Today I am looking at three payout plays poised to hit the high notes.
Vodafone Group
Mobile operator Vodafone’s (LSE: VOD) (NASDAQ: VOD.US) ability to throw up boatloads of cash has enabled the firm to keep dividends ticking steadily higher despite severe earnings volatility. Indeed, the business lifted the full-year payment 8% in the year ending March 2014, up to 10.19p per share, even though earnings dropped 13% in the period.
So although the telecoms giant is expected to record further earnings losses of 63% and 4% for fiscal 2015 and 2016, the payout is anticipated to keep on rising, to 11.5p and 11.8p respectively. And a dividend of 11.9p is pencilled in for 2017, underpinned by an estimated 19% earnings uptick. Consequently Vodafone sports a market-smashing yield of 5.1% for the current year, which edges up to 5.2% for next year.
Vodafone continues to chuck vast sums of cash into bolstering its growth outlook, through its multi-billion pound Project Spring investment programme, as well as engaging in a bubbly acquisition drive that has seen it enter the multi-services entertainment market. But with these measures helping it to latch onto recovering trading conditions in Europe and galloping emerging-market demand, I expect dividends to continue marching steadily higher.
Bovis Homes Group
With housing demand in Britain continuing to outstrip the rate at which houses are being built, I believe that Bovis Homes (LSE: BVS) is in great shape to keep on churning out solid dividend growth. Despite concerns over the implications of today’s UK general election for the housebuilding sector, two things will remain the same: lending conditions should remain supportive for those looking to get on the ladder, while government policy will also remain favourable to first-time buyers.
Accordingly the City expects Bovis Homes to continue churning out double-digit earnings growth in the coming years, and has pencilled in advances in the region of 28% and 20% in 2015 and 2016 respectively. Indeed, a strong forward sales book and record investment in its land bank over the past year certainly bodes well for future earnings — and consequently payout — expansion.
Against this backcloth the business is anticipated to hike last year’s dividend of 35p per share to 40.1p in the current 12 months, a forecast which creates a monster 4.3% yield. And expectations of a 45.5p dividend in 2016 propels the yield to an impressive 4.9%.
Old Mutual
I believe that Africa-focussed life insurer Old Mutual (LSE: OML) is a terrific pick for those looking for solid dividend growth. Like Vodafone, the company has a sterling record of lifting shareholder rewards even in times of extreme profit turbulence, and with these pressures now anticipated to lift the payout picture is as strong as ever.
Indeed, Old Mutual is expected to see earnings surge 11% in both 2015 and 2016, a result which is predicted to drive the dividend from 8.7p per share in 2014 to 9.8p this year, and to 10.9p in 2016. As a result the financial colossus boasts chunky yields of 4.2% and 4.7% for 2015 and 2016 respectively.
The business announced last month that Bruce Hemphill, formerly of Standard Bank, would be replacing long-standing chief executive Julian Roberts during the latter part of 2015. The new man has already proved his mettle in the highly-lucrative territories of Africa, and will no doubt boost Old Mutual’s success on the continent still further — the insurer added 1.8 million new African customers alone last year, taking its total to some 15.8 million. I reckon that low product penetration in these regions should help to propel profits and shareholder payouts skywards in the coming years.
