Today I am looking at four payout plays waiting to deliver stonking returns.
National Grid
The business of power provision has long been a magnet for those seeking solid earnings and, as a consequence, dividend growth. But while the much-maligned ‘Big Six’ face an increasingly-uncertain outlook as regulators get tough with tariff levels, network operator National Grid’s (LSE: NG) top-down model means it does not face the same scrutiny over profits, providing terrific peace of mind for dividend hunters.
On top of this, National Grid is also embarking on a huge asset building programme in both the US and UK to build earnings in the coming years, while RIIO price controls at home are helping to minimise capital leakage. Accordingly the City expects National Grid to churn out dividends of 43.9p and 45.1p per share for the years ending March 2016 and 2017 correspondingly, yielding a handsome 5.2% and 5.3%.
Banco Santander
Financial colossus Banco Santander (LSE: BNC) shocked shareholders at the start of 2015 with news that it was ditching its über-generous dividend policy in a bid to bolster the balance sheet. Allied with a fresh capital raising, the business announced it would reduce the full-year payout to just 20 euro cents per share this year, a colossal downgrade from rewards of around 60 cents in recent times.
While it is true that Santander’s capital strength still lags many of its peers — the firm’s CET1 ratio remains below 10% — I believe that the firm’s breakneck progress across the globe should drive dividends higher again further down the line. Profits by jumped almost a quarter in January-June, to €3.43bn, thanks to colossal strength across all of its main territories. And in the meantime, Santander’s proposed dividend of 20 cents for this year still yields a FTSE 100-busting 3.9%.
Intu Properties
Like Santander, real estate investment trust (or REIT) Intu Properties (LSE: INTU) has hardly been the ‘belle of the ball’ during the past 12 months, and steady earnings pressure forced the business to cut the dividend to 13.7p per share in 2014 from 15p previously. But thanks to the fruits of an improving UK economy, and knock-on effect on consumer spending power, the retail space specialist’s outlook is rapidly improving.
While Intu Properties’ near-term prospects are looking particularly rosy, the company’s brilliant shopping centre pipeline promises to keep earnings — and consequently dividends — chugging higher in the coming years, too. The number crunchers share my buoyant enthusiasm, and expect the firm to match last year’s payout of 13.7p in 2015 — yielding 4.3% — before raising the dividend to 13.8p in 2016, creating a chunky yield of 4.4%.
Standard Life
With insurance giant Standard Life (LSE: STAN) having doubled-down to boost its global presence, I believe dividend hunters can look forward to increasingly-resplendent returns in the years ahead. The business has invested heavily in its North American and emerging market operations, while it has also responded to changing demographic and legislative demands by effectively developing its product range.
In addition, Standard Life also remains committed to splashing the cash to supercharge growth — last March the business snapped up Ignis Asset Management for £390m, and more recently enhanced its Indian exposure by upping its stake in HDFC for £169m. Thanks to its healthy earnings outlook the City has chalked in dividends of 18.3p per share for 2015 and 21.4p for 2016, yielding an impressive 4.8% and 5.3% respectively.
