Capita has released a report this week that shows the quarterly dividend growth for UK shares has averaged just 1.2% in the second quarter of this year. That’s when compared to the same quarter in 2013 and shows that, while the dividend yield of the FTSE 100 remains far higher than any high-street savings account at around 3.4%, dividend per share growth is now worryingly less than inflation of 1.9%.
However, here are three companies whose dividends easily outstrip the average growth rate.
SSE
For starters, SSE (LSE: SSE) offers a much better yield than the wider index, with shares in the electricity provider currently yielding 5.9%. However, where SSE really comes into its own is with regards to dividend per share growth, with the company aiming to increase dividends by at least the rate of inflation over the medium term. Of course, this feature may not sound so impressive when inflation is at 1.9% but, due to the volume of quantitative easing that has taken place (and subsequent increase in the money supply), a far higher rate of inflation could take hold in future. Should that take place, SSE’s great yield and even better dividend growth target could become a huge asset for investors.
Standard Chartered
Although Standard Chartered (LSE: STAN) (NASDAQOTH: SCBFF.US) endured a tough first half of the year, with profits down around 20% versus the first half of 2013, the bank continues to have vast potential in emerging markets. Indeed, with macroeconomic data from China picking up of late, Standard Chartered has the potential to increase profits and also bump up dividend payments beyond the 5.5% increase that is forecast to take place next year. Allied to this is the fact that dividends account for just 45% of profit, which means that Standard Chartered could afford to be more generous with how it distributes profit in future. This would be great news for income-seeking investors as it would mean a higher yield going forward.
Shell
As with Standard Chartered, Shell (LSE: RDSB) (NYSE: RDS-B.US) only pays out a relatively small proportion of profit as a dividend. Indeed, it keeps 50% back for reinvestment in the business, which means that the company’s dividend payout ratio could be increased significantly. That said, Shell is forecast to increase dividends per share by 3.1% next year, which is ahead of inflation and around 2.5 times as much as the wider market achieved in the second quarter of this year. With shares in Shell offering a yield of 4.4% at present, they could prove to be a strong play for income-seeking investors.
