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2021 dividend forecasts: Shell, Vodafone, Royal Mail

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This year has been challenging for income investors. As a result of the coronavirus pandemic, many popular dividend stocks have cut their payouts.

Is next year going to be better? Let’s take a look at the 2021 forecasts for three of the UK’s most popular dividend stocks – Royal Dutch Shell (LSE: RDSB), Vodafone (LSE: VOD), and Royal Mail (LSE: RMG).

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2021 dividend forecast: Shell

2020 was a terrible year for those who own Shell for the dividend. After maintaining a full dividend for over 70 years, the oil giant reduced its quarterly payout from 47 cents per share to just 16 cents per share in the first quarter of the year. That represented a cut of 66%. Shell did lift its payout by 4% in the third quarter, to 16.65 cents per share, but that’s not likely to have cheered income investors too much.

Looking ahead to 2021, City analysts currently expect Shell to pay out total dividends of 77 cents per share. However, that forecast looks too high to me. Given that the payout is currently 16.65 cents per share, I’d be amazed if the total payout is greater than 70 cents. If Shell was to pay out 70 cents per share, that would equate to a yield of about 4% at the current share price.

Would I buy Shell for income today? No. The company has lost its reputation as a reliable dividend payer after this year’s big cut.

Vodafone’s payout in 2021

Vodafone (whose financial year ended 31 March) was one company that didn’t cut its payout this year. While lots of companies in the FTSE 100 index cancelled, suspended, or cut their dividends, the telecommunications giant remained committed to its payout. In its full-year results, it declared a full-year dividend of 9 euro cents, while in its first-half results, it declared a payout of 4.5 euro cents. Both payouts were the same as last year.

Looking ahead, analysts forecast a full-year payout of 9 euro cents for year ending 31 March 2021 and a payout of 9.2 euro cents for the year ending 31 March 2022. At the current share price, these payouts equate to yields of around 6.5%.

Is Vodafone a stock I’d buy for income? No. It cut its payout a few years ago, and dividend coverage remains weak.

Will Royal Mail pay a dividend in 2021?

Finally, Royal Mail (whose financial year ended 29 March), has been another terrible dividend stock to own this year. In its full-year results for the year, posted in June, the company said it wouldn’t pay a final dividend for the year. It also said it didn’t intend to pay a dividend for the year ending 29 March 2021. It also advised last week, in its half-year results, it still intends to pay no dividend this year.

The goods news however, is that RMG has said its ambition is to re-commence dividend payments in the 2021/22 year. Currently, analysts forecast a payout of 6.14p per share for that year, which equates to a yield of about 2% at the current share price. That’s obviously a lot lower than the yields Royal Mail shares have offered in the recent past.

Is this a stock I’d buy for dividends? Definitely not. After cutting its dividend completely this year, RMG has lost its appeal as an income stock.

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Edward Sheldon owns shares in Royal Dutch Shell. The Motley Fool UK has no position in any of the shares mentioned. 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.

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