Today I am looking at a handful of British heavyweights primed to deliver knockout returns.
Unilever
Thanks to the unrivalled strength of its vast product portfolio, I believe Unilever (LSE: ULVR) should deliver increasingly-appetising dividends as earnings take off. The company’s wares can be found everywhere in the home, and labels including Radox shower gel through to PG Tips tea bags and Domestos bleach command terrific pricing power that keep earnings rising even in times of wider economic pressures.
On top of this, Unilever’s terrific exposure to developing markets — places from which the firm currently sources around six-tenths of total revenues — should power shareholder returns in the long-term thanks to rising wealth levels. In the meantime, steady earnings growth through to the end of 2016 at least is expected to support dividends of 85.1p per share in 2015 and 89.9p next year, yielding a very decent 3.2% and 3.4% respectively.
Prudential
Like Unilever, financial services powerhouse Prudential (LSE: PRU) has a terrific global presence that promises to drive revenues to the stars. The London firm advised last month that strength across its Asian and US operations propelled operating profit 17% higher during January-June, to £1.88bn. And further gains can be expected as Western customers stash away for their retirement and low product penetration in emerging economies drives sales.
On top of this, I believe investors should take confidence from ‘The Pru’s’ ability to generate shedloads of capital — cash and equivalents jumped 40% during the first half, to £8.3bn. While it is true projected dividends of 39.8p per share for 2015 and 43.7p for 2016 lag the market with yields of 2.8% and 3.1% respectively, I expect Prudential’s record of delivering huge payout increases to drive these readings comfortably higher further out.
Imperial Tobacco Group
The tobacco sector has long been a haven for those seeking market-busting dividends year after year. So even though a rising legislative charge aimed at curtailing the sale and usage of tobacco products hangs large over the sector, I reckon major player Imperial Tobacco (LSE: IMT) should continue to deliver solid income flows — spending in emerging markets is back on the mend, while its bulked-up exposure to the US and entry into the e-cigarette sector also bodes well for investors.
The company is also undergoing massive restructuring to shutter scores of underperforming local brands and double-down on sales drivers like West and Davidoff, while these measures are also aggressively stripping out costs. With earnings expected to chug higher again after last year’s rare slip, Imperial Tobacco is anticipated to shell out a dividend of 141.7p per share for the period concluding September 2015, yielding a handsome 4.6%. And this moves to 5% for next year thanks to an anticipated 155.6p reward.
N Brown Group
With clothing retailer N Brown (LSE: BWNG) also having undertaken a huge transformation over the past year or so, I believe the business is in terrific shape to deliver brilliant returns. The firm has pulled out all the stops to reinvent itself from a mail order to an internet-based retailer, while improved marketing of ‘Power Brands’ like Jacamo and Simply Be has also boosted revenues — sales of these labels advanced at double-digit rates in March-May.
With the vast costs of restructuring firmly behind it, and its belated adoption of 21st-century technology powering sales higher, N Brown is anticipated to put the earnings woes of recent years behind it and print stellar growth. With this in mind the dividend is expected to advance again following last year’s freeze at 14.23p per share, and forecasted payouts of 14.35p and 15p for the years ending February 2015 and 2016 correspondingly yield a monster 4.8% and 5%.
