2015 is set to be a record year for UK dividends with data company, Markit forecasting an 11% year-on-year jump in the total value of dividends paid by UK companies to a total of £85.3bn.
And there are plenty of ways that you can get in on the action.
Special payout
Spearheading the surge in dividend payments is GlaxoSmithKline (LSE: GSK).
At present Glaxo offers a regular dividend of around 80p per share, a yield of 5.7%, an impressive figure that you’d be hard pressed to find elsewhere. The payout is currently covered one-and-a-half times by earnings. What’s more, this year the company is planning to return an additional £4bn to investors following its asset-swap with peer Novartis.
With around 4.9bn shares in issue, a cash return of £4bn works out at around 82p per share as a special dividend, doubling Glaxo’s annual payout.
Actually, without this special payout the value of the estimated increase in ordinary dividends is 4.4%, so Glaxo alone is responsible for the majority of the increase in dividend payouts to investors this year.
Persimmon (LSE: PSN) is also set to pay investors a hefty special dividend this year. As part of the company’s plan to return £1.9bn — £6.20 per share — to investors over several years, management is planning to pay a special dividend of 95p per share this year.
City analysts reckon that Persimmon’s dividend payouts will equate to a yield of 6.3% during 2015 and another special payout is planned every year until 2021. Specifically, Persimmon’s management is forecasting a special payout of at least 10p per share during 2016 and 2018 and payouts of 110p, 110p, 115p and 25p per share for the years 2017, 2019, 2020 and 2021.
Under pressure
Royal Dutch Shell (LSE: RDSB) is yet another dividend champion. City analysts believe that the company’s shares will support a dividend yield of 5.7% next year despite the falling oil price. Indeed, some analysts have begun to speculate that with the price of oil collapsing, oil giants like Shell will be forced to cut their dividends in order to save cash. But Shell is unlikely to cut its payout in the near-term.
You see, Shell has a reputation to uphold. The company has paid a dividend to investors every year since the Second World War, a period which has seen a lot of volatility in the oil market and it’s unlikely to ruin this reputation now. Shell knows how to handle itself in a crisis and the company should be able to navigate through the current storm.
Vodafone’s (LSE: VOD) dividend is also under pressure as the company is paying out more to investors than it is earning on a per-share basis. For example, City analysts expect the company to pay a dividend of 11.3p per share this year, although the same forecasts expect the company to only earn 6.2p per share for the period.
Still, for the time being most analysts believe that Vodafone’s dividend is safe and the company has plenty of cash on its balance sheet to fill the gap.
Leave it to the experts
Of course, if you don’t feel comfortable investing in a single company like Glaxo, Shell, Persimmon, or Vodafone you can buy a fund and Neil Woodford’s, CF Woodford Equity Income Fund is one of the best around.
The CF Woodford Equity Income Fund currently yields 4% and depending on which platform you buy through, the annual management charge is around 1%.
