3 Shares With Outstanding Payout Prospects: Barclays PLC, Admiral Group plc And Amlin plc

Royston Wild explains why Barclays PLC (LON: BARC), Admiral Group plc (LON: ADM) and Amlin plc (LON: AML) should be on the shopping list of those seeking delicious dividend growth.

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Today I am looking at the investment case for three of the most attractive dividend stocks on the market.

Barclays

Of course, the issue of mounting legal bills should be of huge concern to banking goliath Barclays (LSE: BARC) (NYSE: BCS.US). Not only was the company forced to hike PPI provisions by an extra £200m in October-December — taking the total to some £1.1bn — but it has also swallowed an additional £750m charge for the rigging of foreign exchange markets.

These amounts are of course staggering, but I believe that the bank remains a terrific long-term stock selection. Not only is the firm pulling up trees on the UK High Street, no doubt helped by the steady domestic economic recovery, but its Transform restructuring drive is also stripping out costs and improving its position in the critical digital banking space.

As a result, City analysts expect Barclays to follow last year’s 13% earnings advance with further rises to the tune of 45% and 17% for 2015 and 2016 correspondingly.

Consequently the bank is anticipated to hike the dividend from the 6.5p per share payout seen during each of the past three years to 8.6p this year, and again to 11.5p in 2016. Therefore an already-meaty yield of 3.5% for 2015 leaps to an impressive 4.7% for next year.

Admiral Group

The effect of intense competition across key markets is expected to keep weighing on car insurance giant Admiral (LSE: ADM) in the near-term. But with vehicle premiums back on the rise again after a period of sustained pressure — indeed, comparethemarket.com announced today that the average premium rose to £561.10 in February, up from £539.20 last year — I believe the Cardiff firm is a solid pick for those seeking solid dividend expansion.

The number crunchers expect Admiral to punch an 11% earnings decline in 2015, following on from last year’s 2% dip. But the fruits of restructuring, improving market conditions in the UK, and expansion into Europe and the US is expected to push the bottom line 6% higher next year.

Consequently Admiral is predicted to shell out a mammoth dividend of 89.2p per share in 2015, creating a delicious yield of 5.8%. And this rises to an even-better 6.3% for 2016 thanks to an estimated full-year payment of 96p.

Amlin

As falling underwriting pricing continues to whack insurance house Amlin (LSE: AML) — this fell 3.6% during 2015 — the company is expected to remain in the red for some time to come. Indeed, the company announced last month that “with competitive markets in many of our core business lines, it is unlikely that we will see significant growth in the short term.”

This view is shared by the City’s army of analysts, and current forecasts indicate that the firm will follow last year’s 21% earnings decline with an additional 13% drop in 2015. A modest 1% rebound is pencilled in for next year.

But despite these travails, the insurer is expected to lift the full-year payment of 27p per share to 28.4p in 2015, and again to 29.6p in 2016, helped by the more-than-adequate levels of profit still being generated. As a consequence Amlin’s already-bubbly yield of 5.5% for the present 12-month period leaps to an exceptional 5.8% for 2016. Still, investors should aware that challenging market conditions could put paid to chunky dividend growth in the longer term.

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 considered so you should consider taking independent financial advice.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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