Looking For Terrific Earnings AND Dividend Growth? Look No Further Than Barclays PLC, HSBC Holdings plc And Barratt Developments Plc

Today I am running the rule over three of the FTSE 100‘s great ‘all rounders’.


The newsflow surrounding Barclays’ (LSE: BARC) (NYSE: BCS.US) full-year results released earlier this week again centred on the financial fallout of the bank’s previous wrongdoings. The business was forced to swallow a £750m provision during September-December to cover the cost of rigging forex markets, while it also set aside an additional £200m for the mis-selling of PPI.

However, the release also revealed the exceptional progress Barclays has made in restructuring the organisation, slashing costs and cutting the size of its risky investment bank. On top of this, the company’s retail operations have also received a boost from the improving domestic economy, helping the bank to punch a £5.5bn pre-tax profit in 2014, up from £4.9bn in 2013. And this strong momentum is expected to continue for some time to come.

According to City forecasts, Barclays is poised to see earnings shoot 50% higher in 2015, and an additional 17% increase is on the cards for next year. These numbers create ultra-cheap P/E multiples of just 9.8 times and 8.4 times prospective earnings for these years — any reading below 10 times is broadly regarded as excellent value.

And these solid earnings prospects, combined with the effects of the firm’s Transform restructuring scheme on the balance sheet, are expected to get Barclays’ progressive dividend policy on track — the bank has kept the total payout locked at 6.5p per share for three years on the bounce. Indeed, payouts of 9.5p and 12.2p are expected in 2015 and 2016 correspondingly, resulting in bumper yields of 3.7% and 4.7%.

HSBC Holdings

Global banking goliath HSBC (LSE: HSBA) (NYSE: HSBC.US) has also been in the headlines for all the wrong reasons in recent weeks. The company saw profits dive by almost a fifth last year, to £18.7bn, due to crushing PPI claims and fines related to the manipulation of currency markets. And further problems are on the horizon as its Swiss arm comes under the spotlight of regulators around the world.

Still, I believe that HSBC is in great shape to enjoy strong growth from this year onwards. Not only does it boast considerable exposure to the growth markets across Asia, and in particular the regional powerhouses of China and Hong Kong, but its pan-global presence also allows it to cotton onto the improving economies of the UK and US.

Following last year’s sobering 18% earnings decline, the abacus bashers expect “The World’s Local Bank” to get back on track from this year onwards, and a 24% improvement is currently pencilled in for 2015. An extra 5% advance is expected next year. These forecasts leave HSBC changing hands on ultra-cheap P/E multiples of 10.4 times and 9.7 times for 2015 and 2016 correspondingly.

Bolstered by this bubbly bottom-line outlook and robust capital position, HSBC is anticipated to raise the full-year dividend of 50 US cents per share last year to 52.6 cents in 2015, and again to 55.7 cents next year. These predicted payouts create monster yields of 6% and 6.3% respectively.

Barratt Developments

Homebuilders like Barratt (LSE: BDEV) continue to enjoy the fruits of Britain’s housing crunch. The London company announced last month that pre-tax profit leapt 75% during July-December, to £210.2m, and follows a number of similarly-positive releases across the housing sector in recent weeks.

Indeed, Barratt saw the number of completions rise 13% during the period to 6,971 homes, the highest number for six years, while total forward sales crept 18% higher to £2.3bn. And with the Bank of England now expected to keep interest rates at record lows until 2016 at least; banks and building societies rolling out new, cheaper mortgage products seemingly every week; and government schemes helping first-time buyers to get their foot on the property ladder, market conditions look extremely favourable for Barratt and its peers looking ahead.

The City expects Barratt to punch earnings growth to the tune of 32% in the year concluding June 2015, and an extra 18% rise is predicted for fiscal 2016. These figures create terrific P/E multiples of 12 times for this year and 10.2 times for next year.

As well, Barratt’s plan to reward its shareholders with £400m worth of special payments through to November 2017 is expected to drive the dividend from 10.31p per share last year to 22.6p in 2015, and to 28p next year. Consequently the construction play sports outstanding yields of 4.4% for this year and 5.4% for 2016.

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Royston Wild owns shares of Barratt Developments. The Motley Fool UK has recommended HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.