Today I am looking at four FTSE heavyweights with terrific payout prospects.
Legal & General Group
I believe financial services giant Legal & General (LSE: LGEN) should retain its reputation as a generous dividend provider as new business streams in from across the globe — the life insurance play saw total assets under management rise 12% during the first half of 2015, to £714.6bn. Although UK pension reforms pushied annuity sales 62% lower in January-June, Legal & General’s expansive product portfolio, continues to drive profits higher at home and as well as abroad, particularly the US.
As well, income investors should take heart from the amount of cash flowing into the firm — Legal & General saw net cash generation improve by 11% during the period, to £624m. With earnings expected to keep galloping higher in the medium term at least, the City expects the business to shell out a dividend of 13.3p per share in 2015, yielding a market-beating 5.2%. And this figure rises to 5.7% for next year amid forecasts of a 14.3p payment.
With critical Western customers ramping up their arms spending once again, I reckon industry giant BAE Systems (LSE: BA) is a solid pick for those seeking reliable returns. Mankind’s appetite for waging war is one of life’s constants, and thanks to its exposure to a vast array of defence sub-sectors — from building cyber security and surveillance systems through to armoured trucks and planes — I believe BAE Systems should enjoy brilliant long-term sales growth well into the future.
On top of this, BAE Systems’ growing popularity with emerging markets also promises to drive revenues higher — the firm clocked up £1.3bn worth of non-UK and US orders during January-June alone. With earnings expected to march steadily higher again, the number crunchers expect BAE Systems to throw out dividends of 20.8p and 21.5p in 2015 and 2016 correspondingly, producing chunky yields of 4.7% and 4.8%.
Thanks to its ultra-defensive operations — who doesn’t need, electricity, after all? — I believe National Grid (LSE: NG) is a great pick for people seeking low-risk dividend growth. The utilities space has always been a classic defensive pick, naturally, but while electricity and gas providers like Centrica and SSE face the threat of draconian regulatory action that could put future payouts in severe danger, National Grid’s vertically-integrated model leaves it insulated from such pressures.
Indeed, the network operator is actually benefitting from legislative measures as RIIO price controls allow it to slash expenses across the business, allowing it to return greater sums to its shareholders. Consequently the number crunchers expect National Grid to fork out a dividend of 43.9p per share in 2015, yielding an impressive 5.1%, and a reward of 45.2p is estimated for the following period, driving the yield to an eye-watering 5.3%.
With the chronic shortfall in UK housing stock set to keep home prices chugging higher, I naturally believe Barratt Developments (LSE: BDEV) should continue to shell out brilliant dividends for some time to come. Industry analysts BNP Paribas Real Estate were the latest to assuage fears of slowing transaction values this month by estimating that the average property price will rise by almost a third between 2016 and 2019, to £260,000.
As an improving British economy boosts homebuyers’ financial clout, and mortgage lenders bend over backwards to expand their mortgage books, it comes as little surprise that house prices continue to balloon. This scenario clearly bodes well for the likes of Barratt Developments, and the business is subsequently expected to raise an anticipated payment of 24.6p for the year ending June 2015 to 29.6p in the current period, pushing the yield from 4% to a quite brilliant 4.8%.
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Royston Wild owns shares of Barratt Developments. 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.