Today I am looking at four FTSE heavyweights poised to deliver stunning income flows.
Barclays
Thanks to the steady improvement in the British economy, the growth prospects over at Barclays (LSE: BARC) are more attractive than they have been for many moons. The firm’s decision to row back and focus on its retail operations makes it a much less risky operation than before the 2008/2009 banking crisis, a positive omen for future dividend growth.
Meanwhile, Barclays’ Transform package is helping to strip out costs and build the balance sheet — indeed, the bank’s CET1 ratio leapt to 11.1% as of June from 10.3% at the end of 2014. In light of these factors, the City expects dividends at Barclays to chug higher following three years of being locked at 6.5p per share. A reward of 6.8p is anticipated for 2015, yielding 2.6%, and this leaps to 3.5% for next year amid expectations of a 9.1p payout.
TalkTalk Telecom Group
With demand for ‘quad play’ entertainment services in British households flowing steadily higher, I reckon TalkTalk (LSE: TALK) is in great shape to deliver splendid income flows. The business saw its share price shuttle lower during the summer as intense competition from BT and Sky hampered broadband take-up. Still, I believe TalkTalk’s own promotional activity, combined with massive services investment — such as the acquisition of Tesco Broadband and blinkbox — should underpin brilliant sales growth for the years ahead.
And with explosive earnings expansion forecast in the more immediate term, the number crunchers expect TalkTalk to deliver dividends of 16p and 17.4p per share for the periods concluding March 2016 and 2017 respectively. Consequently the telecoms play carries gigantic yields of 5.2% and 5.6% for these years.
British American Tobacco
Due to the addictive nature of tobacco products, British American Tobacco (LSE: BATS) has long been a favourite for those seeking chunky payout growth. More recently, however, a combination of intense pressure on smokers’ wallets, a rising black market, and changing social attitudes to smoking have conspired to undermine the firm’s reputation as a cast-iron ‘defensive’ stock selection.
While these issues are no doubt a concern, I believe that the terrific pricing of British American Tobacco’s product portfolio — led by the likes of Lucky Strike and Kent — and increased investment therein should keep earnings shuttling higher. So does the City, and last year’s dividend of 148.1p per share is predicted to rise to 156.1p in 2015, yielding an impressive 4.6%. And expectations of a further hike in the following period, to 163.3p, drives the yield to a delicious 4.8%.
Legal & General Group
As life insurance leviathan Legal & General (LSE: LGEN) spreads its tentacles all over the world, I fully expect dividends to charge higher in line with profits. The London firm has proved itself adept in adapting to evolving regulatory and demographic trends to keep business moving, and has announced plans to manage the £17bn worth of assets under National Grid’s UK pension scheme. The deal will also see it acquire Aerion Fund Management, operator of the programme.
With cash at the business also heading through the rafters — net cash generation leapt 11% during January-June, to £629m — I believe dividend hunters should take a long look at Legal & General. Indeed, the City expects the insurer to increase last year’s dividend of 11.25p per share to 13.3p in 2016 and 14.3p in 2016, figures that produce monster yields of 5.3% and 5.6% correspondingly.
