The FTSE 100 (FTSEINDICES: ^FTSE) is in a pretty glum mood this week, slumping 104 points yesterday and sitting a further point down on 6,482 at the time of writing today — an improving economic outlook might be good for jobs, but it doesn’t please those who want economic stimulus measures to carry on for ever.
It’s at times like these that we need to remind ourselves of the power of dividends — even if the FTSE is volatile, the UK’s top index is still delivering a long term dividend income of around 3%. It’s always worth keeping an eye on which dividends are rising too. Here are three companies from the various indices that have raised their cash handouts this week:
Insurance giant Prudential (LSE: PRU) (NYSE: PUK.US) lifted its first-half dividend by 15.8% on Monday, to 9.73p per share. On the current share price of 1,198p, a similar rise in the final dividend would provide a total payment of around 34p for a yield of 2.9%, and that’s a bit higher than the current consensus forecast.
The results showed a 22% rise in operating profit, to £1.4bn, put down partly to the aging “baby boomer” generation in the US and partly to new insurance business in Asia. Forecasts for the full year currently suggest a rise in earnings per share (EPS) of around 10%, with the same expected for the following year, putting the shares on a P/E of 14.
First-half results from Interserve (LSE: IRV) on Wednesday brought us news of a 6.3% interim dividend rise, to 6.8p per share. That was backed by an 8.6% rise in revenue, a 7.6% rise in headline pre-tax profit to £36.8m and an EPS gain of 5.4% to 21.4p. The support services and construction group also told us of more than £1.5bn in new contracts during the period, taking the value of its future workload to £6.7bn.
Looking forward, the City is expecting EPS to be flat this year with a 13% rise suggested for 2014, and that puts the shares on a lowly-looking P/E of 12, dropping to 10.5. And for income-seekers, this year’s forecast dividend would yield a pretty decent 3.9% on today’s share price of 555p.
Rank Group (LSE: RNK) is our third, this time with full-year results delivered on Thursday and a 14% rise in the dividend to 4.1p per share. On a price of 157p that’s only a modest yield of 2.6%, but the dividend has been lifted steadily since payments were resumed in 2009, and there’s a further rise of 14% forecast for the year to June 2014.
The gambling and leisure group told us of a “solid performance with revenue up 7% in a challenging economic environment“, though it did report a 1% fall in adjusted pre-tax profit with no change in EPS over last year. But the outlook appears positive, with a 12% rise in EPS forecast for next year.
Finally, if you’re looking for top investment ideas, it could well pay to take a close look at what Neil Woodford is buying.
The ace investor, whose Invesco Perpetual High Income fund would have turned £10,000 into £193,000 since its launch in 1988, remains bullish on the Aerospace & Defence sector. If you want to learn more, check out the Fool’s latest examination of Mr Woodford’s holdings.
But hurry, because the report will be available for a limited period only. Click here to enjoy your copy today.
> Alan does not own any shares mentioned in this article.
According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…
And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...
It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…
But you need to get in before the crowd catches onto this ‘sleeping giant’.