The FTSE 100 (FTSEINDICES: ^FTSE) looks to be back to winning ways this week, up 39 points on the day to 6,660 and up 105 on the week so far, and resuming the bull run that was briefly interrupted by a fall last week. It surely can’t be long now before the index of top UK stocks breaks that 13-year record of 6,876 points from 22 May.
But even if it doesn’t, a lot of the stock market’s long-term value comes from dividends, with the FTSE 100 currently offering an average yield of about 3.2% — and that’s not bad in these low-interest days. But if you want to do better than that, there are plenty of shares offering more. Here are three companies from the various indices that lifted their dividends this week:
A strengthening property market gave Hammerson (LSE: HMSO) a boost on Monday, when the real-estate investment trust announced first-half results. The shopping centre and retail property specialist saw rental income up 9.9% and earnings per share up 8.8%, enabling a boost of 7.8% for its interim dividend to 8.3p per share.
Hammerson’s dividend plunged in the crunch year of 2009, but it has been recovering steadily since with the year to December 2012 bringing in a yield of 3.6%. If this week’s percentage rise in the interim is repeated for the firm’s final payment, we should see a yield of around 3.6% again for the full year, on today’s share price of 528p.
Engineering is coming back into fashion, with GKN (LSE: GKN) on Tuesday announcing an 8% rise in its first-half dividend, to 2.6p per share. A similar rise at year-end should produce around 7.8p per share for a yield of 2.2% on today’s price of 353p, though forecasts currently stand a little higher than that at 7.9p.
Since GKN’s dividend was suspended for 2009 and then reintroduced at 5p per share in 2010, we’ve seen it steadily climbing. With two more years of earnings and dividend rises forecast, GKN shares are not looking too stretched on a forward P/E of 13, dropping to 11 for 2014.
TV technologist Pace (LSE: PIC) has had a pretty good few years, and on Tuesday delivered a terrific set of interim results. With first-half revenue up 31% to $1.3bn, largely driven by demand for its media servers in North American markets, Pace extracted a 57% rise in EBITDA to $96.7m with adjusted EPS up 73% to 22.1 cents.
That enabled Pace to bring us the highest percentage dividend rise of the three, with a 27% boost to 1.83 cents per share. A similar rise in the final dividend would provide 5.7 cents per share, or around 3.7p. Sure, that would only give us a yield of 1.2% based on the current share price of 319p (after it has doubled over the past 12 months). But on a forward P/E of only 11, and the firm saying “we anticipate that full year profits for the Group will be higher than previous guidance“, Pace still looks good value to me.
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> Alan does not own any shares mentioned in this article.