What This Top Dividend Portfolio Is Holding Now: GlaxoSmithKline plc, Inmarsat Plc And UBM Plc

GlaxoSmithKline plc (LON:GSK), Inmarsat Plc (LON:ISAT) and UBM Plc (LON:UBM) are among the top holdings of Merchants Trust plc (LON:MRCH).

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Merchants Trust (LSE: MRCH) has delivered 32 consecutive years of dividend increases, and carries a trailing yield of 5.1% at a current share price of 463p.

Picking great dividend shares has helped Merchants outperform the FTSE All-Share Index over the past three, five and 10 years.

The trust holds many high-yield ‘usual suspects’, including Royal Dutch Shell, HSBC and current heavyweight top-yielder GlaxoSmithKline (LSE: GSK) (NYSE: GSK.US).

But Merchants also has a couple of interesting mid-caps within its top 10 holdings: namely, mobile satellite communications firm Inmarsat (LSE: ISAT) and media group UBM (LSE: UBM).


GSK has said shareholders can expect a total dividend of 80p for 2014, and the same payout for 2015 — giving a juicy annual yield of 5.7% at a current share price of 1,410p.

Some analysts have questioned whether GSK can afford to maintain the dividend during a phase of weaker sales, but chief executive Andrew Witty said recently: “I don’t think people should be concerned about that”.

In addition to the 80p dividend, shareholders can expect a £4bn capital return (82p a share) during 2015. The payment will be funded from net cash the company will receive as a result of a deal with Swiss group Novartis (expected to complete in the first half of the year) to swap some assets and create a consumer healthcare joint venture.


Inmarsat was set up in 1979 by the International Maritime Organization to enable ships to stay in constant touch with shore or to call for help in an emergency. The company was floated on the stock market in 2005, and its operations now extend across air, land and sea.

At a current share price of 809p, Inmarsat has a market value of £3.5bn and sits just outside the FTSE 100. Annual dividend growth is running at 5% and analyst forecasts for 2015 give an above-market-average yield of 4%.

Earnings forecasts don’t fully cover the projected dividend (around $40m short), but at the last reckoning Inmarsat had cash on the balance sheet of $138m and available but undrawn borrowing facilities of $891m. Furthermore, management is “very confident of the medium-term growth opportunities for the company”.


Media group UBM operates internationally in three main business segments: Events, Marketing Services and PR Newswire. The company has a market value of £2.1bn at a current share price of 473p, and offers a 4.8% yield based on 2015 dividend forecasts.

During 2014, with the aid of a rights issue, UBM made a substantial acquisition in the shape of US trade show firm Advanstar. The deal makes UBM the biggest events organiser in America. Management says it also has “the opportunity to establish UBM firmly as the leading B2B events business globally”.

At the same time, the Board committed to continuing its progressive dividend policy.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline and UBM. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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