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What This Top Dividend Portfolio Is Holding Now: HSBC Holdings plc, Royal Dutch Shell Plc and GlaxoSmithKline plc

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cityTemple Bar Investment Trust (LSE: TMPL) has clocked up 30 consecutive years of dividend increases. At a current share price of 1,239p, the trailing yield is 3%. Picking great dividend shares has helped Temple Bar outperform the FTSE All-Share Index over the past three, five and 10 years.

Let’s take a look at the trust’s current top three holdings: HSBC (LSE: HSBA) (NYSE: HSBC.US), Royal Dutch Shell (LSE: RDSB) and GlaxoSmithKline (LSE: GSK).

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HSBC

At 597p, the shares of banking behemoth HSBC are trading close to a 52-week low. Concerns about China’s property market and borrowing levels have been weighing on investor sentiment towards companies with a high exposure to Asia — HSBC, of course, falls into that category.

However, it’s not just a matter of China worries. Real business performance has also hurt the share price. Management said at the company’s AGM in May that the first quarter was “relatively slow” compared with last year, and that “We expect 2014 to present challenges as well as opportunities”.

While analysts have been downgrading their earnings forecasts, HSBC is nevertheless expected to pay a dividend of around 31p for the year (covered 1.7 times by earnings), giving a juicy yield of 5.2%. That’s a full 2% higher than the FTSE 100 as a whole — and management is optimistic about Asia’s long-term growth story and the company’s ability to grow the dividend.

Royal Dutch Shell

In contrast to HSBC, oil titan Royal Dutch Shell is trading close to a 52-week high, at a share price of 2,550p. The market appears to be warming to new boss Ben van Beurden’s strategy of more disciplined capital investment, and improving returns and cash flow performance.

In first-quarter results at the end of April, the Board upped the first of this year’s quarterly dividends by 4%, saying that the increase “Underscores our delivery in recent years, and our confidence in the future potential”.

Analysts are forecasting a full-year dividend of 112p (covered 1.9 times by earnings), giving a yield of 4.4%.

GlaxoSmithKline

Despite concerns about patent expiries, the shares of GlaxoSmithKline (GSK) have made good progress over the last five years. Currently changing hands for 1,575p, the shares are up about 45% over the period.

Decent pipeline news and a well-received deal with fellow pharmaceuticals giant Novartis earlier this year have helped, while a corruption scandal in China and an announcement in May that the UK’s Serious Fraud Office is investigating GSK’s commercial practices haven’t done too much damage.

The Board lifted this year’s first-quarter dividend by 6%, and analyst forecasts of an 81.5p payout for the full year make GSK another company offering a stonking income: 5.2%. The dividend is expected to be covered a slightly thin 1.3 times by earnings, but the cover is set to improve thereafter.

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G A Chester does not own any shares mentioned in this article. The Motley Fool has recommended GlaxoSmithKline.

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