Today I am highlighting three FTSE 100 stalwarts poised to deliver big bucks this year and beyond.
Mobile telecoms titan Vodafone’s (LSE: VOD) (NASDAQ: VOD.US) ability to churn out buckets of cash has enabled it to keep on delivering vast dividend growth for donkey’s years, even as rising competitive and regulatory pressure in Europe has caused the bottom line to oscillate wildly.
And City brokers do not expect this trend to cease any time soon, with the business anticipated to lift the full-year payout in the year concluding March 2015 to 11.3p per share from 11p last year. This creates a monster yield of 5.1%, but things are expected to get even more exciting in the years to come. Indeed, a payout of 11.6p chalked in for fiscal 2016 pushes the yield to 5.2%, and a prospective 11.7p dividend drives the figure to 5.3% the following year.
Of course, Vodafone’s $19bn Project Spring organic investment scheme, not to mention its supercharged acquisition programme, could pressure these projections. But I believe that these measures, not to mention surging mobile telecoms activity in developing regions, breakneck growth across the ‘triple-play’ entertainment sector, and slowly-recovering European marketplace should maintain Vodafone’s positive earnings — and subsequently dividend — outlook for the coming years.
Imperial Tobacco Group
Cigarette giant Imperial Tobacco (LSE: IMT) has long been an attractive proposition for those seeking market-beating dividend prospects.
Even though stalling tobacco demand has caused earnings to slow for some time now, the consequence of mounting legislative pressure, reduced consumer spending power and changing social attitudes, the business has still churned out double-digit payout rises in each of the past five years.
And City analysts expect this trend to continue for the foreseeable future — a total dividend of 141p per share is estimated for the 12 months ending September 2015, up from 128.1p in fiscal 2014. And a further sizeable jump, to 154.1p, is expected in 2016. As a result Imperial Tobacco’s appetising 5% yield for this year surges to a terrific 5.5% for 2016.
With e-cigarette demand galloping higher, cost-cutting across the group well underway, and the business ploughing vast sums into its ‘Growth Brands‘ like Lambert & Butler and West — products which carry terrific pricing power and thus mitigate the effect of slowing overall volumes — the firm should keep on delivering solid dividend growth, in my opinion.
Like the tobacco sector, utilities firms have long been sought by income chasers owing to the defensive nature of their operations.
But while the dividend outlook for the country’s major electricity and water providers is coming under increasing pressure, as regulators run the rule over their profitability, National Grid’s (LSE: NG) (NYSE: NGG.US) vertically-integrated model makes it immune to these concerns. Meanwhile, the adoption of new, stringent RIIO price controls in Britain should cut unnecessary expenditure and further boost the firm’s dividend picture.
Indeed, current forecasts expect the power play to raise the full-year dividend in the year ending March 2015 to 43.5p per share, up from 42p the previous year. And National Grid is expected to raise the payment to 44.9p in 2016 and 45.9p in 2017. Consequently a sterling yield of 4.8% for this year rises to 4.9% for 2016 and 5.1% for the following year.
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