WM Morrison plc, BP plc, BHP Billiton plc, GlaxoSmithKline plc and Centrica PLC Can Cure Your Tesco Dividend Cut Blues

When a former dividend hero like Tesco scraps its final payout of the year, it’s enough to give grown investors the blues.

Especially when that comes on top of a previous 75% cut in its dividend payout.

Wipe your tears, income seekers, because there are plenty more fish swimming in this particular sea. The FTSE 100 is positively teeming with big fat juicy dividends just waiting to be snapped up.

And plenty of them are yielding far more than Tesco ever did.

WM Morrison

If you reckon the supermarket sector is ripe for a recovery, you may be tempted by WM Morrison (LSE: MRW).

Its share price leapt more than 7% on Thursday, largely on the coattails of rivals Tesco and Sainsbury’s, whose Christmases weren’t the disaster everybody expected.

Normally I wouldn’t touch a company yielding 7.4% on the assumption that it would be unsustainable, but management surprised everybody last year by promising further progression.

At 6.8 times earnings, Morrisons isn’t expensive, either, especially with consumer spending power finally set to rise in real terms this year.

Morrisons is risky, but that’s in the price.


Oil giant BP (LSE: BP) is also risky, with Brent crude shading $50 a barrel and the company’s tie-up with Kremlin-controlled Rosneft under the sanctions cosh.

BP’s share price is down more than 20% in the last six months but that leaves it cheap at just 4.8 times earnings, with a gushing 5.73% yield.

If you think we still can’t live without black gold, now is the ultimate contrarian buying opportunity.

BHP Billiton

You could say the same about mining giant BHP Billiton (LSE: BLT), as we near the end of the commodity super-cycle.

Even if we are, its 5.23% yield should provide some solace. And with the share price down nearly one-third in the last six months, you aren’t overpaying at 7.79 times earnings.

Especially if the commodity shake-up wipes out its smaller rivals.

GlaxoSmithKline And Centrica

We also have troubled GlaxoSmithKline (LSE: GSK) on a meaty 5.46% yield and British Gas owner Centrica (LSE: CNA) on a mind-boggling 6.27%. Both stocks are down around 12% in the last six months.

Glaxo faces a battle to restore its tarnished reputation, but could prove a strong defensive hold in what may be a turbulent year.

Centrica is set to be a political football with high utility bills to feature heavily in the forthcoming election, although a mild winter and recent energy price falls may take some heat out of the debate. That yield is enough to cure your blues until it is all over.

These are all big-name, solid companies offering yields well over 5% or 6%, that's up to 12 times base rate.

It’s hard to spurn that level of income, especially with the first Bank of England interest rate hike receding ever further into the distance.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Centrica and GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.