3 More Of The Biggest Dividends In The FTSE 100: Legal & General Group Plc, Imperial Tobacco Group PLC And National Grid plc

Legal & General Group Plc (LON:LGEN), Imperial Tobacco Group PLC (LON:IMT) and National Grid plc (LON:NG) are forecast to yield an average of 5.2% this year.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

National Grid

Shares in energy infrastructure firm National Grid (LSE: NG) (NYSE: NGG.US) have lost 13% from their May high. This pushed the shares down to levels not seen since March.

Last year, National Grid paid 40.9p of dividends per share from 58.1p of earnings. Analysts forecast that the company will report earnings per share (EPS) of 53.9p this year. The dividend is expected to come in at 42.1p.

The average FTSE 100 stock trades on a forward price-to-earnings (P/E) ratio of 13.4, with an expected yield of 3.4%. National Grid is on a P/E of 13.8 — the expected dividend yield is a thumping 5.7%.

During the last five years, National Grid has grown earnings by an average of 6.9% a year. The dividend has increased at a similar rate.

Imperial Tobacco

Cigarette firm Imperial Tobacco (LSE: IMT) (NASDAQOTH: ITYBY.US) trades at a significant P/E and yield discount to the rest of the market. That seems harsh, given how successful the company has been.

In the last five years at Imperial, EPS has increased by an average of 10.7% per annum. In that time, dividends have grown by an average of 11.9% a year.

Imperial’s past is not the problem. It is the company’s future that is causing concern.

I am suspicious of the long-term viability of the tobacco industry. These concerns are reflected in Imperial’s recent interim results. In the first six months of Imperial’s financial year, cigarette sales fell 6%. This led to a 7% fall in operating profits and a 3% decline in EPS.

Legal & General

Since the financial crisis, Legal & General (LSE: LGEN) has been ramping up its dividend. After paying 3.84p per share for 2009, the payout reached 7.65p in 2012. Double-digit dividends rises are forecast this year and next.

Earnings are forecast to rise at a similar clip. This puts the shares on a 2013 P/E of 11.1 and a forecast yield of 4.9%. The forecasts for 2014 are even better — giving a projected P/E of 10.5, with an anticipated yield of 5.4%.

Legal & General shares are a hybrid of value and growth. At 171p, Legal & General is today one of the best opportunities in the FTSE 100.

One person who thinks there is a better share in the top 100 is billionaire investor Warren Buffett. To find out which share this master investor has been buying and why, get the Motley Fool report “The One UK Share Warren Buffett Loves”. This report is 100% free and will be delivered to your inbox immediately. Just click here to get your copy today.

> David does not own shares in any of the above companies.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Ice cube tray filled with ice cubes and three loose ice cubes against dark wood.
Investing Articles

Just released: our 3 top income-focused stocks to buy before April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

Is this the best chance to buy cheap FTSE 100 shares in a generation?

I want to buy shares when they're cheap, and sell... never, just keep taking the dividends. And the FTSE 100…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

Could NatWest shares be 2024’s number one buy for passive income?

For those of us looking to earn some long-term passive income, how does NatWest's 7% dividend yield sound? It sounds…

Read more »

Investing Articles

£12K in savings? Here’s how I could turn that into £13K annual passive income

This Fool explains how investing a lump sum can help her build a passive income stream to enjoy in her…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s why Rolls-Royce shares are now set to fly over the £4 mark

Once again, Rolls-Royce shares are crushing the FTSE 100. Should I add to my holding of this stock at the…

Read more »

Investing Articles

1 under the radar FTSE 100 AI stock investors should consider buying

Our writer explains why this FTSE 100 pick could be a shrewd investment with its established experience of using AI…

Read more »

Investing Articles

Does the beaten-down Diageo share price make it a no-brainer buy?

Harvey Jones spent years waiting for the Diageo share price to look like good value, before finally buying it in…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

8%+ yields! Should I buy these FTSE 100 income shares this month?

Christopher Ruane weighs some pros and cons of two FTSE 100 shares, both of which have a dividend yield over…

Read more »