With a yield of 5.3%, it’s easy to understand why Vodafone (LSE: VOD) (NASDAQ: VOD.US) is viewed as an appealing income stock. After all, it offers a significantly higher yield than the vast majority of its FTSE 100 peers. However, the really attractive aspect of Vodafone when it comes to income prospects is its track record of increasing dividends per share.
In fact, Vodafone has increased the amount it pays out in dividends in each of the last five years, with it delivering an annualised growth rate of 6.7% during the period. This bodes extremely well for investors in the company, since Vodafone has achieved this growth rate during a very challenging period for the company, with the Eurozone economy (which makes up a significant proportion of its revenue) being hit hard by lacklustre economic growth. As such, Vodafone remains a very enticing long term dividend stock which should be able to maintain its excellent track record of increasing shareholder payouts in the long run.
Although Prudential (LSE: PRU) currently yields just 2.2% at the present time, it is expected to increase dividends at a rapid rate. For example, dividends per share are forecast to rise by 8.1% in the current year, followed by further growth of 11.5% next year. This puts Prudential on a forward dividend yield (using 2016 forecasts) of 2.6%. And, looking at the company’s track record of dividend growth, there could be much more to come.
In fact, Prudential has an excellent history of increasing dividends, with them having risen at an annualised rate of 11.6% during the last four years. This means that, in the long run, Prudential could become a hugely appealing income stock, with its price to earnings (P/E) ratio of 15.3 still indicating that it offers good value for money, too.
The last few years have been challenging for investors in Carillion (LSE: CLLN), with the company’s bottom line declining by 26% from 2012 onwards. This has impacted upon the company’s share price, with it underperforming the FTSE 100 by 5% during the last three years. However, looking ahead, a much more prosperous period could be due to commence.
A key reason for this is that Carillion is very cheap and offers a great yield. For example, it trades on a P/E ratio of just 9.7, which is considerably lower than the FTSE 100’s P/E ratio of 16, and also yields a whopping 5.6% at the present time. And, with Carillion’s dividends being covered 1.9 times by profit, there is considerable scope for them to move higher (as they have done in each of the last four years), which could spark investor sentiment and push the company’s share price northwards.
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