Today I am looking at five FTSE favourites primed to deliver stunning shareholder returns.
Check out these smoking yields
Despite the onset of recent earnings pressure, cigarette manufacturer Imperial Tobacco (LSE: IMT) looks poised to keep on delivering market-beating dividends. Reduced consumer spending power and increased regulatory squeezes has pressured the bottom line more recently, but I believe that slowing economic headwinds in emerging regions — home to the vast majority of the world’s smokers — should drive demand for the firm’s prestigious labels like West and Gauloises comfortably higher in the coming years.
On top of this, Imperial Tobacco’s aggressive expansion into the US, as well as the white-hot e-cigarette market, also promises to support solid payout growth looking ahead — the City expects the business to bounce back from a rare 3% earnings dip for September 2014 with a marginal uptick in 2015, before punching a solid 5% rise in 2016. Consequently the firm is predicted to shell out dividends of 159.3p for 2015 and 174.5p per share for 2016, figures which create chunky yields of 4.8% and 5.3% respectively.
Build up a fortune
Like Imperial Tobacco, I recently invested in Barratt Developments (LSE: BDEV) on account of the smashing dividend prospects on offer. Britain’s chronic homes shortage is playing into the hands of the housebuilding sector, while positive lending conditions and supportive government initiatives are boosting transaction volumes. Indeed, Barratt noted this week that total forward sales leapt 17.9% as of mid-May, pushing the order book to a record £2.6bn.
With earnings expected to surge this year and next — the business is anticipated to clock up earnings growth of 39% and 18% for the years concluding June 2015 and 2016 correspondingly — the number crunchers have pencilled in total payouts of 23.1p and 28.6p per share for these years. Consequently Barratt’s healthy 4.2% yield for the current period leaps to an eye-watering 5.2% for 2016.
A fashionable income pick
British retailer Marks and Spencer (LSE: MKS) has fallen foul with income chasers in recent years as its underperforming Womenswear division has hampered bottom line performance, forcing the payment to remain locked at 17p per share for the past four years. But with demand for its fashion lines showing signs of recovery, its online business surging, and expansion into Europe and Asia gathering pace, I believe that dividends should start to chug comfortably higher again.
Indeed, the City expects ‘Marks and Sparks’ to fork out a 17.8p per share payment for the year concluding March 2015, underpinned by a modest 1% earnings rise. And expectations of 8% increases for both 2016 and 2017 produce payment forecasts of 18.7p and 20.3p, creating decent yields of 3.3% and 3.6%. And I fully expect yields to continue shooting higher as revenues at home and abroad take off.
Cash is king
Boosted by a recovering UK economy and strong record of racking up huge contract wins, I reckon that construction giant Carillion (LSE: CLLN) should keep on throwing up juicy dividend yields. Earnings have come under the cosh in recent years, but the firm’s mountainous cash pile has enabled it to keep the payout ticking comfortably higher during this period.
So although Carillion is anticipated to chalk up another earnings dip in 2015, albeit by a modest 1%, the business is anticipated to hike the payment from 17.75p per share last year to 18.1p in the current period, producing a hefty 5.4% yield. And a forecasted 4% earnings rise in 2016 should herald a sea-change in the Midlands firm’s profits performance and boost the long-term dividend outlook still further — in the meantime current projections for 2016 point to an 18.7p dividend, pushing the yield to an even-better 5.5%.
Post a fabulous fortune
I reckon Royal Mail (LSE: RMG) is poised to enjoy the fruits of surging parcel traffic in the years ahead as the internet shopping phenomenon clicks through the gears. The business is undergoing heavy restructuring to fully meet the requirements of a 21st-century courier service, a programme which is also helping to conserve cash by stripping out costs, another promising omen for dividend hunters.
Even though Royal Mail is expected to follow a predicted 20% earnings jump for the year ending March 2015 with a 15% slip in the current year, the delivery play’s bubbly outlook is expected to propel the shareholder payment to 21.1p per share from an estimated 20.7p last year, creating a vast 4.4% yield. And predictions of a 16% bottom-line bounce in 2017 underpins forecasts of a 21.7p dividend, nudging the yield to a healthy 4.5%.
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Royston Wild owns shares of Barratt Developments and Imperial Tobacco Group. 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.