Today I am looking at three firms poised to deliver spectacular dividend returns in 2015.
Vodafone Group
Mobile telecoms giant Vodafone (LSE: VOD) (NASDAQ: VOD.US) has long been a magnet for those seeking reliable annual dividend growth, a trend that the City’s analysts do not expect to come to a halt any time soon.
Even though the firm’s beleaguered European divisions are expected to weigh on earnings again this year — a 64% earnings decline is currently pencilled in for the year concluding March 2015 — the company’s ability to generate vast sums of cash is anticipated to keep its progressive dividend policy well on track.
Indeed, Vodafone is expected to lift the full-year dividend 3% this year to 11.3p per share. in turn creating a vast 5% yield. And predictions of a further 3% hike during the following 12 months, to 11.6p, pushes the yield to 5.1%. By comparison the FTSE 100 carries a forward average of just 3.3%.
With the firm engaged in a $19bn organic investment plan to boost its services in established and developing regions alike, as well as an aggressive acquisition policy in hot growth sectors, I believe that dividends should continue rolling higher.
Royal Mail
British courier Royal Mail (LSE: RMG), although witnessing a slowdown in domestic parcels activity more recently owing to delivery changes at Amazon, remains in pole position to enjoy the fruits of surging e-commerce in coming years.
And against a backcloth of strong projected earnings growth — the bottom line is expected to swell 21% during the 12 months to March 2015 — Postman Pat and co are anticipated to shell out a full-year dividend of 20.7p per share, up 55% from last year’s levels.
And the good news does not stop there, with a further 5% hike — to 21.7p — forecast for fiscal 2016, underpinned by further 12% earnings uptick. As a result Royal Mail currently sports yields of 4.8% for 2015 and 5% for 2016.
With the firm’s GLS division on the continent also performing well, and cost stripping across the group running at a rate of knots, I expect payouts to continue spiralling skywards.
SSE
Electricity provider SSE (LSE: SSE), like its colleagues across the utilities space, remains under pressure from regulators who are putting the profitability of these companies under the microscope. As a result the business has been forced to shelve tariff hikes as the knives are sharpened from lawmakers, consumer groups and the media alike.
But even though top-line pressures are expected to result in a marginal earnings dip this year, SSE is anticipated to lift the total dividend 3% in the year finishing March 2015 to 89.5p per share, boosted by its strong cash flows. As a consequence the power play boasts one of the best blue-chip yields around, at a gargantuan 5.6%.
And even though further earnings woes are anticipated in the following 12 months, an additional 3% payout hike to 92.3p is estimated, pushing the yield to an eye-watering 5.8%.
Although the possibility of stringent regulatory action could continue to hamper profits growth in coming years, SSE looks likely to remain a solid dividend selection in the medium term.
