5 Stocks With Market-Bashing Dividend Forecasts: Pearson plc, ARM Holdings plc, Mitie Group PLC, Premier Farnell plc And Marston’s PLC

Royston Wild details the delicious returns on offer at Pearson plc (LON: PSON), ARM Holdings plc (LON: ARM), Mitie Group PLC (LON: MTO), Premier Farnell plc (LON: PFL) and Marston’s PLC (LON: MARS).

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Today I am looking at a cluster of London-listed plays with sterling dividend prospects.


I believe that the fruits of extensive restructuring at educational specialists Pearson (LSE: PSON) should power dividends higher in the coming years. The rise of digitalisation has seen it embark on a massive revamp as traditional textbooks disappear out the window, while a rising emphasis on developing regions also promises to drive revenues skywards.

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As a result Pearson is expected to wave goodbye to the travails of recent times — the company has seen earnings dip in each of the past three years — and punch earnings growth of 16% and 7% in 2015 and 2016 respectively. This gives an extra boost to the firm’s progressive dividend policy, and a payment of 51p per share last year is anticipated to rise to 55p this year, resulting in a meaty 4.1% yield. And this rises to 4.3% for 2016 amid predictions of a 58p reward.

ARM Holdings

At first glance ARM Holdings (LSE: ARM) may not be the most lucrative income pick on the market. Due to the vast capital drain required in the field of tech development, dividend yields at the business have long lagged the wider market and this phenomenon is not expected to cease any time soon. Indeed, ARM Holdings currently boasts yields of just 0.8% and 0.9% for 2015 and 2016 correspondingly.

Still, the company has a splendid record of lifting dividends in recent years — the chipbuilder has raised the full-year payment at a stonking compound annual growth rate of 24.7% since 2009 — and further chunky rises, from 7.02p per share last year to 8.7p in 2015 and 10.5p next year, are expected by City analysts. And should ARM Holdings successfully navigate market saturation in its key smartphone and tablet PC markets, and its recent diversification into networks and servers pay off, I expect shareholder rewards to continue advancing at a rate of knots.

Mitie Group

I reckon that outsourcing giant Mitie (LSE: MTO) is a strong contender for those seeking decent dividend potential. Although the business was last month forced to issue a profit warning due to declining demand in key markets, Mitie remains a critical partner for a broad range of blue-chip operators, while the homecare provider should continue to benefit from Britain’s ageing population. Indeed, the Bristol firm saw revenues leap 5.8% higher in the year ending March 2015, to £2.3bn.

Supported by reliable annual earnings growth, Mitie has been able to consistently lift the total dividend in recent years. And with the bottom line anticipated to increase an extra 1% this year and 7% in 2017, the number crunchers expect a payment of 11.7p per share last year to rise to 12.2p in 2016 and again to 13p next year. Consequently the business boasts appetising yields of 3.9% and 4.2% for these years.

Premier Farnell

With economic growth clicking through the gears across the globe, I believe Premier Farnell (LSE: PFL) is a great bet for those seeking solid growth and income prospects. The electronics builder has disappointed the market more recently, having elected to keep the dividend locked at 10.4p per share for the past five years as earnings have consistently disappointed.

But with conditions improving across all of its key marketplaces, Premier Farnell is expected to bounce back into the black and growth of 7% and 11% is estimated for the periods ending January 2016 and 2017 respectively. Consequently the payout policy is expected to get chugging higher again, and dividend projections of 10.5p per share for this year and 10.8p for 2017 create mouth-watering yields of 5.2% and 5.4%.


I believe that Marston’s (LSE: MARS) — helped by expectations of robust earnings expansion in the coming years — can wave goodbye to the recent bumpiness in its dividend programme. The pub and brewery operator is engaging in an aggressive expansion programme to capture rising demand, and plans to add to its portfolio of 1,600 pubs with the unveiling of a further 25, “high-quality” outlets in the current year alone.

The City expects this strategy to push earnings 9% higher in the year ending September 2015, in turn pushing the dividend from 6.7p per share last year to 7p and producing a yield of 4%. And predictions of a further 10% bottom-line rise in fiscal 2016 is expected to push the payout to 7.4p, shoving the yield to 4.2%.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. 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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