The Motley Fool

2020 dividend forecasts: BP, Vodafone and Astrazeneca

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images.

Earlier this month, my Foolish colleague Edward Sheldon looked at the dividend credentials of FTSE 100 financial giants Lloyds and Barclays, as well as revived supermarket Tesco going into 2020. Today, I’m doing the same with three other stocks, all of which are popular with those investing for income.

As Edward quite rightly stated back then, please remember that the numbers stated below are subject to change, particularly as we could see quite a bit of movement in the market before and after the election

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...


FY2020 dividend forecast: 41.2 cents (32p)
FY2020 prospective yield: 6.41%

Oil behemoth BP (LSE: BP) hasn’t had the best time of late, giving away the gains it had made in the first few months of 2019 over the second half of the year due to a falling oil price. That said, a lower valuation means the dividend yield now stands at 6.41% — more than the FTSE 100 average and slightly higher than Royal Dutch Shell. This payout is likely to be covered by earnings almost 1.4 times. That’s a little lower than I would normally like, but certainly better than it once was.

As always, a lot depends on things BP can’t control. Assuming 2020 brings the black gold bulls back from the shadows, however, now might be as good a time as any to invest.  


FY2021 dividend forecast: 9.4 cents (8.1p)
FY2021 prospective yield: 5.17%

There was a time when I would avoid shares in Vodafone (LSE: VOD) like the plague thanks to its dogged refusal to reduce its unaffordable dividend. Now that this has finally happened, I’m prepared to be a little more welcoming. Considering that its share price has climbed 19% since the announcement back in May, it seems I’m not alone. 

That’s not to say that I think income investors should necessarily pile into the stock. Vodafone’s proposed 9.4 cents per share cash return in FY2021 (beginning 1 April 2020) will still only be covered just 1.1 times by expected profits. Moreover, the company still carries an extraordinary amount of debt on its balance sheet — the reduction of which will depend on its ability to offload its European mobile mast business and continue taking contracts from rivals (the recent capture of Virgin Media from BT is an example). 

2019 could go down as the year that Vodafone’s fortunes began to turn, but I’d still proceed with caution. 


FY2020 dividend forecast: 275 cents (214p)
FY2020 prospective yield: 2.89%

Pharmaceutical powerhouse Astrazeneca (LSE: AZN) has been one of the index’s standout performers in 2019 with the share price a little over 25% higher today than where it was at the start of the year.

In contrast to the situation at BP, this has resulted in Astra’s yield moving lower. The firm is expected to return around 214p per share in FY2020 which equates to a yield of just 2.89%. Positively, dividend cover has improved over recent years and next year’s cash payout should be covered around 1.56 times by profits.

My only real concern with Astrazeneca right now is that the stock looks expensive relative to the general market and to peer GlaxoSmithKline (at 27 vs 14 times forecast earnings). Should sterling rise on December 13 following a perceived breakthrough on Brexit, it’s possible the former’s share price could come off the boil (since Astra makes most of its money overseas). As such, anyone considering the stock may wish to put off their purchase for now.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.