Today I am looking at five stock market stars set to pay out big.
Diageo
I believe that Diageo (LSE: DGE), supported by strident alcohol demand in emerging regions, should deliver exceptional dividend growth in the coming years in line with earnings. The business continues to expand its product ranges in these territories, while it also remains busy on the acquisition trail to boost its global footprint — indeed, just last month Diageo agreed to purchase the outstanding 50% stake in South African beer manufacturer United National Breweries.
With consumer spending power in developing regions already showing tentative signs of recovery, Diageo is expected to lift a dividend of 51.7p per share for the year ending June 2014 to 53.9p this year, and again to 57.8p in 2016. Although these payouts produce handy-if-unspectacular yields of 3% and 3.2%, I expect these readings to shoot higher looking further ahead as the bottom line booms.
Tullett Prebon
Financial services play Tullett Prebon (LSE: TLPR) has seen revenues stagnate in recent times as trading activity has struggled. But signs are emerging that conditions could be about to turn — indeed, improving activity in Asia Pacific and the Americas helped push turnover 15% higher in January-March, to £284m — while energy broker PVM Oil Associates is also exceeding expectations following last year’s takeover.
Tullett Prebon has been forced to keep the dividend frozen at 16.85p per share for the past three years amid consistent profits weakness. But predictions of an imminent return to earnings growth — a 6% rise is anticipated for both 2015 and 2016 — is boosting confidence of a return to positive dividend movement. The City has chalked in payouts of 17.2p this year and 17.6p for 2016, figures which create handsome yields of 4.6% and 4.7% correspondingly.
SEGRO
I reckon that real estate investment trust SEGRO (LSE: SGRO) — which specialises in warehousing and light industrial premises — is in great shape to enjoy the fruits of a brilliant British economic recovery. The latest UK Commercial Property Market Survey by RICS showed rental demand rise for the tenth consecutive quarter during January-March, while the amount of new property listings kept on falling. Clearly these conditions bode extremely well for the London firm.
SEGRO got its dividend policy back on track last year — the payment having been static at 14.8p per share for three consecutive years — in spite of another modest earnings dip, and shelled out a reward of 15.1p. So with earnings anticipated to rise 6% and 4% in 2015 and 2016, the number crunchers expect further dividend hikes for these years, to 15.4p and 15.9p. Consequently SEGRO boasts a chunky yield of 3.7% for this year and 3.8% for 2016.
Provident Financial
Credit house Provident Financial (LSE: PFG) has long been a lucrative pick for dividend chasers, the business having lifted the total payment at a compound annual growth rate of around 12% during the past five years as earnings have exploded. And with both demand — as well as credit quality — rising across its loans, credit cards and car finance divisions, I expect shareholder payments to continue surging ahead.
This view is shared by the City, and Provident Financial is expected to see the bottom line swell by 18% this year and 12% in 2016. Accordingly the lender is anticipated to distribute a dividend of 115.8p per share in 2015, a figure that produces a chunky 3.8% yield. And this readout leaps to 4.2% for next year amid predictions of a 128.4p-per-share payment.
Kier Group
I believe that building and engineering contractor Kier (LSE: KIE) should punch terrific earnings growth in the years ahead as infrastructure spending steadily increases, a promising omen for dividend expansion. And my confidence was boosted by last month’s £265m takeover of Mouchel, the latter being responsible for the upkeep of around a third of the UK’s roads.
With earnings expected to rise 9% in the 12 months concluding June 2015, Kier is anticipated to churn out a total dividend of 73.4p per share, a reward which carries a decent yield of 4.4%. And estimates of a 77.8p-per-share payout next year drives the yield to an even more delicious 4.7%. I believe that Kier’s rising diversification across a myriad of engineering sectors bodes well for both growth and income seekers.
