 2011. The board increased the payout by a modest 2.4% to $1.72 for 2012, but growth is set to accelerate this year.

Shell has paid two quarterly dividends of $0.45 to date, putting the company on track for a $1.80 full-year payout — an increase of 4.7% on last year. Translating the dollar dividend into sterling gives a high-octane yield of 5.4% at a recent share price of 2,161p.

BAE Systems

Aerospace and defence group BAE Systems has increased its dividend ahead of inflation every year since 2004. Last year’s 3.7% rise to 19.5p a share was below the company’s average, but still gave shareholders an inflation-beating income boost.

For this year’s first half, the board declared a modest 2.6% increase in the interim dividend. However, with management anticipating double-digit earnings growth, analysts are confident the increase in the total dividend for 2013 will be nearer to last year’s 3.7%. At a recent share price of 448p, the City experts’ forecasts of a 20.2p full-year payout give a yield of 4.5% — over a percentage point higher than the market average.

SSE

Electricity group SSE has an even more impressive dividend record than BAE. In announcing an 84.2p dividend for the year ended March 2013, SSE was posting a 5.1% rise on 2012, and a fourteenth consecutive year of above-inflation dividend increases.

Management is aiming to continue delivering increases ahead of inflation well into the future. Analysts are looking for a 4.5% rise to around 88p for the company’s current fiscal year. An 88p dividend would represent a super-charged 5.6% yield at a recent share price of 1,566p.

Happy retirement!

If you already have Shell, BAE and SSE tucked away in your portfolio and are in the market for more blue-chip dividend dynamos, I recommend you help yourself to the very latest free Motley Fool report.

The Fool’s top analysts have identified five companies they believe will generate superior long-term growth in dividends and earnings. Such is their conviction about the quality of these businesses that they’ve called the report “5 Shares To Retire On“.

You can download this free report right now — simply click here.

> G A Chester does not own any shares mentioned in this article.

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.

More on Investing Articles

Black father and two young daughters dancing at home
Investing Articles

£2,500 in savings? Here’s how I’d aim to turn that into an £27,113 second income

Many of us have savings, or put an amount aside every month. But it's what we do with it that…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Are Anglo American shares like buying £1 coins for 50p?

Jon Smith takes a look at the falling price of Anglo American shares and asks whether they're chronically undervalued or…

Read more »

Close-up of British bank notes
Investing Articles

I’d buy 1,064 shares of this dividend growth stock for £1,000 a year in passive income

Shares in FTSE 100 conglomerate Bunzl come with a 2% yield at today’s prices. But Stephen Wright thinks this is…

Read more »

Growth Shares

Under 50? Here are 3 monster growth stocks to consider for 2024 and beyond

These US-listed growth stocks could deliver blockbuster gains for long-term investors in the years ahead, says Edward Sheldon.

Read more »

Investing Articles

Here’s how much I’d need to invest in Tesco shares for £100 in monthly passive income

Our writer does not own shares of this supermarket for passive income, but how many would he need to buy…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Could £200 of Christmas money be used to start buying shares this month?

Our writer reckons if he was a stock market novice, he could put some Christmas money to work and start…

Read more »

Close-up of British bank notes
Investing Articles

Here’s how I’d aim to build a £250 monthly second income in 2024 – and far beyond!

Our writer thinks buying carefully-chosen dividend shares could help him build a second income over the long term. Here's his…

Read more »

Investing Articles

If I’d put £10k into a FTSE 250 tracker 10 years ago, here’s what I’d have now

UK investors love FTSE 250 tracker funds. But have these products been a good investment over the long term? Edward…

Read more »