Today I am looking at the bountiful returns on offer from three FTSE-listed superstars.
Lloyds Banking Group
After much anticipation Lloyds (LSE: LLOY) (NYSE: LYG.US) finally got its dividend policy back on track earlier this year after receiving the go-ahead from the Prudential Regulatory Authority.
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Although many have questioned whether the firm’s balance sheet will be able to support meaty payout increases in future years — a point exacerbated by the huge PPI-related fines Lloyds is having to dole out — I reckon that the firm’s revitalised retail operations, combined with the fruits of extensive restructuring, should drive earnings, and with it dividends, steadily higher in the coming years.
This view is shared by the City’s army of analysts, who reckon that after shelling out a final dividend of 0.75p per share for 2014, the institution will produce a full-year payout of 2.8p for 2015. And a further chunky increase, to 4.2p, is chalked in for 2016. As a result, Lloyds’ decent-if-unspectacular yield of 3.5% for this year leaps to an impressive 5.2% for 2016.
With earnings expected to keep on rattling higher, I believe that BT (LSE: BT-A) (NYSE: BT.US) is a great pick for those seeking exceptional dividend growth. The company’s bubbly outlook is thanks in no small part to the colossal investment it is making in the ‘quad play’ entertainment sector, from rolling out its BT Sport channels and extensive fibre-laying programme, through to making savvy acquisitions like that of mobile giant EE back in February.
The number crunchers consequently expect BT to lift the dividend to 12.8p per share for the year concluding March 2015, up from 10.9p in the prior 12-month period. And further hefty hikes, to 14.6p and 16.4p, are predicted for 2016 and 2017 respectively.
These figures drive the yield from an average 3.3% for this year to 3.7% for 2017. With customers flocking to the business in their droves — BT enjoyed its best ever quarter of fibre broadband net additions in October-March — I believe the future is bright for both growth and income seekers.
Electronic component specialist Premier Farnell (LSE: PFL) has not been the most electifying dividend selection in recent years as a result of persistent earnings pressure. The company has seen earnings dip in four of the past five years, forcing the business to keep the full-year dividend locked at 10.4p per share for what now seems donkey’s years.
But with financial conditions in its key European marketplace finally on the mend — full-year sales in the region rose 1.9% in the year concluding January 2015 — and the US and UK economies continuing to improve, Premier Farnell is expected to return to growth from this year onwards. Indeed, the City expects the Leeds-based business to record earnings expansion of 7% and 11% in 2016 and 2017 correspondingly.
Against this backcloth the distributor is expected to lift the dividend to 10.5p in the current year, and again to 10.8p in 2016. Premier Farnell subsequently sports a quite brilliant yield of 5.8% for 2016, and which shuffles to 6% for the following year.