3 Dividend Picks For 2014: SSE PLC, GlaxoSmithKline plc and Wm. Morrison Supermarkets plc

SSE PLC (LON: SSE), GlaxoSmithKline plc (LON: GSK) and Wm. Morrison Supermarkets plc (LON: MRW) should provide nice cash.

| 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.

Over the past year, the FTSE 100 has gained a little under 15%. That’s not a bad result, especially in low-interest times like these. But what a lot of people miss is that it has also returned an average 3% dividend yield, with forecasts suggesting that will rise to 3.2% over the next 12 months. With a number of the FTSE’s constituents reinvesting in growth and paying low dividends, at the other end there are some handsome payouts to be had.

Here are three of my favourite dividend prospects for 2014:

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

SSE

Utilities companies are always good for reliable dividend payments. They have a captive customer base, excellent business transparencey, and they can afford to hand out the bulk of their earnings in dividend payments. I reckon SSE (LSE: SSE) is one of the best.

The share price has fallen of late, partly in response to politicians jumping on the “bash the utilities” electioneering bandwagon, but that’s actually improved the dividend yield prospects if you buy now. With SSE shares currently trading at 1,344p, the forecast dividend for the year ending March 2014 of around 88p would yield 6.4%.

A year further out and the City has penciled in a 6.7% yield, so there’s even room for a cut while still leaving a good amount of cash.

GlaxoSmithKline

The big pharmaceuticals companies are generally regarded as good for dividends too, and even though the so-called patent cliff has ended some of their blockbuster profits in recent years, payments are still looking steady.

For the year ending December 2013, GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US) is forecast to pay around 78p per share, which would give us a 4.8% yield on today’s 1,604p share price. That dividend should be covered approximately 1.4 times, which is perhaps a bit low, but cover rises slightly to 1.5 times for 2014’s forecast 5.1% yield.

And a forecast return to earnings growth in 2014 should provide some confidence.

Wm. Morrison Supermarkets

Wm. Morrison Supermarkets (LSE: MRW) (NASDAQOTH: MRWSY.US) shares have had a poor year, gaining barely a couple of percent, and over two years the price has fallen.

But coupled with four years of rising earnings, that’s helped boost the dividend yield — from only 2.1% in 2009, it has risen steadily to 4.7% for the year to February 2013 and there’s a 4.8% payment predicted for the current year. Sure, the City is expecting a 10% drop in EPS, but the predicted dividend should still be nearly twice-covered and the shares are on a forward P/E of under 11.

With a return to earnings growth predicted for 2015 along with an even bigger dividend, that makes Morrisons look like a good income pick to me, with a possibility of a share price recovery as a bonus.

More on Investing Articles

Mixed-race female couple enjoying themselves on a walk
Investing Articles

How I’d invest £1,000 a year to get passive income for life!

I’m looking to double my money by investing in a dividend stock that will give me a reliable passive income…

Read more »

Preparing a budget during a pandemic
Investing Articles

2 high-potential FTSE 250 stocks to buy and hold for 5 years!

The FTSE 250 is a good place to search for the next big British stocks. So, here are two companies…

Read more »

Black father holding daughter in a field of cows
Investing Articles

Could my Stocks and Shares ISA generate £30,000 a year?

Over 2m UK citizens make some use of a Stocks and Shares ISA every year. Our writer considers if it’s…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

4 dividend stocks that can help me fight inflation!

I'm looking at dividend stocks to help my portfolio grow and overcome the impact of high inflation. Here are the…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

2 bargain UK shares trading at less than book value

Book value is a great way to value a stock. These UK shares are trading at a price-to-book ratio of…

Read more »

Happy young female stock-picker in a cafe
Investing Articles

A FTSE AIM stock I’d add to my Stocks & Shares ISA in July

Henry Adefope highlights a FTSE AIM stock he believes could generate significant upside for his portfolio if he buys this…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

I’m following Warren Buffett and buying cheap dividend shares to build my wealth

I think this cheap dividend stock exhibits similar qualities to the companies Warren Buffett has in his investment portfolio.

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

2 cheap FTSE 100 shares I’m buying during the dip!

Andrew Woods explains that low P/E ratios and profitable businesses attract him to these two FTSE 100 shares.

Read more »