HSBC
By market capitalisation, Shell is the only FTSE 100 company larger than HSBC. While rivals Royal Bank of Scotland and Lloyds Banking may get all the press attention, HSBC (LSE: HSBA)(NYSE: HBC.US) is the the largest by far. By market capitalisation, HSBC is more than twice the size of both.
HSBC’s global footprint makes it unique among UK banks. This diversity gives the bank further strength.
Although the forecast yield for 2013 comes in at 4.7%, a big increase is forecast next year. This would push the yield to 5.2%, well ahead of what can be achieved on deposit with the bank itself.
According to the consensus forecast for the year, HSBC shares trade on a P/E of 11.6, falling to 10.6 times next year’s expected numbers.
BP
BP (LSE: BP)(NYSE: BP.US) shareholders are still waiting for a line to be drawn under the company’s Gulf of Mexico spill. Although the current price in the market may look cheap, there remains the possibility of further large fines.
Either way, I still expect BP to reward its shareholders with big dividends.
This year, BP is expected to announce a total of $0.37 of dividends per share. At today’s share price, that’s a yield of 5.2%. An 8% dividend rise is expected next year, pushing the yield to 5.6%.
As for earnings, BP is forecast to make earnings per share (EPS) of $0.78 this year and $0.90 by 2014. That’s a P/E for this year of 9.0, falling to 7.8 for 2014.
AstraZeneca
Pharmaceutical firms like AstraZeneca (LSE: AZN) have a strong relationship with their customers. For as long at their products are protected by patents, sales are almost guaranteed. However, AstraZeneca shares have struggled in recent years, over concerns that its portfolio of forthcoming patent-protected drugs is looking thin.
This has created an opportunity for income investors. AstraZeneca has maintained its dividend in the face share price falls. This has pushed the yield on the shares to 5.5%.
Although earnings are expected to fall this year and next, the dividend looks safe for awhile yet. Management may cut the payout to fund a big acquisition at some point in the future. All things considered, AstraZeneca looks a decent way to get pharma representation in an income portfolio.
