Over the last five years, National Grid (LSE: NG) (NYSE: NGG.US) has paid out 197p in dividends. That works out as 30% of its share price from five years ago which, given that we have endured savings rates of less than 2% for much of that period, is a pretty good result.
Looking ahead, investors in National Grid can expect something similar moving forward. That’s because the company currently yields an impressive 4.7% and, with dividend per share growth of 2.7% per annum forecast over the next two years, income from an investment in National Grid should rise at a faster pace than inflation.
Certainly, shares in the company are not dirt cheap. For example, they trade on a price to earnings (P/E) ratio of 16.4 compared to the FTSE 100’s 15, but with an excellent track record of dividend growth, a top notch yield, and inflation-beating dividend growth on offer, they appear to be well worth their current valuation.
With a dividend yield of 5%, Vodafone (LSE: VOD) (NASDAQ: VOD.US)also offers tremendous appeal as an income play. In fact, with the economic situation in the Eurozone continuing to be somewhat precarious, investors in Vodafone may rely upon the company’s income for the bulk of their total return over the short to medium term, since there appears to be little sign of a marked improvement in the performance of the region.
That said, Vodafone continues to push ahead with its strategy of buying undervalued European assets for long term growth. And, looking ahead, this could prove to be a very sound move. Certainly, it requires patience but, with dividends per share forecast to rise by 2% per annum over the next two years, Vodafone’s yield could be as high as 5.2% next year.
As such, and while there will inevitably be a number of lumps and bumps along the way, Vodafone could prove to be a strong income play over the medium term.
Imperial Tobacco (LSE: IMT) is one of the few FTSE 100 companies to have increased dividends per share in each of the last four years and, looking ahead, this pattern is set to continue. For example, in the current year dividends per share are forecast to increase by 10%, followed by further growth of 9.3% next year. This means that, while it yields 4.8% right now, Imperial Tobacco could be yielding as much as 5.2% next year.
In addition, Imperial Tobacco still offers excellent value for money despite its share price rising by 34% in the last year. For example, it trades on a P/E ratio of 14.1, which is less than the FTSE 100’s P/E ratio of 15. And, with its bottom line due to offer further stable growth over the medium term, its dividend per share rises should be strong and very stable, thereby making it a top notch income play.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
Peter Stephens owns shares of Imperial Tobacco Group and National Grid. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.