Today I am looking at a cluster of FTSE destroyers waiting to deliver smashing returns.
Vodafone Group
Thanks to the vast amounts of cash the firm continues to generate, telecoms giant Vodafone (LSE: VOD) is likely to remain a popular dividend play in my opinion. The firm has consistently lifted the payout even in spite of regular earnings turbulence, and the City sees no reason for this trend to cease any time soon — indeed, a dividend of 11.2p per share for the year to March 2015 is expected to rise to 11.5p this year and to 11.8p in 2017.
Vodafone subsequently sports jaw-dropping yields of 5.3% for 2016 and 5.5% for the following period. And with the company’s key European marketplaces back on the mend, and data-hungry customers in developing regions helping drive group revenues higher, I believe Vodafone’s improving bottom-line outlook should provide future payouts with a further shot in the arm.
National Grid
For those seeking cast-iron year after year dividend growth, I believe one can do a lot worse than to select electricity network operator National Grid (LSE: NG). Utilities are traditionally a great way to secure dependable earnings and subsequently dividend growth, naturally. But while the likes of Severn Trent and Centrica face increasing regulatory hurdles that threaten future profits, National Grid’s top-down structure makes it immune to such troubles.
Meanwhile the impact of RIIO cost controls on the firm’s cost base is also helping to strengthen the balance sheet, another positive omen for payout hunters. As a result National Grid is expected to churn out dividends of 43.8p per share for the period ending March 2016, yielding a tremendous 4.9%. And this figure rises to 5% for 2017 amid estimates of a 45p reward.
Barratt Developments
I have long cheered the investment potential of housebuilders like Barratt Developments (LSE: BDEV) thanks to an ever-worsening homes crunch. A shortage of new listings is adding to the problem of an already-inadequate housing stock, while improving wage levels and favourable lending conditions are significantly boosting demand. As a result average house prices rose 0.5% on-month in September, speeding up from August’s 0.4% rise, Nationwide announced today.
Against such a favourable backdrop Barratt Developments is expected to enjoy stellar bottom-line growth well into the future, and an advance of 18% is pencilled in for the year ending June 2016 alone. Consequently the construction play is anticipated to shell out a 30.3p per share reward, yielding an impressive 4.6%. And I see no reason for dividends to stop steaming higher.
Unilever
I believe that household goods giant Unilever (LSE: ULVR) is a terrific dividend bet thanks to the splendid pricing power of its top-tier labels. From Hellmanns mayonnaise and Dove soap right through to Sunsilk shampoo, the business’s brands resonate with consumers in such a way as to provide strong revenues growth even in times of wider macroeconomic pressures, giving it brilliant earnings visibility.
So despite fears of slowing financial growth in key emerging markets, Unilever is still expected to churn out earnings expansion of 9% in 2015 and 6% in 2016. As a result dividends of 85.8p per share for this year and 90.4p for 2016 are predicted, producing very decent yields of 3.2% and 3.4% respectively. And I reckon the firm’s strong profits outlook should provide increasingly-lucrative payouts further down the line.
