4 FTSE 250 Dividend Greats: AA PLC, Pendragon PLC, Mitie Group PLC & Meggitt plc

Royston Wild analyses the payout potential of AA PLC (LON: AA), Pendragon PLC (LON: PDG), Mitie Group PLC (LON: MTO) and Meggitt plc (LON: MGGT).

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Today I am looking at the dividend prospects of four FTSE 250 titans.

Get in the fast lane

Motor breakdown play AA (LSE: AA) has seen its customer base steadily erode as the competition has mounted. But a mixture of new product roll-outs and marketing improvements have helped stop the rot recently, while a massive IT overhaul should boost the firm’s cross-selling options and leave it better placed in the digital age.

The City expects AA to shell out a 9.1p per share dividend for the year ending January 2016, yielding a handy, if unspectacular, 3.2%. And payments are expected to accelerate thereafter as earnings explode — indeed, for fiscal 2017 alone a dividend of 10.3p per share is estimated, pushing the yield up to 3.6%.

Dividends driving higher

I believe car dealership Pendragon (LSE: PDG) is also in great shape, as improving consumer spending power blasts demand for ‘big ticket’ items like automobiles. Indeed, February car sales in Britain hit a 12-year high of 83,395, according to the Society of Motor Manufacturers and Traders (SMMT). And this marked an 8.4% rise from the same month in 2015.

Pendragon enjoys the best of both worlds, with exposure to the premium market through brands such as Jaguar and BMW, while showrooms dedicated to badges such as Ford and Vauxhall help to shift volume.

As earnings steadily rise, Pendragon is expected to pay dividends of 1.4p per share in 2016 and 1.5p per share next year, resulting in meaty yields of 3.9% and 4.2% respectively.

A services star

Support services play Mitie Group (LSE: MTO) is a terrific selection for those seeking dependable dividend growth, in my opinion. The business sells a wide array of essential services, from cleaning and catering, to providing fire and security systems, giving the firm splendid earnings visibility, regardless of the wider economic climate.

And Mitie Group’s terrific record of generating contract wins and extensions with blue-chip companies across the globe bodes well for future payout expansion. A dividend of 12.1p per share is projected for 2016, yielding a delicious 4.1%. And this figure moves to 4.4% for 2017 amid expectations of a 12.9p reward.

Payouts set to soar

I am convinced that aerospace giant Meggitt (LSE: MGGT) should also keep delivering market-bashing dividends in the years ahead. The recent establishment of its Customer Service and Support (CSS) division should prove a game-changer in helping to turn around its flagging civil aerospace aftermarket, while rising hardware demand from Western militaries also looks set to drive earnings higher.

And helped by improving cash flows, Meggitt is expected to deliver a 15.3p per share dividend in 2016, resulting in a chunky 3.6% yield. Furthermore, predictions of a 16.3p payout next year nudges the yield to 3.8%.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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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