Today I am looking at three fearsome FTSE heavyweights poised to deliver resplendent returns.
Lloyds Banking Group
Having received official backing to resurrect its dividend policy earlier this year, High Street banking goliath Lloyds (LSE: LLOY) (NYSE: LYG.US) is expected to get payouts shooting higher as the UK economy gathers pace. The business saw underlying profit leap 21% during January-March, to £2.2bn, as impairments fell and revenues leapt through the roof — indeed, the bank has seen consumer lending advance 17% over the past 12 months.
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With the firm’s extensive cost-cutting measures, including an increasing move to digitalisation, also clicking through the gears the City expects Lloyds’ earnings to remain stable during the next two years. And with the balance sheet also steadily improving — the firm’s CET1 ratio rose 60 basis points to 13.4% in the first quarter — I reckon the bank is on course to deliver meaty shareholder rewards in the years ahead.
Indeed, a full-year payment of 2.9p per share is currently pencilled in for 2015, a payment that carries a handy yield of 3.2%. And predictions of a 4.2p dividend for the following year drives the yield to a market-bashing 4.7%.
Picture house Cineworld (LSE: CINE) grabbed the attention of dividend hunters back in March, when — supported by industry-beating sales growth — the company elected to raise the total dividend by more than a third. The business now sports 203 cinemas across the UK and Europe following its recent purchase of continental operator Cinema City, and is on course to open another 20 sites in the current year alone.
The trip to the cinema is one of life’s most popular past-times, making Cineworld a great pick for reliable earnings growth, a critical quality for those seeking reliable dividend expansion. And boosted by a raft of high-profile film releases, from Bond flick Spectre and Star Wars Episode 7 this year to Batman vs Superman and Independence Day 2 in 2016, the bottom line is expected to keep rolling higher — growth of 11% is expected both this year and next.
Backed up by this terrific earnings growth, Cineworld is anticipated to drive the total dividend from 13.5p per share last year to 14.3p in 2015, resulting in a handy-if-not-quite-breathtaking yield of 2.8%. But a prospective reward of 15.9p for next year pushes this to a much-improved 3.2%. And I expect yields to keep on rising as revenues march forth.
I believe that insurance leviathan Standard Life (LSE: SL) is also on course to churn out terrific dividend growth in the coming years. The company has kept dividends ratcheting higher in recent years in spite of heavy earnings volatility, so with the bottom line expected to march steadily higher in the years to come I expect dividends to keep on climbing, too.
Standard Life is looking increasingly to non-UK markets to underpin future growth, a shrewd strategy where a combination of rising population levels and booming middle classes in emerging markets — allied with a relatively low product penetration rate in many of these destinations — should deliver meaty sales growth in the coming years. For 2015 and 2016 the City expects the business to punch earnings rises of 69% and 19% respectively, up from 11% last year.
As a result Standard Life is predicted to churn out a chunky 20.3p-per-share dividend this year, yielding 4.2% and a vast improvement from 17.03p in 2014. And predictions of a further hike in 2016, to 21.6p, drives this reading to an even-better 4.5%.