Today I am looking at the dividend potential of three London-listed heavyweights.
HSBC Holdings
Today “The World’s Local Bank” became a little less local following news that HSBC Holdings (LSE: HSBA) (NYSE: HSBC.US) was withdrawing from the Brazilian and Turkish markets amid continued underfperformance. All in all the business is looking to slash up to 25,000 jobs across the globe by the close of 2017 as part of a drive to deliver $4.5bn-$5bn of cost savings each year.
Undoubtedly HSBC reflects a great deal of uncertainty for investors at the current time. From questions over a potential relocation of its headquarters and the fate of its UK retail operations, through to the issue of rising misconduct charges — the business paid Swiss authorities $43m last week to settle the ongoing tax evasion case, although other authorities continue to probe — today’s news marks another chapter in the bank’s eventful restructuring story.
Still, yesterday’s announcement affirmed HSBC’s commitment to the high-growth regions of the Far East, with the business planning to “accelerate investments” in China and across South-East Asia. Consequently I believe the bank should continue to offer compelling earnings and dividends prospects in the long-term.
And in the meantime, City analysts expect the firm to shell out payments of 51 US cents and 53 cents per share in 2015 and 2016 correspondingly, numbers that produce bubbly yields of 5.4% and 5.6%.
Pearson
Even in spite of persistent earnings turbulence, education and publishing specialists Pearson (LSE: PSON) has remained in vogue with dividend chasers as payouts have marched steadily higher. The company has lifted the payment at a decent compound annual growth rate of 7.1% since 2010, and with massive restructuring anticipated to propel the bottom line higher again from this year, I believe investors can expect the firm’s progressive policy to keep on rolling.
Indeed, a 17% earnings bounce at Pearson in 2015 is expected to push the dividend to 54.7p per share, up from 51p last year and yielding an impressive 4.2%. And this figure rises to 4.4% for 2016 amid predictions of a 57.6p reward, driven by a further 7% earnings advance.
RSA Insurance Group
Having got its dividend programme back on track late last year after successfully rebuilding its capital base, I reckon that RSA Insurance (LSE: PSON) should continue doling out plentiful shareholder rewards in line with recovering earnings.
The London business is predicted to shell out a payout of 11.6p per share in 2015, resulting in a decent-if-unspectacular yield of 2.7%. But expectations of a 14.7p dividend the following year drive the yield to a tasty 3.4%. And with the firm’s restructuring programme still rolling — the business completed the sale of its Chinese operations in May — and new business edging higher in its core markets across Europe and Canada, I reckon dividends at RSA Insurance should continue marching northwards.
