The Motley Fool

The One Simple Reason BP plc, SSE PLC And Admiral Group plc Are Top Dividend Picks

Most FTSE 100 companies bang on about having a ‘progressive’ dividend policy. However, only a few make a real fetish of the dividend, and leave income investors in no doubt that the directors are running the business primarily to generate cash to hand over to shareholders.

Such a focus has other benefits for investors. For example, it enforces capital discipline, meaning you’re less likely to see chief executives engaging in ’empire building’, which can often destroy shareholder value.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

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...

Three blue chips that have really nailed their colours to the dividend mast are oil major BP (LSE: BP) (NYSE: BP.US), utility SSE (LSE: SSE) and insurer Admiral (LSE:ADM).

BP

BP was forced to suspend its dividend in the wake of the Gulf of Mexico oil spill in April 2010. However, the payout has been growing strongly again since Bob Dudley took over as chief executive in October 2010.

The recent collapse of the oil price has only served to confirm the strength of Dudley’s commitment to the dividend. He told us within the company’s annual results this week: “the dividend remains the first priority within our financial framework”. To that end, BP is scaling back exploration expenditure and postponing marginal projects in what Dudley expects to be a challenging phase of low oil prices through the near and medium term.

Analysts are forecasting a dividend of around 25p for 2015, giving a yield of 5.7% at a recent share price of 440p.

SSE

If you go to SSE’s corporate website or read its annual results, you’ll find the company tells you: “We believe that our first responsibility to shareholders is to give them a return on their investment through the payment of dividends”.

SSE has admirably fulfilled its responsibility, delivering increases in the dividend each and every year since the company was formed in1998 by the merger of Scottish Hydro-Electric and Southern Electric.

In a trading update last month, SSE confirmed that it expects the increase in its dividend for the year ending March 2015 to be at least equal to RPI inflation. Analyst forecasts give a yield of 5.5% at a recent share price of 1,615p.

Admiral

Popular motor insurer Admiral was founded in 1993 and joined the stock market in 2004. The company isn’t quite as vocal about its dividend as SSE, but its actions speak loud.

Admiral’s policy is to pay ordinary dividends of 45% of earnings, and special dividends on top — together amounting to the majority of earnings, which the company can afford because of its low capital business model. Since its 2004 stock market flotation at 275p a share, Admiral has paid out a total of 291p in ordinary dividends and 316p in ordinary dividends.

Analysts reckon the company will pay out 91p all told for 2015, giving a yield of 6.2% at a recent share price of 1,470p.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

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’.

Click here to learn more.

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

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.