Today I am looking at a clutch of brilliant dividend plays.
Lloyds Banking Group
At first glance Lloyds (LSE: LLOY) (NYSE: LYG.US) may not be a clear candidate for those seeking irresistible income prospects. Sure, the bank’s revived dividend policy may be expected to churn out a dividend of 2.8p per share in 2015, but this creates only a yield of 3.2%. While this may be a respectable figure, it still falls short of the FTSE 100 average of around 3.4%.
Still, for those playing the long game I believe Lloyds is likely to prove a lucrative stock selection — indeed, the total payout is expected to leap to 4.2p next year, thrusting the yield to a delicious 4.9%. A formidable balance sheet should soothe any fears over these payouts being met — indeed, Lloyds’ core tier 1 ratio climbed to 13.4% as of March, one of the strongest in the sector — while steady growth in retail revenues and stringent cost-cutting should also underpin brilliant payout expansion.
I believe that insurance giant Standard Life (LSE: SL) is in great shape to keep delivering market-bashing dividend yields. With savers in Britain putting away more and more for their retirement — Scottish Widows recently announced that more people aged 30 or over are saving since the firm began compiling data ten years ago — and Standard Life boosting its distribution network and product suite across the globe, earnings would appear set to ignite looking further ahead.
Given these factors, for 2015 the City expects Standard Life to fork out a total payout of 18.8p per share, up from 17.03p in 2014 and yielding an impressive 3.9%. And this rises to around 4.2% for next year amid forecasts of a 20.2p reward. So although dividend cover falls below the security benchmark of 2 times throughout this period, I believe the insurer’s brilliant cash-generative qualities should assuage any fears — underlying cash climbed 21% in 2014 to £408m.
Crest Nicholson Holdings
Thanks to Britain’s enduring housing shortage, I reckon housebuilders like Crest Nicholson (LSE: CRST) should continue to enjoy splendid earnings growth well into the future, a promising sign for dividend hunters everywhere. Indeed, sector peer Persimmon’s (LSE: PSN) latest update today underlined the inherent strength of the industry — revenues advanced 12% during January-June, to £1.34bn, while completion volumes advanced 7% to 6,855 homes.
This follows Crest Nicholson’s own update last month which showed turnover jump by more than a third in November-April, to £333.2m. Against this backcloth I reckon analyst projections of massive dividends are well founded — the Chertsey firm is expected to raise last year’s 14.3p per share payout to 19.8p in the year concluding October 2015, yielding a decent 3.9%. And predictions of a 27.6p dividend in 2016 powers this yield to an eye-popping 4.9%.
I am convinced car insurance provider Esure (LSE: ESUR) should become an increasingly-attractive dividend stock as premiums across the sector tick steadily higher once again. Sure, the motor market remains exceptionally competitive, but the company’s expansion into hot segments should help to keep revenues ticking higher in my opinion and therefore light a fire under its dividend outlook.
On top of this, Esure’s May confirmation that its “financial position remains strong” should cheer income chasers — cash was stable around £25.1m at the close of 2014. The insurance play is expected to shell out a 15.1p per share payment in 2015, down slightly from last year’s 15.3p but still yielding a whopping 5.9%. But with premiums expected to push earnings higher again from 2016, a 16.1p payout is currently projected, boosting the yield to 6.3%.
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Royston Wild has no position in any shares mentioned. 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.