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4 Fantastic Income Stocks: Vodafone Group plc, Royal Dutch Shell Plc, Petrofac Limited And Pennon Group plc

Vodafone

With a dividend yield of 5%, Vodafone (LSE: VOD) remains one of the most appealing income stocks in the FTSE 100. In fact, its yield is over 50% greater than that of the FTSE 100 and, even though dividends per share are not forecast to rise at a brisk pace over the next two years (annualised growth of just 0.9% is expected), such a high yield means that Vodafone is likely to remain a firm favourite among income-seeking investors.

Furthermore, with it having strong cash flow and a relatively strong balance sheet, Vodafone could continue to make acquisitions that, in time, may result in a faster growth rate of profitability and dividends. As such, it remains a top notch income stock.

Shell

Concerns surrounding the future of the oil price are very understandable, with oil major, Shell (LSE: RDSB) (NYSE: RDS-B.US), expected to see its bottom line come under pressure over the medium term. And, with a sustained rally in the price of the commodity seeming unlikely in the months ahead, things could get worse before they get better for companies across the oil sector.

Despite this, and even though Shell’s dividend coverage ratio is set to fall to just 1.1 times in 2015, its bottom line is expected to rise by a whopping 33% next year, thereby making any pressure on its dividend payments a relatively short term issue.

Furthermore, with Shell currently yielding a very impressive 5.6%, it continues to appeal greatly to income-seeking investors, thereby making the present time a good opportunity to buy a slice of it.

Petrofac

Also struggling with a lower oil price is oil and gas services company, Petrofac (LSE: PFC). Its bottom line is expected to have fallen by 16% last year and by a further 14% this year, although as with Shell it is forecast to bounce back strongly next year with growth of 21%.

The impact of this volatility on its dividend, though, is expected to be somewhat minimal over the medium term. That’s because Petrofac is still forecast to yield 5.1% in 2016 from a dividend that is due to be covered a very healthy 2.6 times by profit.

And, with Petrofac trading on a forward price to earnings (P/E) ratio of just 7.4, it seems to be a great value as well as income play at the present time.

Pennon

While the likes of Shell and Petrofac offer a great income but significant volatility, water company Pennon (LSE: PNN) provides investors with a great yield and a very stable shareholder experience. That’s at least partly because it has a beta of just 0.6, and also because the provision of water services offers a relatively high degree of earnings visibility.

Certainly, Pennon’s yield of 3.8% may be lower than many of its index peers but, with dividends per share forecast to grow by 5% per annum over the next two years, it could prove to be a top notch income play. And, when its defensive prospects are taken into account, it could be a great stock to own while the outlook for the FTSE 100 remains highly uncertain.

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Peter Stephens owns shares of Petrofac and Royal Dutch Shell. The Motley Fool UK owns shares of Petrofac. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.